EPIRA allowed private takeover of energy sector, says groups

Feb. 08, 2014


Davao Today

DAVAO CITY – Non-government organizations and consumer groups in Mindanao castigated government on its alleged mishandling of the affairs of the energy sector that they said only allowed corporations to dominate the field rather than being clipped of their powers to monopolize.

Their complaint raised during the energy public consultation held at Waterfront Insular Hotel Davao here followed the same tone of criticism hurled by some business chambers in Mindanao, which asked government to amend some provisions of the electricity industry law that tend to allow monopoly, than democratize the playing field.

The groups, coming from diverse sectors from business, labor unions, academe and activist groups all raised the same appeal to “overhaul” or “repeal” the Electric Power Industry Reform Act (Epira) in the Thursday consultation.

They said that the law “only led to higher power rates in the country to become one of the highest in Asia as it has become monopolized by big energy players”.

The EPIRA law was signed on June 2001 amidst protests, as government said the law “seeks quality and reliable supply of electricity by tapping private enterprise to take over the generation, transmission and distribution of power”.

Profiting from state assets

The Bagong Alyansang Makabayan said the Epira “allowed business tycoons to seize control of strategic power lines and earned billions now and in the future”.

Sheena Duazo, spokesperson of Bayan Southern Mindanao area, cited SM magnate Henry Sy as being expected to make a windfall earning reaching P225 billion in the next 15 years from his acquisition alone of the power grid’s transmission company, National Grid Corporation of the Philippines (NGCP).

“NGCP has been sold to Sy at a lower price of $3.95 billion, Sy paid an installment of $987.5 million while the remaining $2.962 billion will be paid within 15 years,” said Duazo.

Duazo said with NGCP’s annual average income of P15 billion, Sy stands to earn P225 billion in 15 years.

“Sy will rake a profit of P77 billion from privatized state assets with a minimal investment,” she said.

Other major corporate incursions into the vital energy sector, Duazo said, was acquisition by the Aboitiz family, through its Therma Marine Incorporated (TMI) of the two power barges at $30 million with a projected capital recovery of $84.7 million. Each power barge has an installed capacity of 100 megawatts.

And in general, she cited a World Bank report that said Epira had allowed 42 public-private partnerships on power projects including 10 coal-fired power plants and 21 coal mining contracts in Mindanao.

Agus-Pulangi Plants

Non-government groups raised its concern over government silence on whether it was indeed planning to sell at auction the Pulangi hydropower plant in Bukidnon.

The plant has an installed capacity of 255 megawatts, one of the hydro-power electric plants that supply slightly more than half of Mindanao’s power supply.

Duazo said that three power firms have bidded for the Agus-Pulangi complexes, namely Sy, Aboitiz and the Alcantara families.

The labor coalition Nagkaisa Mindanao, meanwhile, reechoed what the militan organizations have been warning all along, that government should retake control of the energy sector as a vital industry, and therefore, needing adequate protection from foreign and corporate control.

Vicente Lao, head of the Mindanao Business Council, also expressed the same position.

“We have a small power industry, thus, the Agus-Pulangi complexes should not be privatized,” Lao said.

Lao also urged government to act as “a balancing factor” by controlling the power sector and find ways to minimize costs.

He said high power costs has been a concern for the industry sector, and they may expect the worse when the Asean integration comes in 2015 as they cannot compete with cheaper imports that would flood the market.

Lao warned that with the Asean integration, “Every country has to look and cultivate its own natural endowment and resources.”

Looking at renewables

Dr. Melchora Ambalong, head of Lanao Power Consumers Federation urged consumers to register their voices to stop the privatization of the power sector.

She said that the Department of Energy has been looking for short-term projects such as coal and diesel-powered plants that have detrimental effects to the environment and people’s health.

Ambalong proposed that government “must put emphasis on renewable energy which in the long run would be cost efficient.”

Amend or scrap

At the end of the consultation, groups either called for an overhaul or repeal of the EPIRA.

“A bad law like EPIRA may need some amendments to address the current mess. But a wrong policy such as wholesale privatization can only be addressed by replacing it with a new one, a better one,” Nagkaisa said in a statement released during the forum.

The Nagkaisa also recommended to remove oil and power from the expanded-value added tax coverage, reforming the Energy Regulatory Commission (ERC) and reform its practices, stopping the pegging of prices of natural gas and geothermal steam to international prices, and staying the planned privatization of the Agus-Pulangi hydro plants in Mindanao.

But Bayan called for EPIRA’s outright repeal saying that the “core of EPIRA is deregulation (of power rates) through privatization of generation plants.”

Bayan also recommended government to takeover power barges to ensure regulated and low power rates; and reverse the privatization and deregulation policies and pursue nationalization of power resources.

The consultation was set by the Department of Energy to invite stakeholders in Luzon, Visayas and Mindanao to raise amendments on the EPIRA. (Tyrone A. Velez/davaotoday.com)

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