POSTSCRIPT / August 31, 2006 / Thursday


Philippine STAR Columnist

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Why reinvent EPIRA? Just implement it, period

POWER CRISIS: The neglect into which the power situation has fallen is catching up on us. At the turtle pace we are crawling toward the light, insiders say, we could have a crisis in two to three years.

Government’s pronouncements, and its handling, are not reassuring enough.

Socio-economic Planning Secretary Romulo Neri says the administration would decide early next year about going into the building of new, or the upgrading of ageing, power plants to achieve full capacity by 2011.

That might be too late.

Power industry insiders say some parts of the country have started to feel the effects of a creeping crisis, with no relief in sight. Some parts of the Visayas are reportedly already in the grip of recurring brownouts.

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REINVENT EPIRA?: Private sector players are puzzled over the administration’s intention to tap resources of government-owned corporations to catch up on the growing power requirements of the economy.

This policy goes against the Electric Power Industry Reform Act of 2001 (EPIRA) which seeks to privatize the operation of state-run power plants to make the market more competitive and to stabilize, if not lower, power rates.

Increasing government participation in the building of power plants will defeat the purpose of the EPIRA. It will make more pronounced the flip-flopping policies of the government in dealing with the industry.

Instead of reinventing EPIRA and starting all over again, why does not Neri just implement that law which was the product of substantial research and comparative study by various agencies, including Congress?

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RUBICON CROSSED: With the EPIRA, the decision to privatize has been made. We have crossed the power Rubicon, so to speak. The logical next move is to fast-track privatization.

The EPIRA mandates that by this time, at least 70 percent of the assets of the National Power Corp. should have been privatized to make the market more competitive and beneficial to consumers.

But as of now, five years after the EPIRA’s passage, only one percent of Napocor plants have been privatized.

In the last attempt to sell the biggest Napocor plant — the 600-megawatt plant in Masinloc, Zambales — the bidding was attended by irregularities and the deal was cancelled. That scandal may have impaired the privatization program.

Privatization of Napocor plants appears to have hit the doldrums. The big problem now is how to restore investors’ confidence.

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STAGGERING COST: We do not attract investors by having Neri talk about deeper government involvement in the building and rehabilitating of power plants.

After big players Keppel and Mirant built their power plants in the country several years ago, the country has yet to see a major new power plant being built.

If no new investor dare come in, Neri’s contingency plan of having the government do the job may just be the only option left. But is it the best option? For one, can the government afford it?

Based on the rule-of-thumb that, in building a plant, $1 million is needed for every one megawatt capacity, the money requirement is staggering.

And then, it takes at least three years to put up and start operating a decent power plant. By that time, the crisis would have engulfed us.

Reform, resolve and renewed courtship of investors on the part of the government appear to be urgently needed.

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VISE-GRIP: Many investors complain about corruption, absence of a comprehensive development plan, the ever-changing business policies, red tape, lack of transparency and a seeming reluctance or inability to privatize Napocor.

Sen. Sergio Osmena III has noted that as long as Napocor remains a dominant and government-subsidized player, no private investor would be willing to come in and build or buy existing power plants.

To stab straight into the heart of the problem, the government should focus on implementing the EPIRA as is, without favoritism and without anybody trying to make a fast buck on the side.

Among those blocking the way are people who stand to lose millions upon millions they are currently enjoying with their continuous vise-grip on Napocor.

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WESM WOBBLES: Another EPIRA element that has fallen victim to flip-flopping government policies is the Wholesale Electricity Spot Market (WESM) system.

The WESM has not achieved its goal of substantially lowering electricity rates, because of the existing monopoly in power generation. With its control of 70 to 80 percent of generation, Napocor still dictates the rates — WESM or no WESM.

Industry players have time and again said that WESM would work only if at least 70 percent of Napocor plants are privatized — which should have been achieved by now if the EPIRA timetable were followed.

Blame for the delay is heaped on officials of Napocor and the Power Sector Assets and Liabilities Management Corp. (Psalm), who seem bent on bungling, if not sabotaging, privatization. Remember the failed Masinloc bidding?

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SUBSIDIZED LOSSES: The suggestion of some sector to lower the 70 percent target to 50 percent will not work either. With half of generators remaining in the hands of Napocor, there cannot be true competition as envisioned under WESM.

Napocor has existing contracts that dictate the pricing mechanism for transmission and distribution, but it can still lower its prices below the actual rate because it is subsidized by the government.

How can one reconcile this fact with a supposedly open competitive market? The irony is that while Napocor can absorb losses, thanks to its subsidy, the losses are ultimately shouldered by taxpayers who are also consumers.

Such losses and predatory pricing subsidized by the government kill competition.

As Sen. Juan Ponce Enrile had put it, the government cannot, must not, introduce ruinous competition because that would harm public finances and destroy the private sector.

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BATTERY RECALL: Heed this warning in the Internet. If you are using Sony lithium-ion rechargeable batteries in your laptops, better stop using them.

American notebook computer makers Dell and Apple Computers have recalled rechargeable lithium-ion batteries made by a subsidiary of Japan’s Sony Corp. because of fears they could burst into flames when overheated.

Dell recalled in mid-August more than four million such batteries, while Apple told its customers last week to stop using the Sony batteries, some 1.8 million of them, in the 12-inch iBook G4, 12-inch and the 15-inch PowerBook G4s.

The Apple recall involves only laptops that run PowerPC chips built by IBM Corp. and Freescale Semiconductor Inc. It does not affect Apple’s Intel Corp.-based models, including the Macbook and MacBook Pro.

Dell’s recall covers 14 percent of the Latitude, Inspiron, XPS and Precision notebooks.

Both recalls were triggered by consumer complaints that lithium-ion battery packs are overheating. In two cases reported to Apple, users suffered minor burns.

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JUNK DUMP: Some technicians said the manufacturing process introduced metal particles into the battery cells that may have caused computers to short circuit, or in extreme cases, catch fire.

Sony Energy Devices Corp. said the Dell and Apple batteries were configured in slightly different ways. This is not the first time this happened, although this remains to be the biggest pullout of problematic lithium-ion batteries.

To make a long story short, if you own such laptops using Sony lithium-ion batteries, better take them out and call your friendly Dell or Apple dealer in the Philippines. If they tell you there is nothing wrong, be wise.

The Philippines after all has become the biggest dumping ground and buyer of junk cars, junk computers and other electronic gadgets, junk food, and now, junk batteries.

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OBITUARY: A legendary institution is about to die. Malacanang Clinic, on the mere say-so of a Palace functionary, has closed its doors to the public. Its confused personnel, simply sign time records and stay or even get out of the clinic and await instructions.

Or if you believe the Director, they can just sign in, then go out and nobody cares. The Director and his three assistant directors are safely ensconced at the Mabini Hall, where they can continue with their power play.

Some nurses and doctors have been told to go to the PSG Hospital across the Pasig, where, again, they are told there is no order to accommodate them. Some lucky ones who are close to the Director were told to remain at the Dialysis Center for the Poor.

There is a kind of unreality now at the Clinic which used to bustle with hundreds of patients enjoying free consultations, free treatment, free medicines, free X-rays and ultrasound, free therapy and free blood chemistry.

Does this Arroyo policy twist mean that past Presidents Magsaysay, Garcia, Macapagal, Marcos, Aquino, Ramos and Estrada were all wrong in opening the Clinic to the public?

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(First published in the Philippine STAR of August 31, 2006)

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