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MEMBERS
of the Joint Congressional Power Commission (PowerCom)
are determined to take “coercive measures” to revoke
what they insist to be an illegal sale of prime shares
of Philippine National Oil Co.-Energy Development Corp.
(PNOC-EDC) to Red Vulcan, a private consortium led by
the Lopez family-controlled First Gen Corp., for P58.5
billion in an auction held on Wednesday.
Sen.
Miriam Santiago, cochairman of the bicameral oversight
body, said PowerCom members agreed to first invite
Finance Secretary Margarito Teves to appear at next
week’s hearing to explain why the privatization council
headed by Teves approved the sale despite the strong
reservations aired by several senators and the
commission members on the sale of such a strategic State
asset.
Sen.
Joker Arroyo had earlier filed a separate resolution
asking Malacañang to defer the auction to give the
Senate time to consider the implications of the EDC
privatization deal to the government’s energy program in
relation to its fiscal position.
At
Thursday’s PowerCom meeting, Makati Rep. Teodoro Locsin
Jr. complained there were no extensive consultations
with concerned sectors before the deal was allowed to
push through.
Santiago
pointed out that under the Electric Power Industry
Reform Act (Epira), the PNOC-EDC is the only entity in
the government mandated to explore and develop
indigenous sources of energy. “So, in our view, the
sale, if it proceeds, will be a violation of Epira. It
would therefore be illegal, and in that sense, might be
a ground for action before our courts.”
She
added: “But there is no denying that the PowerCom is
extremely upset about this news particularly since the
highest bid was approved yesterday. However, today
[November 22] is the deadline for the issuance of the
notice of award and November 30 is the closing date when
the winning bidder is required to make a full payment of
its bid. So we still have time [to block it],” she said.
To
butress the PowerCom’s argument against selling the
PNOC-EDC’s controlling shares, Santiago cited the lesson
learned from cancelling the privatization of 4.9-percent
interest of PNOC-EDC in the Malampaya project, where the
government substantially benefitted from the upside of
Malampaya profits, especially with the increase in oil
prices as the natural gas being sold to IPPS by the DOE
is indexed against the oil price.
She
reported that under Presidential Decree 87, the
Philippine government receives 60 percent of the net
proceeds of sales of indigenous oil and gas. This upside
allowed the PNOC to considerably reduce its loan
obligations, incurred in the PNOC purchase of 10-percent
participating interest in the Malampaya project in 1999.
In 2002
the PNOC-EOC was mandated by the national government to
privatize 4.9 percent of the 10-percent participating
interest of EOC-PNOC EOC in the Malampaya Deep Water
Gas-To-Power Project. But the privatization plan
approved in 2005 was blocked by then-Neda chief Romulo
Neri, who questioned the wisdom of selling the shares.
Santiago
said he was eventually proven correct.
Senator
Santiago told reporters that the bottom line in the
PowerCom’s position is that the government needs to
review its privatization efforts to ensure that only
nonperforming assets are sold to private investors.
She
recalled that the PowerCom had also adopted an earlier
resolution opposing initial plans to sell the
government’s controlling shares in 2005, based on
findings “that the PNOC-EDC is No. 1 in the world in
terms of steam technology and No. 2 in the world in
terms of geothermal capacity.”
The
company, she noted, “is earning at least P600 million
annually, and this income will tend to rise because
under a law the price of gas is indexed to the price of
oil. The price of oil has risen from $35 per barrel to
nearly $100 per barrel. . .and, if the price of oil
rises, the price of gas correspondingly rises. Under
that law, it is predictable that the P600-million annual
income of the PNOC-EDC will correspondingly rise.”
It has
been conceded that PNOC-EDC is “the most profitable
venture of government [and] the argument that we should
sell when it is profitable might be relevant in a
business environment but we are talking of a policy
environment,” she added.
“What is
the national policy?” she asked. “Geothermal energy as
an alternative source of energy should be sustainable in
our country. If we sell this to the private sector, it
is the private sector that will make money, not our
government,” argued
Santiago.
She also
disputed claims that since the privatization council
already approved the sale, the government might lose
credibility among prospective foreign investors. “Yet
there is a countervailing opinion in the international
business community that our economy will prove not as
strong as we claim if we depend in a one-off sale to
cover the budget deficit which should be logically
covered by increased revenue [collections] from the
Bureau of Internal Revenue and the Bureau of Customs.”
For all
of these reasons, she said, “we are giving the secretary
of finance an opportunity to air his side before the
PowerCom decides on more coercive measures to insist
that the PNOC-EDC should stay within government
ownership and control,” Santiago said after the PowerCom
hearing.
She
acknowledged that PNOC-EDC president Paul Aquino made a
spirited defense of the privatization scheme in order to
raise funds to acquire brand-new rigs and other
equipment needed to “make the company grow.”
The
panel “fully appreciates his arguments,” she said.
“However, it was the unanimous consensus of all 14
members that Aquino’s arguments are invalid,” said
Santiago, because “they are effective for a business
organization, but not for the running of the
government.”
Still,
Santiago said commission members are hesitant to take
drastic measures at this point against those responsible
for pushing the sale, “but our feeling is there has been
no proper courtesy extended to the PowerCom.”
“When
the commission expresses an opinion and, in fact, passes
a resolution, it is highly impudent of the Executive
branch—I am not talking of the President—to take action
contrary to a resolution of such an elevated legislative
group as the commission,” she said.
She
confirmed they are drafting a resolution which will
state that the legislative oversight body views the sale
as an “illegality” but will articulate it in a proper
language so as not to sound too harsh or threatening in
deference to the officials of a coequal branch of
government.
Asked to
elaborate on the “coercive” steps being mulled by JCPC
to stop the sale, Santiago replied: “We can hold the
Secretary of finance in contempt and punish him. Number
two, we can file a case in the Supreme Court and ask for
a temporary restraining order on the ground that the
sale is a violation of law. And, three, we can appeal to
the President to withdraw the approval.”
But, she
stressed, “we don’t want to go into those things yet. In
the spirit of interdepartmental courtesy and avoid
conflict between two branches of government, it would be
best if they just defer to the decision of the PowerCom.
And then we’ll take it up from there after the next
hearing.” |
