Freedom from Debt Coalition Address: 11 Matimpiin St. Bgy. Central District, Quezon City, Philippines Telefax: (+63.2) 921.1985; (+63.2) 924.6399 | Website: fdc.ph Email address: [email protected] Contact Persons: Aaron Pedrosa - +63.932.364.3137 Zeena Manglinong - +63.917.330.5384 PRESS RELEASE 1 August, 2013 DOE and NEA, not NGCP, ‘short-circuited’ Albay’s Power Supply– FDC Last Tuesday, July 30, 2013, the province of Albay plunged into pitch black darkness not only wreaking havoc on the day to day lives of ordinary consumers but also crippling business operations with losses estimated at PhP 55 million according to the Albay Chamber of Commerce, Inc. (ACCI). According to the Freedom from Debt Coalition (FDC), the Department of Energy (DOE) and the National Electrification Administration (NEA) are equally responsible for this mess. FDC noted that as early as 2011, the Albay Electric Cooperative (ALECO) Employees Labor Organization and other concerned citizens in Albay had proposed a cooperative-to-cooperative (C2C) rehabilitation scheme as an alternative to the return of investment-based private sector partnership (PSP) being peddled by DOE. Under the C2C proposal dubbed as the ALECO Turn Around Strategy, a systems loss reduction and collection efficiency improvement plan was put forward to lower a high systems loss rate of 25% cutting it to as low as 9% to 13% in a period of 10 years starting 2012. This would have saved ALECO PhP 1.23 B. A debt settlement plan was also proposed under the program intended to restructure the PhP 3.7B indebtedness of ALECO to Philippine Electricity Market Co. (PEMC), Power Sector Assets and Liabilities Management Corp. (PSALM), National Grid Corporation of the Philippines (NGCP) and National Electrification Administration (NEA). All these would be complemented by the collection of PhP 0.25/kWh special member’s contribution from the franchise area raising another PhP 1.14 B for a period of 10 years. The C2C scheme also proposed removing ALECO from a captive state of sourcing its entire power supply requirement from the Wholesale Electricity Spot Market (WESM) by allowing it to contract with existing power producers which generate electricity at competitive rates. “Clearly, the member-consumers in ALECO led by its labor unions have already proposed viable solutions in order to immediately address the problems. Tragically, instead of heeding and adopting the proposal, DOE and NEA decided to look the other way, dismissing a workable solution in favor of a PSP-big business arrangement. What is clear though is that DOE has thrown the C2C approach out of the window ”, said Jun Unay, National Coordinator for the Power Industry of Alliance of Progressive Labor (APL), the national affiliate of ALECO Employees Labor Oragnization. “Unlike NEA’s generic privatization plan that would result in ALECO’s debts being passed on to consumers in the form of much higher electricity rates, the C2C proposal would ask consumers to contribute only 25 centavos per kWh as their participation in the turnaround of ALECO,” he added. According to Unay, “Cutting the power supply in Albay was meant as a scare tactic to pressure Albay consumers into accepting the privatization of ALECO. This move as it now appears backfired as it made people realize that the problem lies with NEA." From Php 3.7 Billion ALECO indebtedness in 2012, the outstanding obligation now stands at around Php 4 Billion. FDC attributes the ballooning of the ALECO debt to DOE and NEA’s inaction and failure to adopt the C2C approach. “When in debt, privatize” The FDC views the unfolding events in Albay as reflective of the government’s long-standing mindset in dealing with public utilities’ problems. This is evident in the government’s privatization of the generation and transmission sectors of the power industry and the privatization of Manila Waterworks and Sewerage System (MWSS) in a supposed bid to rid itself of the huge debts which have accumulated through the years. The same line is now being repeated in arguing for the privatization of government hospitals. Yet in the case of both the National Power Corporation and the MWSS, the debts have grown rather than diminished, and big business is profiting from privatization at the expense of small consumers. “It is clear that highlighting the financial situation plaguing ALECO is an argument for privatization – pushing for the takeover of corporations and the private sector in the delivery of power services”, said Ric Reyes, National President of FDC. The DOE announced two more areas which would likely suffer the same fate as Albay – Olongapo and Lanao del Sur. Providing the policy basis for privatization is the Electric Power Industry Reform Act (EPIRA) of 2001 or RA 9136. According to FDC, the recipe being developed by the DOE is consistent with EPIRA which embodies a failed framework in addressing the lingering problem in the electric power industry. “EPIRA, far from achieving its objectives of reducing the debts of the National Power Corporation (NPC) through privatization, bringing down the power rates and securing the power supply in the country, has resulted in a power set up characterized by indebtedness, poor power services and high electricity rates being ultimately borne by consumers,” according to Reyes. “Privatization of ALECO will not solve its problems, but only add to it. The sensible and sustainable way forward for the people and province of Albay would be consumer empowerment together with a genuine partnership between electric cooperatives”, Reyes concluded.###
Posted on: Fri, 02 Aug 2013 00:19:20 +0000
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