Sabotaging EPIRA?

One good thing that emerged from the privatization of National Power Corp. assets is the government’s ability to lower its foreign debts at an unprecedented rate. Just last week, the Power Sector Assets and Liabilities Management Corp. (PSALM) announced that it will trim down a sizeable chunk of the government’s debt burden by programming the pre-payment of up to $1 billion of Napocor’s obligations, or 14 percent of the state-run power firm’s total debts.

This piece of good news is a welcome respite because it will produce optimum benefits not only to the government mired with huge foreign debt (Napocor contributes largely to this foreign debt amounting to $7.2 billion) but also to electricity consumers who are paying these debts through the universal charge in their electricity bills.

No less than PSALM manager for capital markets and risk management Ferdinand George Florendo said they are eager to complete Napocor’s privatization “successfully and liquidate Napocor’s debts as soon as possible.” Even Psalm president Jose Ibazeta vowed that the continued success of the privatization of Napocor’s power plants will result in cheaper electricity for Filipino consumers.

But what is happening at Psalm is entirely different from that of the state-run Napocor whose officials are strongly resisting any effort to further sell Napocor’s power assets. A point in question is the sudden action of Napocor president Cyrill del Callar supporting the controversial House Bill No. 3042, also known as the amendment to the Electric Power Industry Reform Act of 2001 (EPIRA), which was reported to have been railroaded in the House energy committee to lower the threshold of privatization of Napocor power assets from 70 percent to 50 percent.

It appears that despite the protestations of PSALM and other sectors opposed to the amendments, the House energy committee prevailed last Nov. 20, with only two hearings conducted. During one of these hearings, observers expressed disappointment if not dismay when Del Callar went against the wishes of Ibazeta,  declaring that he fully supports the position of the energy committee in accelerating open access through lowering the privatization threshold.

Why, all of a sudden Del Callar acted against the intent and spirit of the EPIRA is not new, industry observers opine. They said that as early as several months back, Del Callar has been giving presentations to some powerful members of Congress and Malacanang officials on why the amendments to the EPIRA should push through.

Government leaders should not lose sight of the fact that EPIRA was passed in 2001 because no industry player has more than a 30 percent share of the market, it promotes a level playing field, it encourages competition, it attracts more investors to build new capacity, it provides a better solution to Napocor’s recurring fiscal problem requiring government subsidy, and because more competition will make power rates competitive over time.

EPIRA is a landmark legislation which embodies the clear intent to provide a framework for the restructuring of the country’s electric power industry, including the privatization of the assets of Napocor, among others.

The law seeks to ensure the quality, reliability, security and affordability of the supply of electric power.  It also aims to ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability to achieve greater operational and economic efficiency and enhance the global competitiveness of Philippine products and services.

In short, the EPIRA is a comprehensive restructuring program envisioned to be decisively implemented within a definite time frame.  However, its implementation has been marred by a series of actions from Napocor officials that causes more problems, the effect of which was the hike in electricity prices.

More than six years after its enactment, retail competition and open access have not been achieved because more than 80 percent of the country’s generating capacity still remains with Napocor.  This delayed implementation of the EPIRA, together with the combined effects of the historical increases in the international price of oil products and fluctuations in foreign exchange, has caused consumers to further suffer from significant increases in the cost of power.

Gem of an executive

One insurance executive is surely getting a lot of attention lately not just from his global bosses but more keenly from headhunters and other companies. And why not?  This youthful and good looking former American Field Service scholar and Citibank New York alumnus has truly made a “David” out of  the insurance company that got him as president and CEO and toppled the “Goliaths” that used to lord over their industry. And what makes his feat special?  He did it all in a span of less than two years.

After making a century old counterpart firm see the sunset by dislodging it to the number three spot, this executive is now on his way to displacing the industry leader from the top spot in the industry rankings. The triple digit growth in all his numbers for most of this year indicates a big catch up story that might put them ahead of their league in the end.  Just in case he fails to snatch the lead, however, it will still be a strong finish for his company which used to be only ninth-seeded when it started.  

So what’s the big deal about this young executive?  What makes him tick? Some say it’s his charisma and his way with people. He always gets his message across and is able to inspire his force to always give their very best. 

And because he’s that good, he is being courted left and right by HR executives from everywhere. He and his former colleague/friend are said to be talking business again —more along the lines of a big job opportunity in the banking industry where both their hearts really are. Over and above that, an Asian financial giant is said to be keeping a close watch on him as well.  Making a leap to the consumer business is said to be another major option for this man. 

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