House paves way for Napocor sale

The House of Representatives paved the way yesterday for the sale of the National Power Corp. (Napocor) by approving the Power Industry Reform Bill.

The chamber voted 146-30 to pass the measure at the end of a 20-hour marathon session that started at 4 p.m. on Tuesday.

During the overnight session, congressmen also approved a new securities law which they said could prevent a repetition of the BW (Best World Resources Corp.) stock manipulation scandal.

Most of those who voted against the power reform measure belong to the House minority. They were joined by a few congressmen of the ruling Lapian ng Masang Pilipino (LAMP).

Speaker Manuel Villar Jr. said the enactment of the measure "will ensure that power rates will not continue to go up but will eventually go down."

"Although reduced power rates will not happen overnight, this is the long term thrust of this bill," he said.

In a statement, the Napocor welcomed the approval of the power bill.

"With the profound reforms in House Bill 8547, we will soon see greater competition in the power generation and transmission industries," said company president Federico Puno.

Puno's sentiments were echoed by Energy Secretary Mario Tiaoqui, who expressed optimism that the proposed reforms in the bill will be "swiftly acted upon by the bicameral conference committee."

Villar said the proposed law seeks to dismantle the "monopolistic structure" of the power industry by separating its three major components, namely, generation, transmission and distribution.

Under the bill, Napocor's power plants would be grouped into seven and sold to interested buyers through public bidding.

Its transmission facilities would be transferred to a subsidiary to be called National Transmission Corp. This will also be privatized, starting on the second year after the law restructuring the power industry takes effect.

Napocor's loans, referred to as "stranded costs" and variously estimated from P400 billion to P600 billion, would be passed on to consumers through an electricity industry reform charge (EIRC).

Sponsors of the bill led by Rep. Arnulfo Fuentebella (LAMP, Camarines Sur) said the state power firm was stripped of its loans so it would be an attractive asset for the private sector.

Fuentebella said the power sector reform measure mandates a five percent reduction in the cost of electricity.

Rep. Ernesto Herrera (LAMP, Bohol) said without its loans, Napocor would be making a clean profit of at least P3 billion annually.

"This is the kind of money that makes interested buyers of Napocor salivate," he said.

The power industry will continue to be regulated. Rates to be charged by the generation, transmission and distribution companies will be subject to approval by the Energy Regulatory Commission, which would replace the Energy Regulatory Board.

Voting against the bill, opposition Rep. Oscar Moreno (Lakas, Misamis Oriental) told his colleagues that "we have not really determined the extent of the financial obligations of Napocor, and yet we are asking consumers to pay for these obligations."

He said passing the so-called stranded costs to consumers and the Filipino taxpayers "is unconscionable."

He said the only nice phrase he has read in the 65-page bill was its declaration of policy, which is to ensure the country's total electrification and promote competition in the industry.

"Sad to say, the rest of the bill does not give meaning and substance to this policy," he stressed.

Rep. Enrique Garcia (LAMP, Bataan), voting with the opposition, warned his fellow lawmakers that they were repeating a mistake they had committed when they deregulated the oil industry.

He said the deregulation led to the sale of Petron and resulted in frequent increases in the prices of oil products.

Such adjustments in turn spawned social unrest and political instability, he said.

"There is no doubt in my mind that we have again sold out the interest of our people. It's history repeating itself," he added.

Like Moreno, Rep. Wigberto Tañada (LP, Quezon) questioned the decision to pass on to consumers and taxpayers the so-called stranded costs.

Tañada said even private distribution companies would be allowed to charge their stranded costs to consumers.

"The Executive Department is of the position that the distribution company investments in generation were business decisions that carry commercial risks. These are private risks. Why are they now being made public?" he asked.

He also said he could not understand why the bill allows cross-ownership between generation and distribution companies.

"Cross-ownership is incompatible with the promotion of competition," Tañada added.

For her part, party-list Rep. Loretta Ann Rosales predicted power rates won't go down.

On the contrary, electricity cost could go up since consumers would assume the burden of paying for the bulk of Napocor's loans, she said.

As for the part of such indebtedness which will be absorbed by the national government, it would be the Filipino taxpayers who would pay for this, she added.

Before adjourning for their three-week Lenten break yesterday, congressmen also passed several local and national bills, bringing to 544 the total number of measures approved by the House since they convened in July 1998.

"We have acted decisively on various bills submitted to us by Malacañang as part of our effort in helping the administration improve the lives of Filipinos," Villar said.

Others who voted against the power bill included Deputy Minority Leader Sergio Apostol (Lakas, Leyte), and Representatives Joker Arroyo (LAMP, Makati), Rolando Andaya Jr. (Lakas, Camarines Sur), Juan Miguel Zubiri (Lakas, Bukidnon), Federico Sandoval II (Lakas, Navotas-Malabon), and Benigno Aquino III (LP, Tarlac).

Rep. Emily Lopez (LAMP, Guimaras), whose husband is related to the Lopezes of Meralco, was the lone abstention.