By BENJIE OLIVEROS
There is something ominous when the president asks Congress for emergency powers on the week that the country is about to commemorate the infamy of the Marcos dictatorship. Nothing good has come out, for the Filipino people, of the granting of emergency powers to the president. The best example, of course, is the late dictator Ferdinand E. Marcos. The Filipino people suffered under his dictatorship for 15 years, since the lifting of the writ of habeas corpus.
Even the granting of emergency powers for a limited time and a specific purpose did not benefit the Filipino people. In fact, the people bore the brunt of the president’s decisions in the past. A perfect example, because it is also what President Benigno Aquino III is asking for, is the granting of emergency powers to former president Fidel V. Ramos to solve the power crisis when he took over the reins of government.
To recall what happened then, it is informative to go back to an investigative report published by the Philippine Center for Investigative Journalism (PCIJ) in October 2001 with the title Trail of Power Mess Leads to Ramos written by Luz Rimban and Sheila Samonte-Pesayco.
The president then Corazon Aquino enacted Executive Order 215, in July 1987, to supersede Presidential Decree 40, issued by the Marcos dictatorship, which places the responsibility of setting up transmission line grids and power generation facilities to the National Power Corporation. While Aquino’s executive order did not remove these responsibilities from the National Power Corporation, it allowed private corporations to set up power generation facilities to produce electricity for their own use, for sale to the National Power Corporation or directly to end users.
One would think that the result would be an ample supply of electricity in the country, but the opposite happened. By 1991, the country was experiencing rotating brownouts because of the power shortage.
Why? Because the government no longer undertook a comprehensive plan to ensure a steady supply of electricity in the country. It relied on private, independent power producers (IPPs) to provide for the expanding energy needs of the country. The PCIJ report revealed that then president Corazon Aquino ignored the requests of the National Power Corporation (Napocor) for the government to build more power plants to generate the 600 megawatts that was supposed to be produced by the mothballed Bataan Nuclear Power Plant.
One would think that the logical solution to the 1991 power crisis in the country was for the government to formulate and implement a comprehensive energy plan since it was the deregulation and liberalization of the power industry that caused the power shortage in the first place. But again, that was not the case. The government signed 48 onerous energy contracts with IPPs (from 1991 to 2001). The worst contracts, according to the 2001 PCIJ report, were signed by then president Fidel Ramos, when he asked for and was granted emergency powers by Congress in April 1993. This allowed Ramos to fast track the signing of contracts, which he sweetened with government guarantees.
Among the sweeteners were sovereign guarantees for foreign loans secured by the IPPs, meaning the government would pay the loan if the IPP defaults on its payments; a “take or pay” provision, where Napocor paid for the power produced by the IPP whether or not it was used; “force majeure” provisions, which provides that the government pays the IPPs when unforeseeable events occur such as labor strikes, insurrection, war, calamities and natural disasters; the government paid for foreign exchange fluctuations as the contracts were in dollars; fuel-cost guarantee, which requires Napocor to supply and pay for fuel used in running the plants.
When the emergency powers of then president Ramos expired, the government passed the Build-Operate-Transfer (BOT) scheme where investors got tax holidays, profit repatriation, and exemptions from import duties and contractor’s tax. The BOT scheme is now being called as Public-Private Partnerships (PPPs).
According to the PCIJ report, Ramos signed 12 more IPP contracts from 1995-1998. The World Bank reportedly warned of a “substantial overcapacity,” particularly because of the “take or pay” conditions, which would result in higher electricity rates.
Instead of heeding these warnings, Ramos even formulated a 30-year Philippine Energy Plan (1996-2025), which was subsequently extended up to 2035, to attract more foreign investors in the energy sector. The Napocor was subsequently instructed by the World Bank to sell this excess capacity to electric distributor Meralco.
Did the overcapacity of electricity result in the reduction of electricity rates as the law of supply and demand supposedly provides? On the contrary, the rates even increased in the form of Purchased Power Adjustments (PPA) or automatic cost recovery mechanisms, which are passed on to consumers. Adjustments in the cost of fuel, foreign exchange fluctuations, and other changes in the price of power being bought by Meralco are shouldered by consumers as it is charged over and above the basic electricity rates.
Did the government reverse the privatization of power generation because it resulted in the energy crisis and increases in electricity rates?
No, it even privatized Transco, which took over the transmission grid after the enactment of the Electric Power Industry Reform Act of 2001. It also privatized the generation, real estate, other disposable assets, as well as the IPP contracts of the National Power Corporation. The government also created the Wholesale Electricity Spot Market, which is supposed to lower rates as electricity distributors such as Meralco, cooperatives, and even end-users could buy electricity directly from WESM. On the contrary, reports reveal that price manipulation in the WESM has resulted in spikes in electricity rates.
Now, from a supposed oversupply in electricity in 1994, the country is again in the brink of a power crisis. And the country’s president, Benigno Aquino III, is asking for emergency powers to ‘solve’ the impending power crisis.
The Filipino people has been bearing the consequences of the deregulation, liberalization and privatization of the power industry, which was started by the late president Cory Aquino, and the decisions and acts of the Ramos administration when the latter used its emergency powers to ‘solve’ the power crisis. Will the people allow that they be buried deeper by allowing the granting of emergency powers to President Benigno Aquino III to enable it to ‘solve’ another power crisis by entering into more onerous contracts with investors under its PPP program?