Why oil prices and power rates keep on rising Posted March 16th, 2012 by Cecilio T. Arillo & filed under Opinion. Tweet To answer this question, let us first look at the country’s energy situation for 12 years, a specific period covered by President Marcos’s total energy plan for the country that succeeded on the right combination of regulated policies, resulting to the steady, low-cost supply of oil and cheap electricity to consumers.In that period, the Marcos government, based on indisputable government records, had also succeeded in reducing the country’s dependence on Middle East oil from 92 percent in 1973 to 71 percent in 1980 and more to 57 percent in 1984. By 1985, the Philippines stood as the world’s second largest user of geothermal power, next to California, resulting further to a 44 percent reduction of the country’s dependence on imported oil worth billions of pesos in savings. On June 19, 1986, four months after the Edsa Revolution, President Cojuangco Aquino, deliberately abolished the Ministry of Energy and placed the successful multibillion-peso National Power Corporation (NPC), Petron and the Philippine National Oil Corporation (PNOC) under the supervision of the Office of the President. The NPC had incomes in sales revenue from P0.4 billion to P18 billion and had total assets of P107.2 billion between 1977 and 1985, almost 10 times of what it had in 1977. Mrs. Aquino’s government broke it up, dissipated some of its assets and privatized majority of its operations, including generations, transmissions and distribution under the guise of doing away government monopoly over the energy sector. Also at that time, PNOC was featured annually in Fortune’s 500 Best Corporations with incomes running into billions of dollars while Petron served as a buffer against foreign oil production and distribution monopoly. Petron, with multibillion-peso assets, controlled 40 percent of the fuel distribution network in the country. To justify the abolition of the energy department and to cover the paper trail, President Aquino through the Presidential Commission on Good Government (PCGG) subsequently charged the late Energy Secretary Geronimo Zamora Velasco with having allegedly committed corruption, only to be declared later innocent by the Supreme Court. Velasco died sometime ago but left behind a solid reputation of honesty and certitude as well as his own personal files made into a book that exposed the unforgivable sins of the Aquino regime in the energy sector. Here’s an extract of Mr. Velasco’s 209-page book Trailblazing, published in 2006: “…it appears that Mrs. Aquino abolished the ministry upon the advice of Cesar Buenaventura, who had claimed that the Ministry of Energy was ‘the most corrupt’ among the Marcos-era agencies. “…Cesar Buenaventura was one of Mrs. Aquino’s closest advisers, but he also happened to be the president of Pilipinas Shell at the time. I have no idea as to Buenaventura’s basis for claiming that the ministry was the ‘most corrupt,’ but I also have no doubt that he had Shell’s interest in mind when he recommended the ministry’s abolition. I could sense that the foreign oil companies were never happy with PNOC, not only because Petron led the pricing structure in the oil market, but also because PNOC’s energy development program, with its emphasis on tapping non-oil sources, threatened to erode the oil companies’ position in the energy market. “Riding on the wave of anti-Marcos sentiment was a good way to eliminate a rival. In my opinion, the abolition of the ministry showed Mrs. Aquino’s inexperience in proper governance. Buenaventura may have been a close friend of hers, but how could she, in conscience, consult someone like him whose interest was to protect his employer, a foreign oil company operating in the Philippines? On the mere say-so of Buenaventura, Mrs. Aquino dismantled the whole energy complex that took twelve years to build and which, in government annals, was unique for the successes it achieved considering the constraints that faced by the country. “Incidentally, the Queen of England knighted Buenaventura thereafter. Did that have anything to do with the ministry’s fate? “Joker revealed that other advisers had already been eyeing Petron’s privatization early on in Mrs. Aquino’s term; they were lobbying for British Petroleum and for a Kuwaiti oil company. Other groups close to Mrs. Aquino’s advisers were interested in PNOC’s privatization because this would enable them to get their hands on Petron. “From a policy perspective, there was no reason to privatize PNOC/Petron even at the time. Why would a government in dire need of cash be willing to let go of a good source of income? PNOC was the biggest government corporation in terms of revenue. “Much of it was due to Petron, which commanded about 40 percent of the local oil market and occupied the top spot in the industry. More important, as Joker himself acknowledged, PNOC’s involvement in oil importation, refining, and marketing took away the foreign oil companies’ advantage of being the only ones who knew how to play the game. It is not surprising then that Petron threatened the interest of multinational oil companies. “Joker’s point about PNOC’s impact on the oil companies is significant, if only because it affirms the fact that foreign oil companies have always invited suspicion that they act as a cartel and dictate the local price of oil regardless of international prices. This issue has hounded the local oil industry since the Ramos Administration deregulated the sector, and has intensified in times of unabated oil price increases, such as what we are experiencing now. “To my mind, however, there is one important question that we should confront–a question that has so far evaded a real answer: As a matter of policy, what should we expect from the foreign oil companies in the Philippines? To answer Mr. Velasco’s question, when the Aquino regime deregulated the energy industry, foreign oil companies formed their own cartel and dictated their own prices, leaving consumers helpless from the harsh effects of rising prices of oil, electricity, water and other commodities. Because energy has a correlation to the economic life of the nation, the country today, notwithstanding its advantages in human capital and natural resources, remains the Asean Region’s economic laggard, continuously retrogressing rather than progressing. Everyman is Manila Standard Today’s new column for citizens’ commentary on pressing issues in the Philippines and in the world. Anybody who feels he or she has something of value to add to the discussion on the pertinent issue is encouraged to contribute. Please send them in MS Word or any compatible format to adellechua@gmail or mst.lettertotheeditor@gmail
Posted on: Wed, 19 Mar 2014 17:08:21 +0000
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