POSTSCRIPT / March 15, 2007 / Thursday

By FEDERICO D. PASCUAL JR.

Philippine STAR Columnist

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Napocor must plow back forex gains to consumers

FOREX GAINS: Now and then, the Arroyo administration mentions the sudden profitability of the National Power Corp. and a recent electricity rate reduction as major economic achievements ushering in the good life.

After hemorrhaging for years, the Napocor reported a net income of almost P90 billion in 2006 traceable to foreign exchange gains with the appreciation of the peso vis-à-vis the US dollar. In 2005, it also reported forex gains amounting to P65 billion.

Without its exerting any effort, Napocor now needs fewer pesos to pay its dollar-denominated loans.

Instead of crowing about its hefty savings, the Napocor should share them with consumers in the form of an electricity rate reduction. After all, the taxpaying public shouldered the gargantuan losses that had bogged down the state firm.

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PAYBACK: Napocor accounted for more than 60 percent of the estimated one-trillion-peso public debt that had hounded the government. The power firm heaved a sigh of relief and restarted with more or less a clean slate after its rescue by taxpayers.

If only out of gratitude, Napocor should now pay back taxpayers by immediately applying for a rate reduction instead of pocketing the savings as its profits and boasting about it.

It was insensitive of Napocor to have delayed asking the Energy Regulatory Commission for lower rates, and when it did to ask for a measly 31-centavo-per-kilowatt-hour.

It took some time for us to hear from ERC chairman Rodolfo Albano and for us to understand the real situation — that Napocor has been shortchanging captive electricity consumers.

Albano pointed out that, first, Napocor should immediately apply for a rate reduction, and second; that the reduction should be P2 per kwh (or P400 on an average 200-kwh consumption per month).

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SHORTCHANGED: This foot-dragging by Napocor is also unfair to power distribution firms or electric cooperatives because they are always being blamed for the delay in the reimbursement of any forex gains.

Most consumers are unaware that distribution utilities are merely distribution and collection outfits. They have no authority to dictate to Napocor the price mechanism much less demand for a price adjustment when there is a need for one.

Worse, these utility firms have advanced their payments for power they had contracted at a particular peso-dollar exchange rate.

So, if the contract with Napocor was signed as early as 2006 (when the exchange rate was pegged at more than P50=$1) they could not be reimbursed immediately because they have to wait for ERC approval.

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DELAYED REFUNDS: Industry players deplore Napocor’s bad habit of deferring accounting adjustment (DAA) on its forex gains but hurrying up when the dollar appreciates by immediately applying for a rate increase with the ERC.

Power distribution firms are not automatically reimbursed for price reductions that they have made as a result of foreign rate adjustments. It takes them usually 46 months to get reimbursed by Napocor.

Napocor president Cyril del Callar must not gloat over supposed profits. He should remember that the improved situation of the peso is traceable mainly to the remittances of overseas Filipino workers.

Their contribution to stabilizing the economy — and helping Napocor recover — should be plowed back to consumers and not diverted to private pockets.

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AUTO-RECALC: During the time of the Energy Regulatory Board, the predecessor of the ERC, power rates were automatically adjusted to reflect foreign exchange rates and the true price of raw materials used in generating electricity.

As most of the materials used are imported, the peso-dollar exchange rate is crucial to the pricing of electricity. If the peso depreciates against the dollar, electricity prices go up. If the peso appreciates, electricity rates should go down.

In the old ERB setup, a system of automatic price adjustment was put in place so that power rates go up or down depending on the current market trends.

This is advantageous to consumers, because they are billed depending on the real market prices.

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FAIR GAME: But this was changed with the ERC. Under the current setup, Napocor needs to apply for any rate adjustment, whether for lowering or increasing it. Full hearings will have to be conducted.

This is disadvantageous to consumers because they do not feel the effects of the peso’s appreciation. With the current trend of the peso gaining on the dollar, electricity rates should have been periodically reduced since 2005 when the peso started gaining.

How come we are still being billed for electricity on rates based on the high peso-dollar exchange rates?

With huge forex gains being reflected year in and year out, gains that do not rightfully belong to Napocor but to the Filipino people become fair game to the Mafia lording it over at Napocor.

Is this one of the reasons why Napocor officials have delayed privatizing the state firm?

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ELECTION LAW: Five prominent election lawyers will conduct a lecture on election laws, rules and regulations for the benefit of the diocese of Paranaque in need of financial help in building its formation house for priests and the laity.

Lawyers Romulo B. Macalintal, Sixto S. Brillantes, Pete Q. Quadra, Leila de Lima and Alberto Agra will hold the lecture on March 28 from 8:30 a.m. to 5 p.m. at the Century Blossoms Hotel located at J. Bocobo corner Padre Faura, Ermita.

A fee of P5,000 will be charged per participant to cover snacks and lunch; a CD containing relevant Comelec resolutions in the 2007 polls; updated materials on the latest practice and jurisprudence in elections; discussion on election cheating and how to prevent cheating; rules in the appreciation of ballots; and discussion of election-related issues based on experience of the lecturers, with demonstration of the ballot box, ballots, election returns, certificates of canvass, certificate of votes, statement of votes by precinct, and other election documents.

Interested participants may register, first come-first served, with Lourdes Panganiban at 0917-858-9961; or Marisa Saba at 0906-4971262 or 0922-8639988.

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(First published in the Philippine STAR of March 15, 2007)

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