POSTSCRIPT / January 29, 2008 / Tuesday


Philippine STAR Columnist

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Mikey pressed to speed up Napocor plants' sale

ONUS ON ARROYO: The burden of stopping attempts to water-down the law privatizing the National Power Corp. has been placed on Rep. Juan Miguel “Mikey” Arroyo, who is pushing amendment of the Electric Power Industry Reform Act (Epira).

Many power sector players and those in allied industries are asking Arroyo, chairman pf the House committee on energy, to drop the amendment reducing from 70 to 50 percent of Napocor assets the privatization threshold for open access to retail electricity.

A 70-percent threshold means that when 70 percent of Napocor generators and their management are sold and transferred to private operators, open access and competitive retail pricing of electricity should follow.

The 70-percent privatization was mandated by Epira to be achieved in seven years after its passage in 2001, or by 2008.

Napocor is being pressured, also by consumer groups, to speed up its privatization, which now stands at some 37 percent only.

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OPEN ACCESS: Instead of rushing privatization and open access as provided by Epira, a Napocor group and its allies in the Congress are trying to lower the threshold to 50 percent.

Many industry players, complaining they were not given a chance to present their insights, say that Epira should be given time to work. The playing field, they add, must be made even by stopping monopolistic practices of Napocor.

They traced the problems to the slow and haphazard implementation of Epira and not to any serious flaw in the law.

In a letter to Arroyo, the Semiconductor and Electronics Industries in the Philippines Inc. said open access can be achieved in a “more expeditious” manner that will not destabilize the power industry and investors.

Ernie Santiago, SEIPI president and executive director, said retail competition and open access is based on the assurance that there will be enough private generation firms and that Napocor is irreversibly on its way to full privatization.

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ELECTRONIC FIRMS: The SEIPI has opened consultations with industry stakeholders and members of the joint chambers on how to effect retail competition and open access without the need to amend Epira.

Members of SEIPI include foreign and Filipino global players like Intel, Texas Instruments, Hitachi, Fujitsu, Toshiba, NEC, Philips, Samsung, Analog Devices, Fairchild, Sunpower, Cypress, Lexmark, Amkor Technologies, IMI, Ionics, and PSI Technologies.

The electronics industry accounts for $30 billion or two-thirds of the total exports of merchandise goods last year. It invests over $1 billion annually, directly employs over 440,000 engineers, technicians and operators, and transfers global practices on high technology manufacturing to Filipinos.

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JOINT CHAMBER: Congressman Arroyo was reported yesterday consulting with a former top energy official who was suggesting a formula for lowering electricity rates without amending Epira.

The former official has also briefed key industry players, particularly members of the Joint Foreign Chamber on the negative consequences of amending Epira.

With Camarines Sur Rep. Luis Villafuerte, Arroyo filed HB 3124 seeking to amend Epira.

The JFC has acknowledged that the state-owned Power Sector Assets and Liabilities Management Corp. had made progress in privatizing Napocor power plants, but that “the privatization of IPP administrators has not begun.”

Under the law, both ownership and administration of power plants must be privatized. Psalm has promised to complete documents for bidding out the Luzon IPP Administrator by the first quarter this year.

The joint chamber includes the American Chamber of Commerce of the Philippines Inc., Australian-New Zealand Chamber of the Philippines Inc., Canadian Chamber of Commerce of the Philippines Inc., European Chamber of Commerce of the Philippines Inc., Japanese Chamber of Commerce & Industry of the Philippines Inc., Korean Chamber of Commerce of the Philippines Inc. and the Philippine Association of Multinational Companies Regional Headquarters Inc.

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RATES ARE CRUCIAL: In a letter to President Gloria Arroyo, the Japanese Chamber of Commerce and Industry of the Philippines Inc. echoed similar sentiments.

Its president, Toshifumi Inami, expressed serious concern over efforts to amend Epira. He said: “Changing the rules midstream, especially at a time when Epira reforms are beginning to work, will not bode well for more investments in the sector and would put the credibility of the Philippine power sector reforms at risk.”

Most formulas being offered by the private sector remove Napocor as a major player in rate setting. A group in the power firm is suspected of delaying privatization so it can hold on longer to lucrative side-business.

Congressman Arroyo himself has been reported as concerned over the impact of high electricity cost on the competitiveness of Philippine companies and their products.

Power rates are crucial. If the Arroyo administration wants the economy to grow faster, it must provide industry cheaper and more stable electricity.

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REQUIREMENTS: Aside from privatization, there are other requirements under Epira for introducing retail competition and open access in a deregulated power industry.

Section 31 of Epira prescribes: (a) Establishment of the Wholesale Electricity Spot Market, (b) approval of unbundled transmission and distribution wheeling charges, (c) initial implementation of the cross subsidy removal, (d) privatization of at least 70 percent of the total capacity of Napocor generating assets in Luzon and the Visayas, and (e) transfer to IPP administrators of management and control of at least 70 percent of total energy output of power plants under contract with Napocor.

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(First published in the Philippine STAR of January 29, 2008)

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