Transco: Blackouts on the rise

Although the government has paid billions of pesos for modern facilities to bring electricity to homes and factories, blackouts continued to plague the country, especially over the past three years, according to documents obtained by The STAR.

The latest performance report of the National Transmission Corp. (Transco) showed that the number of blackouts in the country has significantly increased from 192 in 1999 to 301 in 2000 and 400 in 2001 although the government has paid billions of pesos to upgrade and modernize its power transmission facilities.

Transco, the company that was created by law to manage the transmission assets of the state-owned National Power Corp. (Napocor), spent some P1.41 billion in 2001 to implement transmission improvement projects.

This year, Transco’s operational budget amounted to some P1.08 billion for the improvement of other transmission facilities.

Despite the amount of money spent for the improvement of transmission facilities, however, Energy Secretary Vincent Perez said household and industrial consumers will have to suffer more blackouts if the Napocor’s transmission assets are not privatized.

It was estimated that about $500 million a year will be needed to upgrade and modernize Transco’s transmission facilities but the go-vernment cannot afford it because of its gaping budget deficit.

Based on Napocor’s privatization plan, Transco will "privatize" the state power firm’s transmission facilities by leasing them to a concessionaire for 25 years, renewable for another 25 years, raising some P2 billion to P2.5 billion in the process.

Energy officials expressed hopes that Transco’s privatization would dramatically reduce electricity rates in the country by cutting the subsidies the government extends to debt-laden Napocor, which owes the government some P6.5 billion.

According to Napocor officials, there are at least six foreign companies interested in bidding for the Transco assets, including Asea Brown Boveri, a company owned by Hong Kong billionaire Li Kashing, and a French firm.

When President Arroyo visited Japan earlier this year, she also invited Japanese investors to invest in Napocor’s transmission assets.

Stuck in Congress

However, the privatization of Napocor’s transmission assets is being delayed by the Senate’s failure to approve Transco’s franchise application which has already been approved by the House of Representatives during the First Regular Session of the 12th Congress.

The Transco franchise bill was endorsed for approval by the House committee on legislative franchises, chaired by Bukidnon Rep. Juan Miguel Zubiri.

But a reorganization in the Senate on June 3 derailed the chamber’s approval of the franchise bill along with a bill on special purpose assets vehicles (SPAV), another vital economic measure.

Mrs. Arroyo had repeatedly stressed that the two bills are vital to her economic program because the Transco franchise involves the socially sensitive cost of electricity and the SPAV would allow banks to unload bad loans to free more funds for lending to the business sector.

But the bills were shelved when the Senate adjourned sine die its first session last June, leaving unresolved several controversial issues on economic development financing and the cost of local energy, which is one of the most expensive in Asia. The bill is still pending in the Senate.

Transco franchise will cut power costs?

Energy officials said the passage of the Transco franchise will also help reduce the cost of electricity, especially the controversial purchased power adjustment (PPA), or the cost of excess electricity generated by independent power producers (IPPs).

The President in June ordered the Napocor to cut its PPA collection, dramatically reducing the electricity bills of ordinary consumers, and ordered renegotiation of some contracts entered into between the government and the IPPs.

Energy experts said the PPA was a direct result of allegedly onerous "take-or-pay" provisions in the contracts but other experts said the suspension of the PPA collection was not a real solution to the problem of energy costs in the country.

Energy experts said Mrs. Arroyo’s order was not conducive to foreign investments because the IPP contracts were already "perfected" and revising them would discourage foreigners from investing in the country.

The Palace said the President would work out a way to reconcile the need to extend financial relief to the public and the long-term requirements of building investor confidence.

Meanwhile, the Manila Electric Co. (Meralco) denied reports that it increased the PPA it charges its customers.

"We have not made any upward adjustment in our PPA charges," Meralco spokesman Elpi Cuna said in a telephone interview.

Cuna pointed out that they have, in fact, lowered the PPA charge by five centavos for the month of August, contrary to claims that they raised their PPA charges by 17 centavos.

Last June, Meralco effected a reduction of 38 percent, or P1.26 per kilowatt-hour from P3.30 per kwh in April.

Meralco treasurer Rafael Andrada said Meralco and its IPPs - Quezon Power and First Gas - offered the biggest cuts in PPA charges.

The PPA decrease is broken down as follows: 36 centavos per kwh by Napocor, 50 centavos per kwh by Meralco and 40 centavos per kwh by Meralco’s IPPs.