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Friday, March 29, 2024

The rise(s)

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By Jonathan Dela Cruz

Yes, we are talking here of the visit of President Duterte and senior members of his Cabinet to Casiguran, Aurora to send off our exploration team to the Philippine Rise a.k.a. Benham Rise, the undersea plateau on the Pacific side of the archipelago extending from the tip of Isabela in Northern Luzon to the northern parts of the Bicol region.

The Rise, which has been declared part of the country’s Exclusive Economic Zone and is under our full control and sovereignty, is reportedly a trove of resources which, if properly exploited, can provide food, energy, jobs and other benefits not only to us but to the world.

This is why the Duterte administration has taken steps to ensure that The Rise will be properly explored and its development securely maximized—an undertaking which will require the cooperation of all the best minds, technology and capital providers the world can offer.

The good thing about The Rise is there are no other claimants to it. It is securely and internationally recognized as ours. So we can plan and develop it accordingly.

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But, as some members of the exploration group advised, we can only hope to maximize such development if we cooperate with other countries to, first, gather all the needed data to determine its potentials and, perhaps more importantly, develop the development cooperation framework within which countries and organizations of goodwill can participate. That is where the newly created authority manned by key technical personnel of the concerned agencies such as the Departments of Environment and Natural Resources, Agriculture, Energy, Science and Technology and the National Economic and Development Authority among others, together with the best academics we can “coopt” for the purpose will have to come it.

Now that the Duterte administration has taken this course, it is hoped that the critics including the most vociferous ones in the Senate will take heed and ensure that the research and development efforts will not be derailed by unwarranted speculation and baseless accusations.

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But there is another Rise which the Duterte administration should take special attention to. I refer to the creeping increases being imposed by all kinds of traders and service providers on our already burdened consumers using the just-passed TRAIN Law as the reason. There is the impending increase in gasoline prices which can actually be tempered, if the economic managers are so minded, by having the increase tax take on gasoline products imposed incrementally.

Then there is the expected increase in power rates which the Energy Regulatory Commission and the Department of Energy should review before agreeing even to a one centavo increase. As some consumer groups have long advised, these government agencies and, of course, the consumers are being taken for a ride by the power oligarchs who have taken over the power industry both generation to distribution as a result of the rush to privatization implemented by the Aquino (I and II)  and Ramos administrations. We will not tackle here the privatizations and other contortions done during the first Aquino and Ramos administrations as the saga of these irregular and immensely anti-people operations have long been chronicled not just in thousands of articles and researches but in the sufferings of millions of our people who have to bear with the billions upon billions of unwarranted increases imposed by the privatization spree during those times.

Those involved in these questionable operations have to deal with the consequences if not at this time perhaps in some other place and time.

Instead, we will take the case of the privatization of the 106-MW Mt. Apo geothermal power plant last 2015 under the Aquino II administration as it was the fruit of a creative but highly irregular and illegal privatization scheme.

First, let us take a look at the energy charge before and after privatization. Before privatization the energy charge per kilowatt hour was P3. After the privatization, the total power (energy) generation charge passed on to power cooperatives (who, by the way, imposed their own distribution charges thus further burdening consumers which should be another story) skyrocketed to P5 and 18 centavos per kilowatt hour (P5.1827/kwh). And it was approved by the ERC? Wow!

That P5.1827/kwh was arrived at in this manner: energy charge— P3.034/kwh plus winning bidder’s (Aboitiz) administration fee, P0.1377/kwh (P105.17 million per year) plus winning bidder’s recovery of highest premium, P2.011/kwh or,P128M/mo or P1.5B/yr annual payment to government for a total charge of P5.1827/kwh. This creative scheme was authorized by ERC on May 11, 2015 in ERC Case No. 2015-035.

Why is it creative, irregular and illegal. First, this was the first privatization which did not require the bidder to put up cash up front as its payment for the government asset it is taking over. Instead, the ERC approved a scheme where government will be paid out of the increase of the power rate (P2.011/kwh) per month. In other words, “niluto ng administration para lutuin ang consumers sa sariling mantika/pawis”. The Aboitiz Group managed to take over the facility by just offering this creative bid which, of course, creatively eliminated other potential bidders.

This is the reason why there was really no public bidding at all as the ERC allowed itself through a contemptuous privatization offer (instead of a public bid with publicly advised terms of reference) with Aboitiz presumably coming out with such a creative scheme.

In other words, there was no competitive determination of the lowest service rate to be offered at privatization which should have been, at least, the mode for such an undertaking if the administration at that timer was really intent in protecting the consumer. Which it did not.

And this is just one of hundreds of other deals during the Aquino III regime which now has to be looked into by the Duterte administration if it hopes to bring back consumer confidence in its management of the economy and of the lives of the millions who continue to suffer under this continuing regime of anti-people privatization.

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