NR0208:Solon questions ADB grant to power sector

Mula sa Tanggapan ni Anakpawis Rep. Crispin Beltran
News Release February 8, 2005
House of Representatives, South Wing Rm 602
931-6615 Ina Alleco R. Silverio, Chief of Staff
Email: paggawa@edsamail.com.ph, anakpawis2003@yahoo.com
Cellphone number 09213907362 Visit geocities.com/ap_news

Solon questions ADB's %1.2 million grant to the Philippines for the
full privatization of the power sector

Anakpawis Representative Crispin Beltran today raised a question regarding the
Asian Development Banks' $US 1.2 million grant to the Philippine government
for the restructuring the country's power sector through a technical
assistance (TA) grant approved for US$1.2 million. Beltran questioned the
possible onerous nature of the TA grant, its possible disastrous impact on the
electricity industry in the country and the service it provides to the
public.

"There's already a tangled-up ball of controversies and anomalies over the sale
of the Napocor and the National Transmission Corporation (Transco) that have
yet to be sorted out. The Senate hasn't even gotten through the first layer of
these anomalies, but here we have the ADB and the Macapagal-Arroyo
administration shaking hands over an agreement that will railroad the NPC and
the NTC's sale," he said.

To support its power reform agenda, the GMA government sought the ADB's
assistance to build the capacity of the Energy Regulatory Commission (ERC)
and help speed up the privatization of the Napocor. The TA, financed by the
Japan Special Fund will supposedly help boost investors' confidence by
supposedly enhancing ERC's efficiency, and provide the necessary financial and
technical advice to the Power Sector Assets and Liabilities Management
Corporation (PSALM) for the privatization of NPC. The government will
contribute $515,000 equivalent toward the TA's total cost of $1.715 million.
ERC and the PSALM will serve as executing agencies for the TA, which will be
carried out over 24 months beginning March 2005.

"Where on earth will the national government get the $515,000 as its
counterpart share in the is suspicious deal? Malacanang continues to crack the
whip and pressure Congress and the Senate into passing its infamous tax bills.
It's quite possible that t he administration will be borrowing the amount
from the ADB and then issuing a promissory note. In the end, all this will
translate into a more excruciatingly weighty foreign debt,' he said.

The TA targets to overhaul the ERC, aiming to "improve its organizational
structure, operational systems and processes, and resource management."
According to the ADB's paper on the TA, the legal and technical competence of
ERC's staff will be strengthened, and a mechanism for proper financial
management will be recommended. The TA will also rationalize and streamline
ERC's regulatory processes and improve the accountability and transparency of
regulation.

The ADB's TA also has a specific agenda for the Power Sector Assets and
Liabilities Management (PSALM).The TA aims try to determine the main reasons
for the limited success in privatization to date and recommend ways to improve
the process. The TA will assist PSALM in evaluating contracts with IPPS,
propose and design credit enhancement schemes, and familiarize PSALM and NPC
personnel with the best international practices of privatization.

"Consumers organizations and anti-monopoly groups point out that the power
sector reform agenda of the ADB and other international financial institutions
such as the International Monetary Fund (IMF) is aimed towards fully
privatizing the country's electricity industry and extract more superprofits at
the expense of consumers and the national economy," said Beltran. "The ADB and
the World Bank are behind moves to fully privatize the country's power sector.
Their main agenda is to create the biggest possible space for private sector
privatization in the electricity industry. The ADB and the WB impose
conditionalities on all technical and financial assistance it gives to
government such as the Philippines, demanding in exchange for the assistance
greater control over the industries where reforms are being made.
Privatization, Beltran said, equates to higher power rates and poorer services
for the public, as well as massive lay-offs for ERC, DoE and NPC employees.

"Pres. Gloria Macapagal-Arroyo, is in a haste to privatize the NPC allegedly to
preempt a shortage in the supply of electricity in the coming year, but this is
bunk. Luzon's energy capacity can actually supply the archipelago if only the
government would ensure the transmission of power towards the Visayas and
Mindanao. The only long term solution is to nationalize the power industry from
generation to transmission to distribution," he said. "The NPC is liable to
more than P1.37 trillion debts which constitutes the majority of the national
debt burden. Most of these came from the WB, ADB, and the Japan Bank for
International Cooperation (JBIC) - the international creditors continually
pressing for the immediate completion of NPC privatization. The NPC
privatization is one of the major pre-conditions of foreign creditors for them
to continue giving out loans to the national government."

"Even if the NPC is privatized, the government will still absorb its P200
billion debts through PSALM. NPC privatization will unilaterally benefit the
buyers, while subjecting the economy to greater debt and excessively high
power rates."#