Last chance to make Napocor sale ‘pro-poor’ - GOTCHA by Jarius Bondoc

It’s all over but the shouting. The House of Representatives ratified yesterday the contentious Omnibus Power Act by accommodating some and rejecting most refinements lobbied by consumerists. The Senate will follow suit on Monday. The auction of state-owned National Power Corp. is final. Such is the parliamentary process.

President Gloria M. Arroyo had staked her political reputation on the bill’s passage. Aiming to bring down factory electricity rates to entice investors, she rallied a Congress that’s about to retire in a week’s time for last-minute work. Consumerists and unionists, though one with GMA in reforming the power industry, nevertheless were unsatisfied with the bill’s contents. For them, it favored big business more than small electricity users she purportedly wishes to help. GMA could’ve waited for an incoming administration-dominated 12th Congress to improve on it starting July. But she didn’t. Time was of the essence. She picked up the version passed by Joseph Estrada’s ruling allies in the 11th Congress, then negotiated revisions through her Lakas partymates. Political foes in the bicameral conference committee took the revisions in stride as part of the give-and-take. Now it’s time to test if the law would indeed encourage private firms to buy Napocor’s generating plants and offer competitive rates.

Still, opposers have their misgivings. Consumerists and unionists didn’t get the meat of their demands, just a few concessions here and there. For them, GMA may have won, but she’s politically bruised by resentful distrust. More so since the law lacks all-important consumer safeguards. For one, it would still pass on P570 billion in Napocor cash obligations to taxpayers, the very consumers of electricity. Too, it guarantees to cut home electricity rates by only five percent or 30 centavos per kilowatt-hour, but gives factories a heftier discount of 27 percent or P1.62 per kwh. How can the law be pro-poor as GMA claims, the opposers ask her, if it not only will burden consumers with more taxes but also favor businesses instead of small electricity users?

There’s still a way to make Napocor’s sale pro-poor, though. And it’s in a formula long proposed by Environment Secretary Heherson Alvarez when he, as congressman, was head of the House committee on energy in 1997. First brought up by economists from the Congress Planning and Budget Office, the plan is to make shareholders out of home electricity users whom the law will force to absorb Napocor’s P570-billion mess.

Here’s how it works. Napocor’s generating plants will be sold to private distributors like Meralco or the Alcantara and Aboitiz power firms. Probably even to new players, depending on their bids. But to sweeten the deal, the law will restart Napocor on a clean financial slate. Taxpayers, that is, consumers, will pay Napocor’s present commercial debt of P150 billion (out of P280 billion). In addition, they will pay for P420 billion in Napocor "stranded costs" to independent power producers (IPPs). These are future bills for Napocor’s forced purchase of 85 percent of the electricty produced by the IPPs, at prices up to 35 percent more than Napocor’s own generating cost. (Napocor fell into those purchase contracts with IPPs during the flurry to solve the power crisis of the early ’90s. Some of the IPP bills, consumers already are paying for at present in the form of PPA or power purchase agreement.)

But under the plan, taxpayers-consumers will get something in return for the total P570 billion they will pay. This, so that the law won’t make the public get the shorter end of the stick the way they already did with the mothballed Bataan Nuclear Power Plant and the bankrupt Central Bank. In exchange for their monthly payment of their portion of the P570 billion, consumers will get shares of stock in the companies that bought Napocor plants in their locales. It’s like making their forced payment of Napocor losses a capital infusion into the new private electricity generators. And the consumers’ shares are different from the provision in the law that requires the new generating firms to sell 10 percent of their shares to the public through the stock market.

Making "capitalists" out of otherwise perennial consumers is empowerment. And empowerment is the core of any pro-poor program. With their shares, consumers can command a seat in the generating firm’s board of directors. Too, they will get shares of the profit in the form of stock dividends or even discount coupons. More importantly, they will have a say in the firm’s pricing and service quality.

If the idea sounds new, it’s only to GMA’s partymates and energy officials who refused to listen long ago to cries of consumers. It’s an old concept, done in several European countries that similarly sold their state-run power firms in the ’80s. In fact, that’s where the Congress planning staff picked up the idea.

Truth to tell, some GMA advisers are receptive to the equity plan. Just that, for some strange reason, they heard about it only now. (I, for one, have been writing about it for two years now.) Some say they can have it inserted in the new law’s implementing rules and regulations. That won’t wash, since they can’t make rules and regulations out of something that doesn’t exist in the mother law in the first place. They also say they can draft an amending law for the 12th Congress to study and pass. There’s time enough for that, they claim. After all, Napocor’s actual sale will take place in late 2002. Then again, who’ll remember to take up the cudgels for consumers by then? Or, they can try inserting it in the present version of the Omnibus Power Act. This will require new floor debates within the 11th Congress’ last four session days next week. But then, it’s better late than never. Especially for GMA, who lost many of her EDSA-II supporters during the bruising debates on the Omnibus Power Act.

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