Members of the Freedom from Debt Coalition (FDC) – Women’s Committee picketing the office of the Energy Regulatory Commission (ERC) in Ortigas Center, sent this message to oppose an impending new wave of electricity rate hikes.
The National Power Corporation (Napocor) and Power Sector Assets Liabilities Management (PSALM) filed petitions with the ERC for the recovery of stranded debts and contract costs amounting to almost P140 billion. This translates to 40 centavos per kilowatt-hour that, with ERC’s go-ahead, will be collected through the universal charge.
Judy Ann Chan-Miranda of the FDC Women’s Committee urged the regulatory body to junk the petition of Napocor and PSALM, stressing that it is “anti-women” and “anti-poor.”
“High power rates means women taking on even more work to pay for electricity and have something left for other essentials. It means cutting the budget for food, medicines and healthcare, the education of children. It means having little choice but borrow from loan sharks to avoid disconnection,” said Chan-Miranda.
FDC filed an intervention before the regulatory body last August 19, stressing the lack of merit and substance of Napocor and PSALM’s petitions.
The coalition warned that the proposed rate hike is part of a series of petitions lined up by Napocor and PSALM to fully source from consumers the payments for Napocor’s billion or P729 billion (P42 = ) debt.
In a previous statement, FDC said the petition on stranded debts tends to lump all types of Napocor losses to be paid for by electricity consumers through the universal charge (UC). “This opens the door for Napocor to charge consumers twice – through its regulated rates and through the UC.”
The coalition added that “the amounts sought in the latest applications do not have any relation to our legitimate usage of electricity because these are mainly financial obligations in the form of debts, borne of past government incompetence, mismanagement and corruption.”
FDC said that EPIRA’s formula of having government sell public assets, impose various additional charges and assume P200 billion of Napocor debt, has failed. “Consumers are being forced to shoulder this debt and unjustly penalized for the miserable that is the EPIRA.”
PSALM has proposed to collect a UC of P0.03 per kWh over 15 years for the stranded debt, and P0.36/kWh over four years for stranded contract costs.
Under EPIRA, a UC will be imposed on all electricity end-users to cover payment of NPC’s stranded debt and stranded contract costs. Stranded contract costs refer to the excess of the contracted cost of electricity under eligible contracts over the actual selling price of the contracted energy output of such contracts in the market. Stranded debts refer to any unpaid financial obligations of NPC which have not been liquidated by the proceeds from the sales and privatization of the firm’s assets.
Last year, PSALM had sought to recover P471-billion stranded debts recovery bid and three other applications which had been initially intended for pass-on to consumers under the UC component of the electric bills. Said petition was withdrawn and revised by the Aquino administration.
FDC had already urged PSALM to veer away from the past administration’s strategy of passing on the firm’s inefficiency to the consumers in terms of high electricity rate, and to confront head-on one of the roots of this problem – the onerous contracts with independent power producers (IPPs).
The group also urged the government to conduct a meaningful and substantial new round of review and renegotiations of contracts with IPPs, and immediately rescind onerous ones already established by the Inter-Agency Review Committee formed under the Arroyo administration.
FDC said the Committee’s 2002 report found five contracts “onerous” and 24 others “with various degrees of legal, financial, and social infirmities.” Only six of the 35 contracts came out “clean.”
FDC said that the debt of NPC will continue to grow and that electricity rates will continue to increase as long as the government continued to legitimize and honor these one-sided agreements.
Re-channel P8-billion payment for illegitimate debts to much-needed services, solons urged
MANILA, Philippines – Members of the Freedom from Debt Coalition (FDC) staged a protest at the gates of the House of Representatives Monday, urging the current lawmakers to emulate the move of the past Congress suspending interest payments on “illegitimate debts” in the proposed P1.816-trillion national government budget for 2012.
The debt watchdog also urged Congress to re-channel some P8-billion interest payments to much-needed services.
It is recalled that in 2008, members of the 14th Congress suspended some P25 billion proposed expenditures, which included adjustments to foreign exchange rates and interest payments to 11 illegitimate debts or "debts which are challenged as fraudulent, wasteful and/or useless." Unfortunately, then President Gloria Macapagal-Arroyo vetoed on the said special provision allowing the full payment for two (2) of these illegitimate debts to be passed on to Filipinos – the Small Coconut Farms Development Project (SCFDP) and the Telepono sa Barangay (TSB) Project.
According to FDC, illegitimate debts are those debts that involve fraud and deception; purchasing overpriced, unnecessary goods or services; grossly disadvantageous terms and/or onerous and harmful conditions; lack of compliance with democratic processes or legal requirements; financing of failed projects, or projects with damaging effects on people, on the environment, or on the economy; support of policies that result in the violation of human rights; debt accumulation due to unjust economic relations; incidences of aggressive and unscrupulous loan – pushing to promote specific interests at the expense of the borrowers; or, transactions by illegitimate regimes.
Currently, nine (9) cases of illegitimate debts are up for payment this year in the amount of P8-billion. These are the Austrian Medical Waste Project, Social Expenditure Management Program 2 (SEMP 2), Secondary Education Development and Improvement Project (SEDIP), Philippine Merchant Marine Academy (PMMA) Modernization Project, Power Sector Restructuring Program (PSRP), Power Sector Development Program (PSDP), Angat Water Supply Optimization Project (AWSOP), Procurement of Search and Rescue Vessel from Tenix Defense Pty Ltd., and Pampanga Delta Development Project.
FDC also hopes that should Congress do its part, President Benigno S. Aquino III will not veto such special provision.
“It can be done”
“Lagi na lang sinasabi ng gobyerno na wala o kulang ang budget, pero may iba pang paraan (The government always says that there is no or not enough budget, but there are other ways),” said FDC vice president Lidy Nacpil.
In his recent trip to China, President Aquino has demonstrated that, indeed, tainted loans or projects could be renegotiated or “reconfigured.” He was successful in renegotiating the controversial North Luzon Railways Project, which cost ballooned from 1 million to 1 million from cost-overruns and had been the subject of numerous Senate investigations by Senator Frank Drilon.
Aquino also cancelled and/or suspended, subject to review and renegotiation, three questionable debt-financed projects: P18.7 billion (0 million) Belgian-funded Laguna Lake dredging; P12 billion (6 million) French modular RoRo ports; and, a China-financed rail project linking Manila to the Clark airport complex in the north.
“We urge Congress under the Aquino administration to suspend debt payments for these illegitimate debts and re-channel said amount to much-needed social and economic services. It can be done,” stressed Nacpil.
“The earmarked P8 billion could be used instead to build 12,307 more classrooms, or to procure 129 million additional text books, or augment the initial P3 billion for the People’s Survival Fund (PSF),” she added.
The PSF is a special trust fund for the financing of climate adaptation programs and projects of local communities, which are at the forefront of the climate crisis. Once established, it will support local governments to undertake measures to make communities resilient to climate change.
P723 billion hidden in the budget
FDC further urged the members of the House of Representatives to exercise their “power of the purse” by demanding from the executive department to reflect in the proposed 2012 budget the amount and details of debt service payments. Some P723 billion in automatically appropriated funds were purposely erased from the National Expenditure Plan (NEP), the basis of the General Appropriations Bill (GAB) to be signed by Congress.
“This move by the Department of Budget and Management is unthinkable and unacceptable, especially for a government that claims to promote accountability and transparency,” FDC said.