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There is
something amiss in the way the National Power Corp. (Napocor)
is resisting all efforts at privatization, not only
through the Electric Power Reform Industry Act (Epira)
of 2001, but even through the Power Sector Assets and
Liabilities Management Corp. (Psalm) that is mandated to
sell the power plants.
The sooner the power plants of Napocor
are privatized, the sooner electricity consumers would
benefit from it, by way of reduced electricity charges.
As of now, consumers have to absorb the huge costs of
the enormous Napocor debts—$7.2 billion—that are
reflected in their electricity bills as universal
charges.
Universal charges refer to the interest costs that
Napocor incurs as a result of its debts, and which it
passes on to its consumers. The servicing costs of these
debts are what you and I are paying for. Thus, Psalm is
eager to complete the privatization of Napocor to pay
off the foreign debts and take it off the electricity
bill of consumers. A case in point is the announcement
of Psalm president Jose Ibazeta last week that the
corporation would retire up to $1 billion of Napocor’s
debts following the successful sale of several power
plants.
So
successful has Psalm been in the privatization of
Napocor assets that foreign and local investors are
beginning to take interest once again in the Philippine
power sector. The sale alone of the 600-megawatt
Masinloc coal power plant bagged $930 million for the
government from the American power company AES. That
translates to more than $1.55 million per megawatt
price, which is higher than the cost of a brand-new
plant of similar make.
But it
appears now that Napocor wants to sabotage what Psalm is
desperately trying to achieve. How else can Napocor
explain its resistance to the 70-percent privatization
threshold that was called for under the Epira? Napocor,
in fact, is moving for the lowering of that threshold
level to 50 percent, which effectively means that it
will continue to lord it over the electricity market
given its big share.
Giving
50-percent control of power assets to Napocor would mean
the continued occurrence of questionable activities in
the corporation. Napocor president Cyril del Callar was
earlier admonished by no less than the Energy Regulatory
Commission for his attempt to manipulate the Wholesale
Electricity Spot Market. Of late, Napocor was accused in
both chambers of Congress of buying coal at a price that
is way above the prevailing market price, ostensibly due
to emergency purchases.
Clearly,
the questions raised over Napocor’s coal procurement
point to the urgency of removing the firm from its
dominant-player status in the energy market. After all,
this is supposed to be the mandate of the Epira:
Napocor’s privatization.
Epira is
a landmark legislation, which embodies the clear intent
to provide a framework for the restructuring of the
country’s electric-power industry, including the
privatization of the assets of state-owned Napocor. The
law seeks to ensure the quality, reliability, security
and affordability of the supply of electric power. It
also aims to ensure transparent and reasonable prices of
electricity in a regime of free and fair competition,
and full public accountability to achieve greater
operational and economic efficiency and enhance the
global competitiveness of Philippine products and
services.
But its
implementation has been marred by a series of actions
from Napocor officials that ultimately resulted in the
increase in electricity prices. More than six years
after its enactment, retail competition and open access
have not been achieved because more than 80 percent of
the country’s generating capacity still remains with
Napocor. This delayed implementation of the Epira,
together with the combined effects of the increases in
the international price of oil products and the
fluctuations in foreign exchange, caused significant
increases in the cost of power.
The
lessons of Enron, which collapsed on its manipulative
devices, should not be lost on the government when
looking at the efforts to privatize Napocor which, sad
to say, leave much to be desired.
Napocor’s procurement of five shiploads of coal in April
is an interesting case that could explode à la Enron.
Napocor put a tender for the “emergency” purchase of the
coal and forthwith agreed to the purchase price of $84
per metric ton when the prevailing rate at the time was
between $20 and $30 per metric ton. The seller was
Hunter Valley Coal Corp Pty Ltd. and the conduit was
Glencore Far East Phil AG. The bid for the coal was made
on March 29, 2007, and the award was made three days
later. However, the brownout—the underpinning reason for
the purchase—occurred on April 17, 2007. What gives?
E-mail: hugagni@yahoo.com |
