National Power Corporation

Power sector debt: $ 34-B

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by Herman Tiu-Laurel

WHILE the country is being distracted with the Napoles hearings revolving around P 10-Billion pork barrel scams involving four dozen opposition and administration “sow-lons”, a national shame of $ 34-Billion or P 1.5-Trillion of unjust debt on the shoulder of the people continues to weigh down the nation, its economy and its chances for economic take-off astride other Asian countries. The P 1.5-Trillion debt of the power sector is a fifth of the total debt of P 5.46-Trillion and yet there has been no executive or legislative investigation, senate hearing or national media uproar on it, thence the continuing public ignorance of this national shame and injustice.

The P 1.5-Trillion debt is the combination of the National Power Corporation (NPC) and Power Sector Asset and Liabilities Management (PSALM) current obligations amounting to $ 16-Billion and $ 18-Billion respectively. These two debts began as a single debt, of NPC in 2001 of $ 18-Billion. Gloria Arroyo’s third Yellow government, after Cory Aquino and Fidel Ramos, passed the Electric Power Industry Reform (Epira) law creating PSALM to liquidate NPC debts by buying and selling of NPC assets for private takeover. It should shock the nation that after 12 years and 91.75% of NPC assets privatized, NPC debt remains almost unchanged, while the new mountain of debt of PSALM had been created.

Iligan, EPIRA gone amok
Iligan City, Mindanao, is a prime case. Blessed with the Maria Cristina Falls and the wellspring of the massive Agus-Pulangui hydro-electric system. Iligan City with its 60,000 power consumers had for the longest time the lowest power cost in the Philippines. Up to only recently, delivered power cost there was only P 5/kWh; today Iligan City residents will face a 100% increase to P 10/kWh. The rise of globalist economic colonialism in the guise of “free trade” and “privatization” in the 80s, reassertion of oligarchy-elite Philippine politics with Corazon C. Aquino’s ascendance and the surge of profit-manic Filipino family-corporations led to the Epira and privatization of the power sector.
There was no Mindanao power shortage in 1992 but Cory Aquino, two days before her term ended, signed a midnight IPP contract for the Alcantara family-capitalist group (relations go back to Boston). The Alcantaras bought land for project at P 200/sq. m. and valued it at P 20,000/sq. m.. A three years later FVR signed a second Alcantara IPP, the two now valued at m P 3.5-Billion. The BOTs expired and returned to NPC, but confiscated by Iligan City for tax delinquency. In 2010 despite a higher P 500-M bid the plants the Iligan City council resold them to Alcantaras for P 300-Million, less than 10 cents to the Peso. Rehab cost of P 34-M was bloated to P 614-M and entire project cost to P 1.5-B as rate base.

Worse privatization cases
According to PSALM it has privatized 26 power generating plants and 4 decommissioned facilities (whatever that means) for 91.73% of its assets in Luzon and Visayas. Among the assets bought from NPC to privatize is the Bohol-Panay Power Plant Complex which was set up for P 19-Billion but sold to SPC for P 293-M, or two centavos to the Peso. One power plant in the complex was rehabilitated by NPC for P 1-Billion, that alone was a huge loss. Investigating further we found that a Chan Lok Lim heads SPC, he was formerly with ITE Power Corporation, a Singaporean company; we can be sure that behind these are also British finance-capital groups.
Another privatization scam sale and transfer of Transco, the transmission grid of NPC before which was earning P 16-B per annum when it was privatized. A Ramos-Razon-Carlyle first took over the $ 6-Billion grid for half that price, and then a transfer to the Sy-China Grid Corporation group for a $ 1-B down payment on a price of $ 4-B, to become National Grid Corporation of the Philippines (NGCP). NGCP is now raking in profits that used to go to NPC and NGCP debt to Psalm is part of the latter’s P 568-B collectibles. NPC continued to pile up debts because its profit centers were gradually removed from it,