Nene sees passage of power reform bill

Senate President Aquilino Pimentel Jr. expressed confidence yesterday the controversial Omnibus Power Sector Reform Bill will finally see passage during the special session of Congress this week.

"There is a big chance the law will be passed," said Pimentel yesterday, adding he was counting on 16 senators, including himself, to attend the four-day session that begins tomorrow.

The measure, which seeks to sell off the generating assets of state-controlled National Power Corp. (Napocor) to the private sector, has undergone seve-ral transformations in both the Senate and the House of Representatives with the various versions having been deliberated upon by Congress since the Ramos administration.

The newest version of the bill is likely to emerge from debates in the Senate and the House of Representatives and will include safeguards against monopoly and market domination to ensure transparency and competition.

Pimentel, however, stressed that legislators cannot ignore the concerns raised by cause-oriented groups.

"The law is long overdue, but Congress will have to pass it with due regard to the objections of civil society," he told a forum in a Quezon City hotel yesterday.

Many sectors are opposing the passage of the bill, saying there is no guarantee that the cost of electricity would go down even if Napocor is sold to private investors.

Sen. John Osmeña, chairman of the energy committee and principal author of the bill, earlier said approval will still depend on the individual members of the chamber, although he gave assurances that his panel is ready to report out the measure during the special sessions.

He had proposed that the Senate reconstitute the bicameral body, originally composed of Juan Ponce Enrile, Teofisto Guingona, Tessie Oreta, Sergio Osmeña III, Ramon Revilla, Raul Roco, Vicente Sotto III and Francisco Tatad.

"Tatad and Revilla are out of the country while Roco and Guingona are already resigned from the Senate," he said.

Osmeña said that once the bicameral panel is reconstituted, he would immediately sit down with his House counterparts and resolve the remaining sticky points of the bill.

The Senate approved its own version of the bill last January after years of deliberations, public hearings and consultations. The countless hearings have exasperated Osmeña, who said he kept hearing the same arguments every time.

He said the Senate must exercise political will "or it will never come out with a law."

JPE: Don’t sell out the people

Enrile warned President Arroyo and Energy Secretary Jose Isidro Camacho not to sell out the interest of the Filipino people in their eagerness to pass the power bill next week.

He said the measure in its present form contains too many loopholes that work against the interest of already suffering Filipino consumers.

"There is a need to plug all the loopholes and introduce essential safeguards to protect electric consumers," the senator said.

Enrile identified six critical areas and issues that need to be addressed to protect the consumers and ensure a fair and effective deregulation of the power industry:

• Prevention of monopoly and harmful market domination;

• disallowing stranded cost claims on privately negotiated power supply contracts.

• Stopping the abusive practice of making consumers pay for income taxes of power distributors.

• Mandated open bidding for bilateral contracts.

• Stopping abuses in rate setting.

• Setting up an independent, trustworthy Energy Regulatory Board.

Meanwhile, Malacañang continued to seek the support for the power bill, appealing to lawmakers to cross party lines in approving the measure.

"The power reform bill is really a non-partisan measure. Its main objective is to stabilize the economy," said Presidential Legislative Liaison Office chief Gabriel Claudio.

He pointed out that some 179 out of 210 congressmen have confirmed attendance to the special sessions to ensure reaching the quorum required for the ratification of the bill.

DOE chief outlines new power bill

Speaking to the Foreign Correspondents Association yesterday, Camacho outlined the main points of the power reform bill, which is seen as a litmus test of the government’s commitment to economic reforms.

Included were the following:

• Debt-laden Napocor, which owns most of the country’s power generating plants and transmission lines, will be privatized.

• Napocor’s contracts with independent power producers (IPPs) which sell all their power to the state firm, will be reviewed.

• Of Napocor’s total assets, estimated to be valued at $5 billion, its generation companies will be divided into six groups and sold off mainly to foreign investors in about 15-18 months.

• Napocor already has $6.7 billion in debts and nominally is about 90 percent leveraged. The debts, to be transferred to a special purpose company, will be repaid by proceeds from Napocor’s asset sales. The government has provisions to shoulder a maximum of P200 billion worth of stranded debt, referring to Napocor’s remaining debt after its asset sales.

• Consumers will shoulder losses from IPP contracts estimated to be 25-30 centavos per kilowatt-hour. However, residential customers will a receive mandatory 30-centavo per kilowatt-hour rate cut.

• The local power industry is currently comprised of two sectors: generation and distribution. Following the bill approval, the industry will be broken up into four sectors: generation, transmission, distribution and supply/retail.

• Generation and supply/retail sectors will be open to competition both to domestic and foreign companies.

• Transmission will likely continue to be a monopoly but a private group will be asked to operate it under a concession agreement and it will be regulated by the government-commissioned regulatory body. Distribution will also likely be a monopoly, but regulated by same body.

• There is no cross-ownership ban in the bill, but dealings between distributors and generators will be limited. Dealings between companies of the same group will likely be capped at around 50 percent. Distributors will be forced to purchase at least 10 percent of their power supply from the spot market.

• There will be caps on the market share of generators at 30 percent per grid and 25 percent nationwide.

• Regional electric cooperatives involved in distribution, will be given a five-year grace period before becoming open to competition.

First sale in 2002?

Should the measure be passed, Camacho said, the country will likely see the first privatization of its power assets late next year.

He added that foreign investors are expected to be the main players bidding for Napocor assets as there are few local firms with enough financial capability to rehabilitate and operate these assets.

"Even if the bill will be passed on Monday, we will not be selling the assets two weeks from now," Camacho told foreign correspondents. "I personally estimate a period of about 15 to 18 months from passage of the bill before the first set of privatization is likely to happen."

Camacho said the government will have to formulate the implementing rules and regulations of the power bill, formulate a privatization plan and then come up with bidding guidelines.

The government intends to launch a two-step marketing effort to lure investors to look at Napocor’s assets.

The first round of talks with investors will help the government determine its privatization plan.

"We fully intend to do two rounds of marketing, a pre-marketing so that we can start talking to potential investors and buyers, get a feel for what their parameters are today... before we finalize our privatization plan," Camacho said. "Once we already have a privatization plan, we intend to go on a marketing roadshow and present our plan to potential investors."

He declined to identify the foreign investors who have expressed interest in Napocor’s assets.

Officials have said the power reform bill is symbolic of the ability of Mrs. Arroyo’s administration to push for economic reforms.

"I think this reform is very, very important for investor confidence," Camacho said. – With Efren Danao, Sandy Araneta