POSTSCRIPT / April 18, 2006 / Tuesday

By FEDERICO D. PASCUAL JR.

Philippine STAR Columnist

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RP's mineral riches can ransom us from poverty?

REVERSAL: Whatever the Constitution and the courts say, my bias is for having mining and land ownership exclusively in the hands of Filipinos. We are a small country with a burgeoning population mired in poverty.

We cannot afford to sell our country piecemeal to wealthy foreigners and end up squatters and servants in our own homeland.

I fear the day when we suddenly will wake up to the fact that most of our valuable lands and mineral resources had been taken over by aliens as we the natives watched helplessly.

That was the reason why I felt betrayed when the Supreme Court reversed in December 2004 its prior en banc decision reserving the exploitation of natural resources to Filipinos.

The reconsideration and reversal by the full court was reportedly upon the insistent lobby of a media mogul unsuccessfully hiding a bulging conflict of interest in mining.

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OTHER SIDE: Then the other night, I was talking with Resty Perez, a newsman-friend from way back who gave up his brisk business beat to engage in PR and consultancy work.

Resty was rattling off figures indicating that this country’s economic redemption could be in the rational exploitation of its mineral resources. He gave 2004 estimates of NEDA that the mineral riches locked in our mountains were valued at $1 trillion at the time.

With the price of gold, copper and the other valuable metals having doubled and still rising, the treasure under the ground could be worth $2-3 trillion in a few years. If the Arabs have their oil, we have our precious metals. And theirs could run out before ours does.

If only this wealth could be dug up to ransom the country from its poverty. The problem is that we do not have the capital and the technology to take out the gold, copper and other mineral deposits that God has strewn around this archipelago.

That is why, Resty said, the high court’s change of heart in 2004 was wise and providential.

He said the new ruling signaled the entry of legitimate mining operators, not the Wild Wild West types hacking away at Mt. Diwalwal in Davao and smuggling their bumper harvest of gold out of the country in full view of conniving officials.

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MERCURY POISON: In Diwalwal, where crude mining techniques are still being used, mercury in the surrounding waters has been measured at 60,000 times the allowed limit.

What is being done about this poisoning of the waterways — and the big-scale smuggling of gold? Nothing. Reports that some generals are involved in the mining and smuggling are not helping bring order into the mining town.

A corollary question is: What is in it for Malacanang? Despite the big-scale poisoning of the environment and the robbing of the national coffers of billions every year, not a word is heard fromjunto al Pasig.

Resty said Diwalwal is the best argument for letting foreign investments into mining and rationalizing it to everybody’s benefit. If the government does not have the political will to put order into its Diwalwals, maybe legit big players could help do it.

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LAFAYETTE: Talking of enlightened and technically competent mining companies, there was the recent case of Australia-listed Lafayette Phils. Inc., which is now under new management.

Lafayette twice spilled in Rapu-rapu, Albay, last October process water and effluents — not tailings — killing fish and other aquatic life totaling less than 20 kilos. As mine disasters go, the incidents were minor.

But still, the new management under Carlos G. Dominguez, who took over as chairman, president and CEO last January, saw that the small-scale spillage called for serious corrective measures.

Dominguez served notice that the firm and its officials will fully comply with all the rules. This former Cabinet official of the Cory Aquino administration apparently wants to demonstrate that mining companies are not necessarily evil and are in fact good neighbors.

Vowing transparency, he admitted the mistakes of the company and promised to do his best to prevent them from happening again. He has shown he will deliver on every promise he makes.

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TEST RUN IT: Now that Lafayette’s remedial safeguards are nearing completion, Dominguez is asking the government if he could test them with all interested parties watching.

Yes, how about some kind of a test run to see if Dominguez is worth his credentials?

But some anti-mining groups say No, period.

This despite the fact that after fish samples were declared as contaminated with mercury, the University of the Philippines and the Bureau of Fisheries and Aquatic Resources conducted tests and found that there was no mercury.

Who provided the fish samples? The National Bureau of Investigation has been asked by the Albay Sangguniang Panlalawigan to identify the groups that submitted the dead fish and spread poisoning rumors that only slashed the income of Sorsogon’s 5,000 sustenance fishermen.

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CHEAPER POWER: I was leafing through the Electric Power Industry Reform Act (Epira) and stumbled on something that looked like a simple way of lowering electricity rates by just removing or drastically cutting taxes on indigenous power.

Section 35 of the Epira says: “Royalties, Returns and Tax Rates for Indigenous Energy Resources. — The provisions of Section 79 of Commonwealth Act No. 137 (C.A. 137) and any law to the contrary notwithstanding, the President of the Philippines shall reduce the royalties, returns and taxes collected for the exploitation of all indigenous sources of energy, including but not limited to, natural gas and geothermal steam, so as to effect parity of tax treatment with the existing rates for imported coal, crude oil, bunker fuel and other imported fuels.”

To ensure cheaper electricity for end-users, the Energy Regulatory Commission, after due notice to all interested parties and public hearing, is mandated to find ways and means and exert every effort to forthwith reduce the prices and/or rates of electric power from all indigenous sources of energy and improve the grid’s generation mix or portfolio of plants.

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CHECK EPIRA: Will the experts please look at this section and tell us if, indeed, it provides for the reduction of the share of the national government (in the form of taxes, returns and royalties imposed) in the exploration and exploitation of all indigenous sources of energy to peg it at par or equal to those enjoyed by imported fuels.

With the current rate of taxes on indigenous fuels, it is more expensive to use local sources of energy because of the higher tax and royalty rates applied to them compared to those imposed on imported fuels.

The country generates 54 percent of its power from indigenous sources (geothermal, hydro-electricity and natural gas) with the remaining 46 percent generated from imported fuel (oil and coal). The reduction of taxes and royalties on indigenous sources of power should lower electricity rates.

If the Epira provides for the reduction of rates for indigenous sources, how come it is not being implemented? Who benefits from the current costly (for consumers) arrangement? Figure that out.

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IDEAL MIX: The same section also provides for a shift in the generation mix or use of energy sources from imported to indigenous materials.

The 46-percent generation share of imported fuels is still high compared to that of other countries in Asia. Thailand derives 27 percent of its energy from imported fuels, while Malaysia gets only 14 percent from the same sources.

In China, imported fuels contribute only 1 percent to its power sources. Indonesia has eradicated imported sources in its electricity generation as it is now totally dependent on indigenous materials.

Because of their heavy use of local fuels, electricity rates in these countries are lower than here. The Philippines charges $0.09/kWh, while Thailand, Malaysia, China and Indonesia charge $0.053/kWh; $0.063/kWh; $0.077/kWh and $0.074/kWh, respectively.

Highly-industrialized countries such as the United States and Canada are also starting to shift from oil to indigenous sources such as hydro-electricity, geothermal power and natural gases. It appears from studies that a shift to local sources is not only more cost-efficient but environment-friendly.

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(First published in the Philippine STAR of April 18, 2006)

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