POWER RATE INCREASE: 'SECOND GIVE' COMING

MANILA, September 7, 2004 (STAR) By Pia Lee-Brago - Talk about pain in "two gives."

Senators Ralph Recto and Panfilo Lacson separately warned consumers yesterday that the nearly P1 per kilowatt-hour (kwh) increase in power rates was just the first of two "shock therapies" being given to a nation on the brink of a fiscal crisis.

Recto, chairman of the Senate ways and means committee conducting an inquiry into the country’s fiscal deficit, said the 50 percent of the power rate hike so far approved by the government "is half the voltage that will be used to electrocute the people."

The new rate of 97.98 centavos per kwh approved by the Energy Regulatory Commission (ERC) is half of the P1.87 per kwh being sought by the government-controlled National Power Corp. (Napocor).

Recto, however, said a second power rate hike could just be the "shock" needed to snap the cash-strapped Napocor "out of its coma."

"It is the lifesaving jolt to a company whose vital signs have long flatlined," he said.

For his part, Lacson said another power rate increase is "inevitable" because the government can no longer service the debts of Napocor and other government-controlled firms without borrowing from creditors.

Speaking at the "Kapihan sa Maynila" forum at the Manila Hotel, Lacson said a "second scourge" from Napocor may soon follow.

He explained that the government must decide between taxing consumers directly or taxing the people at large after absorbing Napocor’s debt.

Consumers will once again shoulder the burden in the end, he said, as big industries will pass on higher power rates to them.

"The painful part will come in the second scourge when taxes will be increased because government has to pay Napocor’s debts," Lacson said.

"It would have been acceptable had Napocor managed to put the loans to good use. But the money ended up with certain officials from Napocor through corruption and the debt grew because of that," he explained.

Recto said the people "can only stand for so much shock therapy."

"They (public) can be convinced to pay down the debt and the deficit through higher power rates or taxes, or even a combination of both, but not the full P80 billion in proposed taxes and the P75 billion in higher power rates," the senator said.

"Mixing the two in their maximum dosage will result in a medicine so powerful it could kill the patient with tax overdose," he added.

Over the weekend, the ERC issued a provisional authority for Napocor to increase its generation charge by an average of 97.98 centavos per kwh starting on Sept. 26.

In an initial hearing of Recto’s committee last week, administration officials presented their proposed solution to the fiscal crisis: a Napocor rate increase of nearly P2 per kwh and new taxes that would make Filipino taxpayers poorer by P80 billion each year.

A Napocor rate adjustment is part of the solution because the state power firm, on account of its uncontrolled borrowing binge, contributed at least 40 percent to the fiscal crisis. Napocor has piled up a debt estimated at P500 billion to P600 billion, which the national government has assumed.

Recto said it is within the right of the people to now ask the government what relief is due them after doing their share of trimming the deficit by paying higher power rates.

"After adjusting up electricity charges, it is now time for the government to adjust down its proposed new tax rates or at least delay its imposition to give the people a chance to recover after being hit in the jugular," Recto said.

"The Napocor rate hike was adopted on a pay-per-use principle, of restoring power rates to their real production cost. This principle should also be used in purchased power from IPPs (independent power producers) so that only power consumed should be billed," he said.

Opposition Sen. Alfredo Lim meanwhile asked the National Bureau of Investigation (NBI) to investigate a former Napocor vice president who allegedly ran off with an undetermined amount of agency funds in 1991.

Lim said the official, whose name he did not reveal, was sent to Paris to pay Napocor’s debts but offered to buy dollars in the black market at a much lower rate.

"I have asked the NBI to furnish the records of this case," he said.

Critics led by maverick Sen. Joker Arroyo blamed President Arroyo for the rising cost of electricity.

Senator Arroyo, who is not related to the President but ran under her ticket in the May elections, said Napocor’s rate adjustment would have been avoided had Mrs. Arroyo not asked the state firm in May 2002 to cut the PPA from P1.25 to 40 centavos as he cited a study made by the Senate ways and means committee, of which he is vice chairman.

The senator slammed it as a populist move by the President to look good with the masses.

Pro-administration lawmakers defend GMA

But amid criticisms and protests, administration lawmakers defended yesterday the President’s previous decision saying this was made after consultations with Congress.

The congressmen led by Lakas-Christian Muslim Democrats (Lakas-CMD) Representatives Exequiel Javier of Antique, Mayo Almario of Davao Oriental and Nationalist People’s Coalition (NPC) Rep. Douglas Cagas said it was unfair for Arroyo to blame the President for the power rate hike since government needed to reconcile public relief against the long-term needs of investor confidence in accepting any solution to the soaring electricity cost.

They argued the PPA rate adjustment issue had undergone congressional hearings and the President consulted lawmakers prior to her order for a rate cut.

"It is unfair to claim she did it to earn ‘pogi points’ because the interest of the nation, not her popularity, has always been her primary concern in making crucial decisions," said Javier who is vice chairman of the House energy committee.

Javier said the PPA issue became the subject of hearings in the 12th Congress, including the proposal to stretch the period of PPA payment.

There was also a proposal to replace the PPA with the universal levy and for Napocor to seek loans to finance the alleged losses resulting from the President’s order at the time to suspend PPA collections, he said.

Almario, for his part, said the President does not make decisions without consulting all sectors "especially if these affect consumers."

He enumerated the benefits of the President’s sound policies - "reduction in the rates of electric cooperatives, discounts to the actual monthly energy consumption of all large energy consumers, and conclusion of negotiations on 20 of the 35 IPP contracts with expected savings of up to S2.95 billion."

Cagas turned the tables on Arroyo, saying it was the senator who seems to now be trying to earn "pogi points at the expense of the President."

Cagas said the President has been doing her best to save consumers from bearing the brunt of cost hikes and the fiscal crisis by drawing up an austerity program for the government.

"This is not the time to blame the President, who has been doing her best to lead the nation towards economic recovery. Let us talk about solutions rather than blame the President for our troubles," he said.

Protests everywhere

While some consumer groups are planning to challenge the ERC decision before the courts, protest actions filled the streets yesterday.

Teachers agreed with Senator Arroyo’s observation as they joined several cause-oriented groups in a picket protest at the Napocor office in Quezon City to condemn the approval of the rate increase.

"Teachers, just like the vast majority of ordinary citizens, cannot take this onerous new rate hike sitting down," Alliance of Concerned Teachers (ACT) chairman Antonio Tinio said.

"This new rate hike should be called the GMA levy. Consumers are going to be forced to pay dearly for the huge losses incurred by Napocor due to President Arroyo’s decision to reduce the PPA in 2002."

At the ERC office in Pasig City, at least 100 members of militant groups staged an anti-power rate hike protest rally yesterday.

Officials of the Freedom from Debt Coalition (FDC) and Alternatiba took turns lambasting the ERC’s decision approving the rate hike.

"Filipino consumers have long been praying for the monumental mistakes, disastrous policies and gross mismanagement of the power industry. And now the government wants to inflict more pain by imposing Napocor’s 97-centavo provisional increase," said Wilson Fortaleza, FDC vice president.

Rallyists said this was the second time the government had put aside the interest of consumers. The first was when the flawed Electric Power Industry Reform Act, or EPIRA was enacted.

"In both instances, the government had chosen to favor the interest of the private sector over those of the consumers and the general public," Fortaleza said.

ACT challenged the government to address the real issues behind the country’s exorbitant power rates, which they noted are the seventh highest in the world.

According to ACT, the President’s directive in 2002 has caused P60 billion in losses to Napocor.

"We demand that the Arroyo government cancel the iniquitous contracts with the independent power producers," said Tinio. "This is the only viable solution to Napocor’s financial problems. For the long term, the nationalization of the power industry is the only way to ensure our people of abundant and affordable electricity."

ACT, a federation of public and private school teachers from elementary, high school to tertiary organizations nationwide, vowed to join in the broad multisectoral struggle against the higher electricity rates.

The ERC decision, Tinio said, strengthens their "determination to fight for higher salaries" as ACT reiterated their call for a P3,000 across-the-board salary increase. – With Rainier Allan Ronda, Non Alquitran


Reported by: Sol Jose Vanzi

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