From the News! – Your Daily News

Florante S. Solmerin
Manila Standard

PROMISING greater transparency and accountability, the acting chief of the Presidential Commission on Good Government said the agency will avoid repeating mistakes that led to the mismanagement and dissipation of assets at the sequestered Philippine Communications Satellite Corp.

Narciso Nario, appointed by President Arroyo to the commission three years ago, said his predecessors had failed to implement checks and balances in monitoring and supervising appointed nominees in sequestered companies.

“This has been a lingering problem and the strange thing is that we don’t have direct supervision over these nominees, and yet we’ve so many of them sitting in the boards of so many sequestered and surrendered corporations,” Nario said.

“We’ll be closely watching now their activities so that the Philcomsat incident will not happen again. What happened to Philcomsat? Dissipation, mismanagement here and there.”

Nario said he would require all sequestered and surrendered corporations to submit an annual report of their financial status and operations to the commission.

“I will also suggest that there must be a representative from the PCGG in the audit committee and the executive committee,” he said.

“Now, in order to economize, I’m thinking of designating a PCGG director already there to act as member of the audit committee and executive committee to prevent any attempt to dissipate our assets. The committees of the PCGG should be informed of the daily status and conditions of these corporations. I’ll require them to submit their reports.”

In the spirit of transparency, Nario said, the complete list of appointed nominees would be posted on the agency’s bulletin board and copies would be furnished Malacañang and the office of the Justice secretary.

The President has the prerogative to appoint a nominee to represent the government in any sequestered and surrendered corporation.

These nominees usually sit as members of the board. Under the law, the President appoints them there, and because these are sequestered or surrendered assets, the commission is mandated to supervise them, including the nominees.

Nario said he had already scheduled consultations with nominees to the Bataan Shipyard and Engineering Corp., whose P4-billion, 350-hectare property in Mariveles, Bataan, is under sequestration.

Vincent Cabreza, Northern Luzon Bureau
Philippine Daily Inquirer

BAGUIO CITY — THE EMPLOYEES’ union of the National Transmission Corp. (Transco) has gone to the streets, seeking public support after it challenged the government’s decision to sell the state-owned firm.

The Luzon chapter members of the Mindanao Transco Employees Association (Mintrea) distributed fact sheets to about 300 Baguio pedestrians on Saturday that alleged a conspiracy to hasten the privatization of the country’s major power grid.

Walder Revelar, Mintrea north Luzon president, said the group needs to show consumers the reasons they sued the government before the Ombudsman for concealing the facts behind the Transco sale.

The suit, filed by Mintrea on June 25, wants the Ombudsman to order the government to release the details of Transco’s sale to the National Grid Corp. of the Philippines (NGCP) because union members had not been given guarantees about their continued employment.

Influential

Monte Oro Grid Resources Corp., which owns NGCP, won the bid for the Transco grid operations last year.

Monte Oro has been associated with businessman Ricky Razon, who runs key ports in Manila and abroad and is a key supporter of President Macapagal-Arroyo.

Razon, who served as treasurer of the administration Senate ticket Team Unity in the last elections, is also considered to be one of the most influential businessmen in the country today.

Officials of the Power Sector Assets and Liabilities Management Corp., which is auctioning off all government facilities, and the National Economic Development Authority, which supervises the government’s privatization efforts, are principal subjects of the complaint.

Record time

Transco manages the Luzon power grid and transmits power that flows through households in the rest of the country.

“The public needs to learn that government is repeating the abuses we all suffered when it deregulated the power industry and broke up the National Power Corp.,” Revelar said.

According to the Mintrea fact sheet, Congress has been rushing the passage of a franchise law for NGCP while the firm “continues to stonewall Mintrea’s demands for [a written assurance] that they will absorb everyone [working in Transco].”

‘Sweetheart deal’

While negotiations continue, it said the House of Representatives and the Senate managed to shepherd their respective measures to second reading in record time.

The absence of transparency had made the union “too nervous” about the sale, Revelar said.

The Mintrea fact sheet said Transco’s sale was “a sweetheart deal” for NGCP because it stands “to earn between P18 billion and P20 billion in net profits annually” and would recover its investments “in just four to five years of operations.”

“If you find all these [details] unfavorable not only for all Transco workers but for all Filipinos, then you are not alone… This leaves us no other option but to close ranks and rally behind Mintrea,” it said.

Euan Paulo C. Añonuev
Manila Times

While the Philippine government anticipates huge revenues from the impending privatization of the National Transmission Corp. (TransCo), the state-grid’s employees are in state of anxiety over their fate when the sale finally comes to pass.

Fernando Masapol, Mindanao Transco Employees Association (Mintrea) president, told The Manila Times yesterday that around six thousand TransCo employees will be affected once Congress grants the 25-year right to operate the country’s power grid to the consortium of Monte Oro Grid Resources Corp.

TransCo, the state’s natural monopoly that runs the country’s transmission lines, which brings electricity from power plants to electric utilities. The company, which was once part of National Power Corp., earns profits of upto P18 billion to P20 billion yearly from its operations.

Although TransCo’s concessionaire has repeatedly assured its employees that they will all be absorbed and their salaries, “which have not been raised since 2001,” increased once it takes over the grid’s operations, Masapol said that none of these assurances have been put in writing.

“Nothing is clear, even the transaction documents have not been presented to the employees. Well, they have provided us with one but it was not even signed,” Masapol said in the vernacular.

Mintrea, which represents TransCo employees across the country despite its name, has filed a case before the office of the Ombudsman last week to force officials of the Power Sector Assets and Liabilities Management Corp. (Psalm) and National Economic Development Authority to disclose these documents.

However, Arthur N. Aguilar, TransCo president and CEO, earlier said that TransCo’s winning bidder would have to secure a Congressional franchise first before it can assess who among its employees will be retained.

“If they do get a franchise we enter into a five-and-a-half-month transition period with them . . . and within five-and-a-half months they will determine who among those they will invite to be retained in their concession,” Aguilar said

On the other hand, Jose C. Ibazeta, president of Psalm, the government’s power sector privatization arm, said he is optimistic that TransCo’s winning bidder will take into account its skilled employees when it assesses who among the company’s personnel will be retained in its new concession company.

“I wouldn’t worry much about TransCo’s employees as they are highly technical people,” Ibazeta said.

Under the soon-to-be-privatized TransCo, the concessionaire will take over the grid’s operations and maintenance while a government-side will also be retained but will require only about a hundred personnel.

But aside from being in the dark as to what their future will be in the national grid, TransCo employees fear they are being shortchanged, saying there is nothing in the franchise bill being pushed in Congress “regarding separation.”

“What will happen to the employees?” Masapol wanted to know.

Although the Monte Oro Grid consortium under the name of National Grid Corp. of the Philippines has a year to obtain a Congressional franchise after posting the highest bid of $3.95 billion when TransCo’s operations were auctioned off in December last year, TransCo’s franchise bill has already been approved on second reading in the lower house this early. The bill’s counterpart in the Senate, on the other hand, is now ready for the same.

Masapol said that in light of this, TransCo employees will hold regular dialogues among its ranks and reach out to lawmakers to air their concerns on the security of their jobs at time when prices of commodities are increasing.

“We are not against privatization as this is the policy direction of the government. But we have to give security of tenure to the employees,” he added.

Joel M. Sy Egco
Manila Standard

Wowed by the prospects of earning precious dollars each year, the Arroyo administration has embarked on a medical tourism program, backed by a financial grant from the Dutch government.

The program is anchored on the integration of five state-owned hospitals in Quezon City which will utilize state-of-the-art equipment to meet the health care needs of well-off clients from rich nations, according to documents.

Dr. Nestor Venida, chief coordinator of the integration plan, said the Philippine government is setting its sights on capturing even a small share of the $50-billion medical tourism market in Asia.

“Integration is occurring at a very slow but steady pace,” Venida said, who blamed the health workers for the delay. “Indeed there is strong opposition from health workers regarding the integration plan. But they are only misinformed. The integration plan will work for all. It will work best for the country. Their fears are baseless,” Venida said in an interview.

Under the plan, five specialized hospitals within Quezon City’s growth triangle will be placed under the management of the Philippine Center for Specialized Health Care. The five—Lung Center, National Kidney and Transplant Institute, Heart Center, Children’s Medical Center, and East Avenue Medical Center—will be placed under one roof but remain as they are and where they are, according to Venida.

Contrary to the fears raised by health workers’ unions, Venida said there would be no dissolution of existing hospitals or massive displacement of workers. In fact, he said the PCSHC would need additional medical professionals once the program goes in full swing.

Job losses feared

But the Alliance of Health Workers said the plan will cost the job of 420,000 hospital employees. Emma Manuel, AHW national president, and Manuel de Asis, president of the Lung Center of the Philippines Employees Association, claimed that the integration program’s thrust is to “streamline” the Department of Health and all its attached agencies.

That thrust is contained in Executive Order 366 or the Rationalization of the Functions and Agencies of the Executive Branch, which took effect in 2006, about the same time that the creation of PCSHC came to the fore. “The said law provides for the streamlining of some 420,000 government employees,” Manuel said.

“Since the recent reorganization of the Health Department, its vital core services are now limited to monitoring, regulating and troubleshooting. Therefore, health workers who are not connected to this ‘vital function’ may lose their jobs,” Manuel said.

But Venida, whose PCSHC holds office on the third floor of NKTI, allayed such fears, saying that the integration program would even mean the hiring of more health workers.

Aptly called “Integration Office,” Venida said the small facility is actually the birthplace of PCSHC and it is the official name of his unit.

The Integration Office is directly under the supervision of Health Undersecretary Jade del Mundo, one of the signatories to a resolution implementing the integration of the five hospitals. Health Secretary Francisco Duque also signed the resolution along with representatives of the board of the five hospitals.

Presently, PCSHC has around 100 interns who are undergoing training for deployment among the five specialty hospitals in the next few months, Venida said.

Dutch ODA

The hospital integration plan was conceived as early as four years ago, as evidenced by a memorandum of understanding signed among the Philippine government through the Health Department, the specialized hospitals and the Philips Medical Systems Netherland B.V. The memo details the scope of cooperation between the Philippine and Dutch governments in the “improvement and complementation of specialty hospitals’ health care services.”

The MOU stipulates that the Health Department, through funding from the Dutch official development assistance funds, shall “put forward a five-year health sector reform agenda covering the period 2005-2010.”

The parties agreed to redesign the health sector “to meet the health care needs of the Filipino people, to achieve adequate, affordable and universal access to quality health care services; and to improve the quality of services provided in major teaching and training hospitals, for patients, students and clinical staff,” among others.

For the Philippine government, the signatories are Dr. Juanito Rubio, health assistant secretary; Ofelia Bulaong, executive director of the Build-Operate-Transfer Center; Dr. Ruben Flores, executive director of Fabella Hospital; Dr. Ludgerio Torres, executive director of PHC; and Dr. Enrique Ona, executive director of NKTI.

The Dutch government was represented by Martien Druiven, sales manager of PMSN.

Interestingly, the MOU has a confidentiality clause that is effective for four years since it was made effective on Oct. 14, 2004. The provision states that “any tangible information shall not be reproduced, disclosed, duplicated or used, except to the extent required in connection with the MOU.”

Funding for the integration project, as stipulated under the MOU, shall come mainly from grant financing from the Dutch government through PMSN, including support from an ODA-related export program from The Netherlands (known by its Dutch acronym ORET/Milliev of the Dutch Ministry of Foreign Affairs, under the auspices of the Dutch minister for development cooperation).

The main component of the MOU is to “build, upgrade and improve the capacities and capabilities of specialty hospitals to cater to the health care requirements of their growing clientele. It lines up various proposals on how to transform the local hospitals in consonance with the integration plan.

Despite strong opposition from thousands of workers from the five institutions, Venida said his office managed to “integrate” several functions of the five hospitals on ambulance services, security, maintenance, pharmacy and even public biddings.

“The idea is for the five hospitals to act as one. We are lagging far behind our neighbors in terms of medical program. Thailand and Malaysia, earn $50 billion a year each. What was originally proposed for the Philippines is to capture even a small share of that market,” Venida said.

According to studies, rich countries could no longer accommodate the medical needs of their citizens, Venida said. This is the reason rich nations refer their patients to countries with equally modern hospital equipment.

Donnabelle Gatdula
Philippine Star

The Energy Regulatory Commission (ERC) has ordered the state-run National Power Corp. (Napocor) to explain why it should not be penalized for reportedly withholding information regarding possible overcharging.

In a show cause order dated May 7, ERC told Napocor “to explain its failure to file its applications under the Generation Rate Adjustment Mechanism (GRAM) and the Incremental Currency Exchange Rate Adjustment (ICERA) for the period covering July 2006 to March 2008.”

ERC requires Napocor to respond within 15 days from the receipt of the order.

Based on ERC’s estimates, the over-recovery amounted to P10  billion, which entitles customers to a refund of 20 centavos per kilowatt-hour under the so-called deferred accounting adjustment (DAA).

“Napocor’s non-filing of its GRAM and ICERA applications is a violation of Section 5 of the implementing rules for both the GRAM and the ICERA,” ERC officer-in-charge Alejandro Barin said.

“The ERC hopes that the NPC will take expedient action on this matter to safeguard public interest,” he said.

Section 5 of the IRR for GRAM requires Napocor to file an application for deferred generation cost accounting for the calculation of the generation rate.

On the other hand, Section 5 of the IRR for ICERA requires Napocor to file a currency exchange accounting application for the calculation of ICERA.

GRAM is a mechanism that allows periodic adjustments in the generation rate to reflect changes in fuel and purchased power costs after a review by the ERC.

ICERA, on the other hand, factors in currency changes in rates setting after a review by the ERC.

“Rest assured that your ERC will remain vigilant in protecting the welfare and interests of electricity consumers,” Barin said.

In a statement, Napocor said it is “in the process of filing such application,” and that is just waiting for its board to approve the application.

Napocor said it is set to file its  9th GRAM covering the period July 2006 to December 2006 to effect a rate reduction in Luzon by P0.0133; Visayas, P0.0599; and Mindanao, P0.4007 per kWh. This is expected to result in an overall reduction of P0.1088 per kWh.

‘Irregular buying behavior’

Napocor blamed the Manila Electric Co..’s “irregular buying behavior” yesterday for the high cost of electricity in Metro Manila.

Dennis Gana, Napocor spokesman told reporters at the weekly Baliltaan sa Rembrandt Hotel in Quezon City that Meralco buys electricity from Napocor during peak hours, or about five pesos more expensive than during off peak hours.

“Because of irregular behavior of Meralco the public cannot avail of the so called Time Of Use (TOU)) because Meralco only buys electricity during peak hours,” he said.

Gana said that during off peak hours from 10 p.m. to 4 a.m. Meralco gets its electric supply from independent power producers.

Gana said electricity costs only P1.80 per kWh during off-peak hours and P6 during peak periods.

He explained that even without being ordered by President Arroyo,  Meralco can charge less based on the TOU rates approved by the ERC.

“It all depends on Meralco’s purchasing mix, since end consumers cannot directly avail of the NPC power TOU power rates. Meralco can optimize its benefits by adjusting the level of electricity it buys from various sources,” he said.

Gana said Meralco may improve its load pattern from Napocor by buying electricity also during off peak hours when rates are lower.

He said this is how electricity cooperatives in Luzon outside Meralco’s franchise areas are able to charge lower rates.

Gana also pointed out that the rate Meralco showed in its full-page ads includes the 30 centavos rate cut by Napocor under the Power Act Reduction of P 0.30.

“Meralco should have explained what time they buy power from each source, and how much, considering that (Napocor) is offering charging them on the ERC-approved TOU rates of only P 1.87 /kWh during off period and 6.06 /kWh during peak compared to their IPPs which

charge P 4.4744/kWh” Gana said. In its ads, Meralco explained its side against allegations of overcharging.

No gag on power execs

Senate President Manuel Villar Jr. urged President Arroyo yesterday to allow officials of the energy department, Napocor, and the National Transmission Corp. (TransCo) to attend the hearing called by the Joint Congressional Power Commission (JCPC) on high power rates.

“They should be present in the hearings called by the Senate. If they have not done anything wrong, then there should be no problem coming to the Senate and present their sides during the hearing,” Villar said.

Villar said energy officials led by Secretary Angelo Reyes should attend the hearing on Monday morning. Sen. Miriam Defensor Santiago chairs the JCPC.

Also invited to attend the hearing are Napocor president Cyril del Callar, ERC chairman Rodolfo Albano Jr,, Meralco president Jesus Francisco and Government Service Insurance System president Winston Garcia.

The Palace and the Senate are locked in a battle over Executive Order 464 and over executive privilege. Mrs. Arroyo issued EO 464 to prevent officials from attending legislative hearings without her consent. She issued the EO at the height of the national broadband network scandal.

Militants dare govt on transparency

The militant Bagong Alyansang Makabayan (Bayan) challenged the administration yesterday to prove its commitment to “transparency in governance” by fully disclosing its earnings from the value-added tax (VAT) on electricity rates.

Bayan, citing “industry sources,” said the government might have already collected some P36 billion from the generation, transmission, and distribution sectors of the power industry in just two years.

“There is an ongoing debate on why power rates are high. Apart from the policies of deregulation and privatization, we have also maintained that the VAT contributes significantly to these high power rates,” Bayan secretary- general Renato Reyes Jr. said.

“Industry sources have informed us that the Arroyo government was able to collect more than P30 billion in VAT on generation and transmission from 2006-2007,” he said.

“Other sources have informed us that the Arroyo government may have collected more than P6 billion in VAT on distribution charges from Meralco service areas,” he said.

“These are huge amounts collected only in a span of two years. We challenge government, in the spirit of transparency, to disclose to the public how much VAT it is collecting from power rates,” Reyes said.

Bayan said generation and transmission charges are “pass through” charges so the VAT rates on these items are not computed at exactly 12 percent. The VAT on the distribution charge, however, is computed at 12 percent of all items under distribution. Meanwhile, the generation, transmission, and distribution rates are computed based on kilowatt per hour consumption.

“Another way of looking at it, take away the VAT and you will probably lower power rates by P1.41/kWh,” Reyes noted.

Citing a study made by consumer group People Opposed to Warrantless Electricity Rates (POWER), Bayan said that eliminating the VAT on power will save electricity users consuming 200 kWh/month around P206; while those consuming 300 kWh/month can save more than P470.

“The savings from VAT will help families cope with the rising cost of living. It’s not true that they will tend to consume more electricity. They will in fact use the savings to buy food and other basic necessities,” Reyes said.

“If government is really serious in bringing down power rates, it can start with the VAT on power. That would be a fast and direct way of lowering rates,” he said.

- With Christina Mendez and Perseus Echeminada

Iris C. Gonzales
Philippine Star

The Philippines’ fiscal consolidation efforts need to focus on sustainable revenue sources and not merely on the privatization of state-owned assets, the Asian Development Bank (ADB) said.

While the ADB recognized the “significant reduction” in the government’s “fiscal imbalance,” it also said the Philippines must address the problems in the country’s tax revenue stream.

“There are many examples of the Philippines doing the right things, and doing them right. For example, prioritizing fiscal consolidation and reducing the budget deficit are the right things  to do at this time and reforming the tax system to increase the tax effort is one of the right ways to achieve it,” said Tom Crouch, ADB deputy director general for Southeast Asia, in a recent paper.

But he also said: “The structural erosion of the tax effort must be addressed.”

The ADB echoed the views of other lenders such as the International Monetary Fund and the World Bank on the need for the country’s excise tax rates to be indexed to inflation.

At present, excise taxes – taxes on cigarettes and alcohol – are based on 1997 prices even as the current prices of these so-called sin products have since escalated.

Multilateral lenders and members of the donor community have been urging the government to change the excise tax system and align the rates to inflation or the rise in consumer prices.

The ADB noted that the relatively less-taxed economic sectors are the ones that are growing.

Furthermore, Crouch recommended a thorough review of fiscal incentives extended by the government to local and foreign investors to avoid redundancy. Proposals to rationalize these tax perks are still pending in Congress amid strong lobbying from big business for the retention of these incentives.

In terms of economic growth, the ADB said the government must work to improve the investment climate so that growth must be sustained instead of the country relying heavily on dollar remittances from overseas workers.

The government also needs to boost infrastructure and social spending by specifically raising public capital spending closer to five percent of gross domestic product by 2010.

In the area of governance, the ADB said authorities must continue to address corruption so that it is seen as a “high risk-lower reward activity.”

The ADB said it would continue supporting the Philippines in its efforts to achieve higher sustainable growth.

Last year, the government incurred a budget deficit of P12.4 billion or significantly better than the programmed deficit of P63 billion.

It hopes to balance the budget this year or two years ahead of the original 2010 deadline.

Donnabelle L. Gatdula
Philippine Star

The government should push through with the privatization of the IPP (independent power producers) contracts to help reduce prices of electricity in the future, an energy expert said.

Asian Development Bank (ADB) principal energy specialist Yongping Zhai told reporters that the state-owned Power Sector Assets and Liabilities Management Corp. (PSALM) should first proceed with the selection of the IPP administrators to be able to bid out the IPP contracts.

Zhai noted that the privatization of the IPP contracts will ensure competitiveness at the wholesale electricity spot market (WESM), the country’s trading floor for electricity.

“WESM is largely dominated by PSALM owned and operated IPPs which comprise about 70 percent of trades,” Zhai said.

“PSALM should continue to implement its privatization program to sell as early as possible at least 70 percent of Napocor’s generating assets and transfer of at least 70 percent of its IPPs to IPPAs,” he said.

PSALM president Jose Ibazeta earlier said they are ready to auction the IPP contracts by September this year while the selection of IPPAs will be held within the first quarter of 2008.

Under the Electric Power Industry Reform Act (EPIRA) of 2001, PSALM has the power to take title to and possession of the Napocor IPP contracts and to appoint, after public bidding, qualified independent entities who shall act as IPP administrators.

Under the EPIRA, before retail competition and open access can be implemented, it shall be “subject to the transfer of the management and control of at least 70 percent of the total energy output of power plants under contract with Napocor to the IPP administrators.”

Among the IPP contracts include the 1,200-mw Sual coal facility and the 1,200-megawatt (mw) Kepco Ilijan natural gas facility.

Other power plants are the Limay combined cycle (655 mw), Pagbilao coal facility (735 mw), Subic Power Corp. (116 mw), Hedcor Bacun (29 mw), Luzon Hydro Corp. (75 mw), CBK Botocan (21 mw), CBK Kalayaan (739 mw), Casecnan (150 mw), San Roque (411 mw), Malaya (650 mw) and Bauang Private Power Corp. (226 mw).

The IPPAs will sell the Napocor-IPP contracts through the wholesale electricity spot market or through bilateral contracts.

Being one of Philippines ’ largest multilateral lenders, ADB has been an active participant the Philippine power sector.

ADB has provided over 20 loans worth $1.6 billion and a partial credit guarantee of ¥12 billion to Napocor for power generation and transmission projects.

The bank has also provided two program loans to the government for the power sector restructuring and debt liabilities management totaling $750 million.

Manila Times

In a bid to moderate the impact of high energy prices in the country, the government plans to subsidize power costs of low-income consumers and industries.

Energy Secretary Angelo Reyes told participants to the Philippine Economic Briefing on Friday that the government will subsidize power costs of low-income consumers.

“We will ensure preferential treatment for poor households and power-intensive industries in the distribution of Transco [National Transmission Corp.] charges by Meralco [Manila Electric Co.],” Reyes said.

Socioeconomic Planning Secretary Augusto Santos agreed, saying power is the major input to the country’s export industries, particularly electronics.

“Lower electricity rates will help industries to cut their expenses,” Santos added. Electricity accounts for nearly 50 percent of total operating costs for some firms.

President Gloria Arroyo earlier expressed concern about electricity prices that consumers and industrial users pay for, and promised to bring power costs to be what is the average for Southeast Asia.

“We are eager to move along the privatization of Napocor [National Power Corp.]. Not only will it enable open access, it will also free the government of its subsidy and allow us to use the windfall proceeds to subsidize power costs,” President Arroyo said.

Privatization process under review

Reyes said the government is reviewing the privatization process of power generation assets to fast-track the sale and immediate implementation of open access and retail competition.

He added that for this year, the government plans to privatize 11 power plants operated by state-owned Napocor.

The plants that have been lined up for privatization are the decommissioned Bataan Thermal Power Plant in Limay, for April; Tiwi Geothermal Power Plant in Albay and MakBan Geothermal Power Plant in Laguna, for May; and the Amlan Hydroelectric Power Plant in Negros Oriental, for June.

Also on the list are the Limay Combined-Cycle Power Plant in Bataan,   Palinpinon Geothermal Power Plant in Negros Oriental, and Panay Diesel Power Plant in Iloilo, for July; Leyte Geothermal Power Plant in Tongonan and Bohol Diesel Power Plant in Tagbilaran City, for August; BacMan Geothermal Power Plant in Sorsogon, and Iligan Diesel 1 and 2 in Dalipuga, for September; Subic-Zambales Diesel 2 in Olongapo City, for November; and the Aplaya Diesel Power Plant in Misamis Oriental, GenSan Diesel Power Plant in South Cotabato and Navotas 1 and 2 Diesel, for December.

Reyes said to help further lower the cost of electricity in the country, the government needs priority bills such as those on renewable energy, energy conservation, natural gas, liquefied petroleum gas and the Transco Franchise bill.

– Darwin G. Amojelar

Donnabelle L. Gatdula
Philippine Star

Norway’s SN Power, a partner of the Aboitiz Group in several biddings for National Power Corp. (Napocor) generating assets, said the government, through the Power Sector Assets and Liabilities Management Corp. (PSALM), has shown complete transparency and fairness in its privatization program.

PSALM is created under the Electric Power Industry Reform Act (EPIRA) to oversee the disposal of Napocor’s generation and transmission assets, including its contracts with independent power producers (IPPs).

SN Power made this pronouncement amid allegations that PSALM had favored an influential businessman close to President Arroyo on the sale of the multibillion-dollar National Transmission Corp.(TransCo), one of the government’s largest energy assets.

“We have found PSALM to be very professional, fair and balanced in its drive to protect government interest in the transaction while openly and fairly adapting the transaction documents to satisfy the complex requirements of international investors and their financiers,” SN Power chief executive officer Oistein Andresen said in his letter to President Arroyo.

SN Power is a Norwegian industrial investment company whose interests include investing in renewable energy assets in Latin America, Africa and Asia, including the Philippines.

The company is jointly owned by the Norwegian Development Fund and Statkraft, Europe’s largest renewable power company. Both Norfund and Statkraft are 100-percent owned by the Norwegian government.

Together with its local partner Aboitiz Power Corp, SN Power has been heavily involved in the privatization of Napocor assets since 2005.

SN Power had tendered bids in three big power projects, but won only in two: Magat in Isabela and Ambuklao and Binga in Benguet. It lost in the Pantabangan and Masiway project in Nueva Ecija.

In October, SN Power refinanced and fully paid for the Magat plant after initially availing of PSALM’s credit facility.

The SN Power executive said his company never had any problems dealing with PSALM top management as well as its other team members.

“The transparent nature of the bid processes has been, and continues to be a critically important factor in our continuing interest in investing in the Philippines, and participating in the future sale of the Napocor assets both in Luzon and in Mindanao,” he added.

Through its charter, SN Power, said Andresen, “invests only in developing countries, abiding by strict rules of conduct, and only in projects contributing to the positive economic and social development of the (host) countries.”

TransCo has been described as one of the government’s “crown jewels.” With TransCo’s power transmission grid and fiber optic cables, the winner of the auction could also become a powerful player in the telecommunications industry with its own broadband backbone network.

Andresen said SN Power also noted with “significant interest the recent successful participation” of the US-based AES Power Corp. in the plans to expand the Masinloc coal-fired power plant in Zambales to double its present capacity, and the Belgium-based Suez Tractebel’s successful bid for Calaca, another coal-powered plant, in Batangas.

Both large and very capable companies, AES and Suez, he added, have a long history of competing internationally, participating in international bids as well as being involved in a deregulated power industry.

Andresen said this involvement bodes well for both the past and future bid process, as well as the future of the Philippine power market, already one of the most deregulated power markets in the developing world.

Iris C. Gonzales
Philippine Star

The National Government (NG) has raised its privatization target for 2008 as it expects to fetch better-than-expected prices for the assets on the pipeline.

According to documents from the Development Budget Coordination Committee (DBCC), the new privatization target for this year is set at P48.525 billion or P18.96 billion higher than the previous target of P29.562 billion.

Among the assets to be put on the auction block this year is the 100-hectare Food Terminals Inc. property in Taguig. The government expects to sell this in the second quarter of the year and raise at least P15 billion from the sale.

Also on the auction block this year are the government’s stakes in San Miguel Corp. (worth P50 billion) and Manila Electric Co. (valued at about P10 billion).

The government will also sell a real estate property in Fujimi, Japan valued at P1.3 billion and the old penitentiary in Muntinlupa.

The government has yet to determine the value of the Muntinlupa property.

As of end-November 2007, proceeds from the privatization of state-owned assets reached an all-time high of P90 billion.

Aggressive efforts by fiscal authorities to sell state-owned assets have paid off, with year-to-date proceeds beating the revised privatization target of P25.3 billion for 2007 and the original target of P500 million.

Finance Undersecretary for Privatization Crisanta Legaspi earlier said that inflows from the recent sale of the government’s stake in Philippine National Oil Co.-Energy Development Corp. (PNOC-EDC) accounted for the better-than-expected privatization proceeds as of end-November 2007.

The government has raised P58.5 billion from last month’s sale of its stake in PNOC-EDC, the country’s leading geothermal firm.

Red Vulcan Holdings Corp., a consortium led by First Gen Corp. of the Lopez Group, has bagged the government’s 60 percent stake in PNOC-EDC.  The consortium offered a bid of P58.5 billion, topping other offers including a bid from the Filinvest group amounting to P48.52 billion.

The winning bid exceeded government expectations. Originally, the Department of Finance expected to raise between P32 billion to P36 billion from the PNOC-EDC auction.

For 2006, the government was able to raise P5.8 billion from the sale of state-owned assets.