FVR defends IPPs in Senate hearing

Former President Fidel Ramos attended a Senate hearing yesterday to defend his decision to allow the operation of independent power producers (IPPS) during his term, which is now being blamed for the high electricity rates in the country.

Ramos said it was a "judgment call" on his part caused by the massive power interruptions during his term as president.

Unlike in a previous hearing where Ramos and Sen. Miriam Defensor-Santiago engaged in a verbal tussle over the botched sale of YNN Consortium to a Malaysian firm, yesterday’s hearing was relatively peaceful.

However, opposition Sen. Sergio Osmena, whose wife is related to the Lopez clan that controls Meralco, grilled the former president over the IPPs.

Osmeña argued that the government and the consumers could have been spared of the high power rates today had Ramos not ordered the IPPs to operate.

Santiago, Osmeña and Senate Minority Leader Aquilino Pimentel Jr. share the view that Ramos may be held liable but it would be difficult to pin him down on the charges.

The lawmakers are leaving it up to the Sandiganbayan to decide if charges of malversation of public funds or graft may be filed against Ramos and government officials during his administration.

Ramos said in his opening statement that he was attending the hearing to participate in what he calls "important steps in the lawmaking process."

"While many have criticized the Senate for holding too many hearings and inquiries (258 as of last count) with too few legislation coming out, I continue to regard hearings such as this, as I did in the three other hearings I attended previously, as important steps in the lawmaking process," Ramos said.

Santiago said Ramos can be held liable after he admitted in the hearing that indeed he may have done something wrong in allowing the IPPs to operate.

Ramos, upon Osmeña’s questioning, admitted that he allowed the operation of the IPPs to address the massive power interruption in the country.

Santiago also said that during the investigation of the Senate Blue Ribbon committee, there were also glaring anomalies found.

The senator was referring to the Caseclan contract, which the government is paying up now — P2.8 billion for energy and P4 billion as guarantee fee annually.

A few years ago, the Caseclan project was deemed as the "most notoriously corrupt" power deal during an inquiry undertaken by the Senate Blue Ribbon Committee led by Sen. Joker Arroyo.

"So much debt was piled up to the IPPs…In turn, the IPPs made so much money out of government and that the losses are now being shouldered by consumers," Santiago said.

Ramos reiterated that a decision was needed at that time to avert the looming economic crisis brought about by the lack of efficient power supply. He also cited as contributing factors the Asian financial crisis in 1997 and the El Niño phenomenon in 1998. Had the government not intervened, he said the government could not have survived the crisis worsened by the power interruptions.

"The issues on excess power supply and the "take or pay" provision in the IPPs contracts never came about. This was simply because at that time, the projected electric power capacity requirement matched closely with actual demand," Ramos said in position paper.

He added that the imminent shortage in power supply happened as early as 1989 when old and inefficient power plants broke down. During the worst period of the crisis during the Aquino administration, Ramos said power outages lasted 10 to 12 hours daily.