SPEED UP MAGNA CARTA, PALACE ASKED ERC

MANILA
, June 12 , 2004
 (STAR)
Malacañang asked the Energy Regulatory Commission (ERC) yesterday to speed up the issuance of implementing guidelines of a law that grants new rights to residential electricity consumers. Presidential Spokesman Ignacio Bunye aired this request to the ERC in an official statement he made yesterday, following the approval of a 13.27 centavos per kilowatt-hour (kwh) rate increase by the Manila Electric Co. (Meralco).

"We are urging the ERC to expedite the drafting of the implementing guidelines of the Magna Carta for Residential Electricity Consumers in order to further safeguard the welfare of consumers," he said. Bunye also lauded the directive issued by ERC Chairman Rodolfo Albano for Meralco to refund P13 billion in meter and service deposits it collected from its customers.

"We welcome the ERC ruling on the service refund and we hope this will be translated into some relief from rising power rates," he said. Albano said the order to all power distributors was contained in the Magna Carta for Residential Electricity Consumers that it was promulgating. The document grants new rights to customers. Based on Meralco’s financial books, the refund could reach an estimated P13 billion, taking into account the four million residential and commercial customers that paid meter and service deposits to the power firm. Meralco is already under previous orders to refund an estimated P30.5 billion to its customers, which the ERC ruled had been overcharged in the 1990s. Under current arrangements, customers are required to terminate their electricity service before they can recover their deposits covering the cost of meters and services.

"Among these new rights of consumers are the exemption from payment of meter deposits and the refund of bill deposits as long as the consumer pays his bill on or before its due date," Albano said.

"The Magna Carta also provides clear-cut policies on connection and disconnection of electricity services, the source of most complaints filed with the commission," he added. Albano, however, pointed out that the refund will not be immediately implemented since guidelines have to be taken up. The ERC also said they have yet to determine if the refund will be in the form of cash or deduction in electricity consumption. Albano explained the ERC will definitely scrap the meter deposits since these have already been included in the distribution rates being paid by the customers.

"All applicants for electric meter will no longer pay deposits. We will also work on the refund of those that already paid it," he said.

Albano said the ERC is expected to issue the implementing guidelines of the Magna Carta next month. Under the new rules, no disconnection service can be carried out without prior notice. It also spells out the obligations of residential consumers, particularly the payment of monthly bills. The ERC directive was issued a day after Bunye appealed to Meralco, a company owned by the influential Lopez family, "to defer" the rate increase approved by the ERC, which goes into effect next month.

"For reasons of social amelioration and relief, we are appealing to Meralco to defer the rate increase until we shall have gotten over the run of oil price increases and the recently approved fare hike," Bunye said. At the same time, Bunye said President Arroyo and her economic managers are looking for available "options" to help convince Meralco and the state-run National Power Corp. (Napocor) to defer the rate hike. He said the government will exercise "moral suasion" on Meralco.

"We have to alleviate pressures on the prices of prime commodities. Sacrifices are called for and everyone must pitch in," Bunye said. Meralco clarified that through the newly approved rate increase, Napocor will recover its generation cost and Meralco’s role is to collect it. An ERC official said the rate increase of Napocor under the generation rate adjustment mechanism (GRAM) was approved by the commission last June 2. This will be implemented by Meralco in its June billing cycle and will be reflected in the customers’ billing statement starting next month. The newly approved Meralco rate increase takes effect on July 1 — a day after the country’s next president shall have been officially sworn into office.

Mrs. Arroyo, whose Koalisyon ng Katapatan at Karanasan sa Kinabukasan claims that she won the presidential election, has promised during her campaign to work for the reduction of power costs in the country to make it the lowest in the Asian region and spur the growth of businesses and investments. Speaking over the government-run Radyo ng Bayan yesterday, Bunye explained the Arroyo administration has been trying to privatize Napocor as one of the measures to rationalize the power cost structure in the country as mandated by the Electric Power Reform Act.

"The assets of Napocor are up for privatization and we are continuing with the search for interested private investors," he said, adding that the Department of Energy has had serious talks with interested private investors. "Perhaps, these privatization efforts would bear fruit soon." Bunye assured the public that the government will not sell Napocor assets at a loss since these are state-owned assets.

"We are not selling them in haste because we cannot allow that we get very low prices for these assets. So there are negotiations taking place," he said. Last Jan. 27, Mrs. Arroyo issued an official statement commending the ERC directive for Meralco to implement a 21.49-centavo power rate reduction. In the same statement, Mrs. Arroyo expressed her satisfaction with the initiatives taken by the ERC to roll back Meralco’s rates based on her policy of dealing with public welfare against the need to protect the viability of private utility firms like Meralco. — Marichu Villanueva

Arroyo mulls measures to stem worsening fiscal situation (STAR)

President Arroyo met her top economic advisers yesterday to address the Philippines’ deteriorating fiscal situation, Economic Planning Secretary Romulo Neri said.

"We are pursuing action plans to help avert any threat to the fiscal sector and the economy as a whole," Neri said in a written statement as he and other senior aides of Mrs. Arroyo met in Malacañang.

"We aim (for) a balanced budget... by 2009 and this will be achieved through a combination of tax measures, rationalization of expenditures and reduction of the deficits of government-owned and controlled corporations," he said. Neri said economic managers have identified "the ballooning national government and public sector deficits, and national government and public sector debt as threats to the economy."

The budget deficit is forecast to reach P197.8 billion ($3.54 billion) or 4.2 percent of the gross domestic product this year, while the consolidated public sector deficit is expected to rise from 5.6 percent of the GDP in 2003 to 6.7 percent by the end of this year, he added. Total national government debt stood at 69.2 percent of gross national product in 2003, while the public sector debt was estimated at 126.2 percent of GNP, Neri said. To improve revenue streams, the government is looking at several proposals, including higher "sin" taxes on liquor and tobacco, a tax on short messaging systems on mobile telephones, raising government fees, shifting to gross income taxation and amending incentives offered to the private sector. Neri told a news conference later that "social marketing may be needed" to convince the public and Congress of the need for these taxes amid rising oil and electricity costs.

"We need more resources to improve the quality of education, the health system and our infrastructure," he said in his written statement.

Meanwhile, Neri said the government is also looking at tightening its own spending by focusing on its core functions. "Thus, functions devolved to local government units will no longer be funded by the national government," he said. The government will also push Congress to pass a bill that ensures that no new expenditure will be approved without new taxes to support it.

"With these and other measures, we hope to raise between roughly P85 billion to P115 billion so we can absorb" the losses and debts of the state-run National Power Corp. (Napocor), Neri said. He explained that the Electric Power Industry Reform Act mandates the government to absorb P200 billion of the Napocor’s debts. The government also has to absorb the Napocor’s losses — about P100 billion a year — until the power firm can be privatized. Neri said selling off Napocor’s assets to the private sector may take two to three more years and this is why the government allowed Napocor to increase its generation rates that it passed on to distributors like the Manila Electric Co. (Meralco), which then raised its power rates.

"The economic managers realized the impact of higher fuel prices resulting in higher power cost. We have to really explore measures that will make the (energy) industry more competitive. I guess we also need the cooperation of Meralco management because much of the areas that are quite expensive in terms of power rates are within the Meralco franchise areas," he said. Neri said the economic managers sought the meeting with Mrs. Arroyo, herself an economist, to determine if she agrees with the set of economic policy measures they had drawn up to address the problems with Napocor.

"Basically, it was more of an exploratory type of discussion. We wanted to feel out how the President felt about certain policy measures and whether she was in agreement with the policy directions. I guess after this, we will meet again to finalize these policy directions," he said. The meeting was attended by Executive Secretary Alberto Romulo, Energy Secretary Vicente Perez, Budget and Management Secretary Emilia Boncodin, Finance Secretary Juanita Amatong, Bangko Sentral ng Pilipinas governor Rafael Buenaventura and presidential adviser Tomas Alcantara.

Of the proposed tax measures, Neri cited the legislation on "sin" taxes as the "most important" since this can raise as much as P14 billion in additional revenues for the cash-strapped government. The proposal to tax the gross income of corporations and the self-employed, if passed into law, can yield up to P40 billion. The measure to tax text messages can generate P7 billion in additional revenues, according to Neri, who said the President "is open to it. It is a matter of how we can sell this idea to the public in terms of using revenues derived from this source to finance housing, education or health projects. Maybe the public will see the benefit of this." — Marichu Villanueva, AFP


Reported by: Sol Jose Vanzi

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