Emergency power seen as mere excuse to plunder Malampaya funds anew

“The Department of Energy (DOE) has not sufficiently laid out the reason for emergency powers because as their own data show, there is enough power supply.” – Bayan Muna Rep. Neri Colmenares

By MARYA SALAMAT
Bulatlat.com

MANILA – Why is President Aquino and his energy officials “obsessed” with getting emergency powers to respond to a projected power “deficit” which energy department figures say the country’s plants can adequately meet? Because “it means sweetheart deals, corruption, take or pay, and high electricity rates,” said Bayan Muna Rep.Neri Colmenares in a statement today.

Urging the president and his “apologists” not to split hair and call a spade a spade, Senior Deputy Minority Leader Colmenares said “the essence of this power is to ask Congress for authority to enter into negotiated contracts for additional generating capacity.”

There is a precedent in this. In 1993, then president Fidel V. Ramos asked for and was granted emergency powers from Congress to solve the power crisis that hit the country in 1991. The result is that then President Ramos was able to enter into onerous contracts with independent power producers, which the public ended up paying.

The public outcry generated by President Aquino’s letter to Congress asking it to grant him emergency powers prompted Deputy presidential spokesperson Abigail Valte to request reporters not to call it emergency powers but “additional authority.”

Section 71 of Electric Power Industry Reform Act of 2001 (EPIRA) states that upon the determination by the President of an imminent shortage of the supply of electricity, Congress may authorize, through a joint resolution, “the establishment of additional generating capacity under such terms and conditions as it may approve.”

“But up till now the Department of Energy (DOE) has not sufficiently laid out the reason for emergency powers because as their own data show, there is enough power supply,” Colmenares told Bulatlat.com.

Billion-peso deals await approval of emergency power/special authority

As Congress deliberates on whether or not to grant Aquino emergency powers, Power Sector Assets and Liabilities Management (PSALM) president Emmanuel Ledesma Jr. has been quoted early this week as saying they are already accepting and evaluating proposals by four foreign companies for at least 300MW of gas and/or diesel generator sets.

To respond to the energy department’s projected summer energy deficit, it is proposing to contract additional capacity by leasing at least three generator sets with 100MW capacities each for two years, at P1 billion ($22.28M) per genset per year, or a total of P6 billion ($133.68M) for two years. The cost is to be paid by Malampaya Funds and passed on to consumers as universal charge ranging from P.20-P20/kWh, Colmenares said in a statement.

PSALM is the government agency tasked to manage state-owned power assets, including taking charge of sourcing additional capacity. But PSALM is “neck deep in anomalies” under its Pres. Emmanuel Ledesma Jr., Colmenares said.

PSALM workers have accused Ledesma of allowing the National Grid Corporation of the Philippines (NGCP) to prepay the 10th to 30th deferred payments for the concession fees in the amount of P57.883 billion, even if NGCP has outstanding obligations due to TransCo amounting to P2.531 billion ($56.391 M) contrary to Section 6.07 of the Concession Agreement.

“This was also done without the PSALM Board’s approval and as the Commission on Audit (COA) observation on January 2014 states, PSALM/Transco lost the opportunity to earn interest income by as much as PhP31.025 Billion ($691.237M),” Bayan Muna Rep. Colmenares said a week ago.

Now Ledesma through PSALM is entertaining billion-peso gen set deals to address a power crisis which Bayan Muna says is “contrived.”

Another option being floated by the energy department to respond to the supposed energy deficit next summer is the Interruptible Load Program (ILP).

Under the ILP, big industrial and commercial customers who have the ability to produce their own electricity through generating sets should cut off or reduce their electric consumption, particularly during peak periods of the day, and instead use their own generator sets. But Meralco consumers will foot the bill by compensating the firms under the ILP, the think tank Ibon has said in another statement.

Contrived power crisis designed to open Malampaya Fund kitty?

For Bayan Muna Rep. Carlos Zarate, the projected power deficit is nothing but a bogey to justify the grant of emergency powers to Pres. Aquino, citing that there is enough capacity to cover the supposed shortfall in the energy supply for summer 2015. He suspects this phantom shortfall and the president’s plea for emergency powers are meant to enable Malacañang to dip its fingers again in the Malampaya fund.

A Supreme Court decision in November 2013 has restricted the spending of Malampaya Fund, following outcries that it is becoming a source of presidential pork.

Zarate recalled that in 2011, about P13.267 billion ($295.59M) was spent from Malampaya funds, with the Armed Forces of the Philippines (AFP) getting the largest share of nearly P5 billion ($111.4M) and DOF-NPC with P4.6 billion ($102.49M).

In 2012, nearly P2 billion ($44.56M) was disbursed from the Malampaya fund, accessed only by two agencies, the Department of Defense (DND) and the DOF-NEA electrification, Zarate said.

He said a big portion of Malampaya funds have been spent for the military’s use rather than on energy needs, which it should have been prioritizing.

“If they had used Malampaya fund to develop our energy industry, it might have helped lessen the cost of electricity or the incidences of brownouts. This kind of spending is what makes pork barrel, especially presidential pork barrel, anomalous,” Zarate said.

Nearly half of the P15 billion ($334.2M) disbursed from the Malampaya fund under Aquino had been spent for AFP-DND.

“All these have been declared illegal under the November 2013 ruling of the Supreme Court and, and it is in this light that we are urging the Commission on Audit to conduct a full audit of the Malampaya funds,” said Rep. Colmenares.

Aquino allies in Congress deliberate on emergency power/special authority

House Majority Leader Neptali Gonzales II said in a news conference last Tuesday September 23 that they would approve the granting of emergency powers to President Aquino when they resume sessions third week of October. Gonzales said they have to “because if we postpone approval to November or December, it will be too late to bring in additional power.”

Senators, meanwhile, started deliberations Thursday on the enactment of a Joint Resolution authorizing the President to seek additional generating capacity.

This followed the filing of twin energy-related resolutions in the Senate: Senate Resolution No. 933 by Sen. Serge Osmeña, chairman of the Senate Committee on Energy, directing his committee to determine government options to alleviate a power shortage in 2015 and Senate Resolution No. 934 filed by Senate President Franklin Drilon, directing the same committee to inquire “on the need to establish additional generating capacity to ensure the energy requirements of the country, in accordance with Section 71 of EPIRA.

But during budget deliberations also this week, Energy Sec. Jericho Petilla has failed to explain why they need emergency powers, said Colmenares of Bayan Muna.

The secretary had difficulty explaining what Colmenares calls as their “obsession for emergency powers” given that the energy department’s figures itself, as of 2013, shows the country is not facing an energy shortage.

According to DOE figures, the installed capacity for Luzon grid is 12,790MW, of which the dependable capacity is 11,469MW. The peak demand is at 8,700MW plus (this happens in summer – May in particular). Meralco is also able to produce 6,121MW (based on 2014 figures).

Rep. Colmenares has been saying since last month that “Deducting dependable capacity from peak demand, there should have been allowance for reserves amounting to 2,700MW. This is more than the 400 MW deficit Sec. Petilla has been claiming. Based on the DOE figures itself, even in a tight supply condition, there should be more than enough supply.”

As of this writing, Petilla’s projected power deficit in some reports has increased to 800MW. Bayan Muna said the department still could not explain it.

Earlier statement of Bayan Muna said the energy department is just repeating a scenario that has resulted in an anomalous practice. Private power company collusion timed during the Malampaya shutdown resulted in the highest rate hike by Meralco early this year. It was opposed by multisectoral group Bayan and Bayan Muna, filing a petition before the Supreme Court, which subsequently issued a restraining order. It is now the subject of a long overdue collusion report by the Energy Regulatory Commission (ERC).

“The Meralco rate increased because of the plant shutdowns during the Malampaya turnaround. Now the DOE claims a shortage of supply because of more plant shutdowns in 2015,” added Senior Deputy Minority Leader Colmenares.

What energy lack?

Colmenares said that even if there would be a short fall of electricity, the government can still tap state-owned power plants like the Malaya power plant and the Sucat power plant.

“These power plants should be immediately rehabilitated and recommissioned instead of being sold to the private sector. The DOE has not even considered renewable energy and even the demand side of the equation,” he added.

Colmenares said today that the bidding for the 850-megawatt Sucat Thermal Power Plant in Muntinlupa City has failed, meaning it is still government owned and should be used.

“In fact, even with just the Malaya power plant alone, with its full dependable capacity of 610 MW, could already offset the supposed power deficit of 400 MW being aired by Sec. Petilla. If the government is to operate the Sucat power plant as well at 850 MW, then, there would be no power crisis for at least three years,” said the progressive solon.

He asked how come the DOE is not factoring the new power plants about to be on the grid early 2015. These include the Avion power plant, South Luzon Tech Coal and Pililla Wind.

All in all, there appears to be no basis for Aquino and his energy officials to sign more contracts to purchase electricity at the last minute. The Communist Party of the Philippines, in a statement emailed to the media, warned that these special presidential purchases of power (without benefit of public bidding) will lead to large amounts of funds ending up in Aquino’s political kitty.

The group noted that Aquino’s political supporters are “the biggest DAP-fed senators, congressmen and local government officials.”

In another statement, consumer group People Opposed to Unwarranted Electricity Rates (POWER) suggested that instead of granting the President emergency powers (or special authority), it should immediately rehabilitate and upgrade existing assets of the National Power Corporation (NAPOCOR) like the Malaya Thermal Plant and several power barges and hydroelectric plants in the country.

According to POWER Convenor Teddy Casiño, the country’s power industry thrust should be changed to allow NAPOCOR to build, own and run publicly-owned power plants to address whatever supply shortfall the energy department says there is and ensure long-term stability in prices and supply.

Zarate of Bayan Muna hailed the increasing number of people and agencies who are being more critical of Aquino’s proposed power/authority, because it is fearsome indeed as it will cause power rate hikes and plunder the Malampaya funds. ()

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