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100% foreign ownership to boost public service

Allowing 100 percent foreign ownership in public utilities, with certain restrictions, will solve the unending woes suffered by consumers caused by poor but costly services of the country’s three vital industries; power, telecommunication and transport, Albay Rep. Joey Sarte Salceda, said.

Salceda, chairperson of the House Ways and Means Committee, said amending the Public Service Act will open up competition in these industries, lower their costs, improve service quality and create jobs.

Albay Rep. Joey Sarte Salceda
In a a four-page aide memoire sent to Speaker Alan Peter Cayetano and Majority Leader Martin Romualdez, Salceda said consumers’ woes stem from the “ambiguity in the definition of public utility that is interchangeably used with public service under the 84-year-old Public Service Act.”

He said this allowed monopoly for decades to the detriment of consumers and progress. 

The aide memoire responded to key issues on House Bill No. 78, principally crafted by Salceda himself, which seeks to amend the old Public Service Act and provide a clear statutory definition of public utility.

Salceda said electricity, power, telecommunications, and water, with excessively strong market power for the few players being capital intensive but subject to foreign ownership restrictions, “lack competition and therefore, limited choice for consumers, ultimately result to market failure.”

The 1987 Constitution restricts the operation of a public utility to Filipinos only. There is no definition of a public utility, however, in existing laws.

The old PSA only defines a public service and not a public utility, hence the ambiguity, Salceda said in his aide memoire.

Salceda pointed out that public utilities are “clearly not the equivalent of public service, but are more plausibly just a subset of the latter.”

The PSA defines “public service” very broadly to include even such sectors as ice plants and ship repair shops.

The Albay lawmaker noted that the Supreme Court, in a recent ruling, had offered the key elements of a public utility as “a business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas, water, transportation, telephone or telegraph service.”

HB No. 78 proposes to limit public utilities to transmission of electricity; distribution of electricity; and waterworks and sewerage systems. The amendments also propose that no other business or service shall be deemed a public utility unless recommended by the National Economic and Development Authority.

To protect the national interest, the bill provides that: 1. The President can suspend or prohibit any merger, acquisition or investment in a public service in the interest of national security; 2. Foreign nationals can only invest if there is reciprocity with Philippine nationals; 3. Fines for violations shall be substantially increased and indexed to inflation, to strengthen the regulatory powers of administrative agencies; 4. Relevant regulatory powers shall be retained; 5. Restrictions on hiring foreign labor if there are competent and able Philippine nationals to perform the service; and 6. Retention of takeover power.

Topics: foreign ownership , public service , power , telecommunication , transport , Albay Rep. Joey Sarte Salceda , Speaker Alan Peter Cayetano , Majority Leader Martin Romualdez
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