We’re paying for Napocor’s excesses

The National Power Corp. (Napocor) gave a rather odd, if not downright funny, response to the column I wrote last week, entitled “Cyril del Callar—incompetent or corrupt?”

The reply was a non sequitur, a quaint way of drawing you away from the main issue, which was the absurdity of the P1.3-billion coal-supply contract it awarded to an Australian firm on April 2.

My column merely expressed the view that del Callar would have a lot of explaining to do for the contract, which was awarded on a negotiated basis to Hunter Valley Coal Corp. of Australia, through its local representative Glencore Far East Philippines AG, on April 2 at a shockingly high price of $84 per metric ton, far above the normal import price that ranges between $20 and $30 per metric ton.

Napocor’s justification for the outrageously priced importation was that an abnormal surge in demand for power had put the coal-fired power plants of Napocor in the grip of an acute fuel shortage, implying that the shortage had to be filled right away through an emergency, hang-the-cost coal importation for the sake of ending those pesky rotating brownouts.

My column also cited the reaction of Sen. Aquilino “Nene” Pimentel Jr., who had the suspicion that the rotating brownouts one or two months ago were contrived or stage-managed to justify the huge importation, the cost of which would definitely be passed on to power consumers in the form of higher power rates.

Napocor’s reaction came in the form of a 19-paragraph letter to the editor of this paper. The letter of Dennis Gana, Napocor’s corporate communications manager, was published in the May 25 issue of the BusinessMirror, with the title “Stop spreading rumors—Napocor.”

Gana tried to draw attention to the power-rate increases that could ensue from the huge coal importation, and away from the whys and wherefores of the Hunter Valley Coal importation. He then said it was not true that there was an imminent power-rate increase; and that those who have said so were rumormongering.

With this kind of response, Gana adroitly sidesteps the issue of the overpriced coal importation. He might as well have said: “So what if we authorized this scandalously priced importation? It’s not true that it will result in higher power rates in the short and medium term as you suggest. It takes time for the Energy Regulatory Board [ERC] to decide on rate increases. There will be no rate increases in the short and medium term. So stop spreading false rumors about an imminent power-rate increase. Spreading rumors of this sort only creates undue concern.”

Anyway, that’s more or less the central message of Gana’s 19-paragraph letter.

It was in the 12th paragraph where this main message was buried: “Thus, there is no truth whatsoever of any electricity-price increases in the short or
medium term, unless it has gone through a public hearing, and the thorough review and analysis of the ERC.”

No matter how his spokesman may try to tap-dance around the issue, del Callar still has a lot of explaining to do regarding the Hunter Valley Coal contract. And he may have to do his explaining under oath to the Joint Congressional Power Committee (JCPC), because the Hunter Valley Coal contract was simply too big to escape public notice.

For one thing, it has already shaken up wholesale prices at the Wholesale Electricity Spot Market (WESM). Despite Gana’s explanation that it was “an abnormal surge in demand due to the extreme summer heat” that caused the rotating brownouts, the public—and this includes two or three prominent members of the JCPC—remains suspicious that something rotten is going on somewhere. That suspicion must be laid to rest for del Callar’s sake, assuming he is on the up and up in this deal.

The question that needs to be answered is why did Napocor fail to anticipate the coal shortage by stockpiling on the required supply? Is it so incompetent that it did not anticipate any surge in power demand during the extreme summer heat?

Napocor has no business purchasing its fuel requirements on a short-term basis the way it just did. In any well-run power system, sufficient fuel inventory is a must. The practice, if I remember right, is to maintain 30- to 45-day supply at any time of the year.

I was told that at the time the Hunter Valley Coal deal was closed, Napocor had a fuel inventory for its coal-fired plants equivalent to only four days’ supply.

The big question the JCPC might ask is, how much was the commission, if there was any at all, on this P1.3-billion deal, and who were the beneficiaries, if there were any at all?

And oh, by the way, Gana’s assurance that no power-rate increase will be imposed on the public “in the short or medium term, unless it has gone through a public hearing, and the thorough review and analysis by the ERB” is a cryptic message that only means the inevitable rate increase will be passed on to us a little later than the medium term.

The way I see it, the matter of the coal-importation overprice will be swept under the rug for the meantime. It will be swept out again when nobody’s looking. Sooner or later, whether it’s next year or even after 2010, it will be the public that will have to bear the cost of the Hunter Valley Coal deal. There is no escaping it even if the national government absorbs the loss, assuming it is chalked up in Napocor’s books as a loss.

In the end, we the people will pay for it, the way we somehow have to bear the tens of billions in losses that this power agency has been incurring through mismanagement or because of corruption ever since it was established more than two generations ago.  

Omerta_bdc@yahoo.com 

So how come nobody’s talking at all now about the “7-8-9” formula much hyped in the media by one of the country’s economic managers during the campaign period? 

The effective means of controlling the presidency lies not in law but in politics. For the American president rules by influence; and the withdrawal of consent, by Congress, by the press, by public opinion, can bring any president down.

— Arthur M. Schlesinger Jr. in “The Imperial Presidency”

The National Power Corp. (Napocor) gave a rather odd, if not downright funny, response to the column I wrote last week, entitled “Cyril del Callar—incompetent or corrupt?”

Studies show that there is a marked increase in the incidence of child abuse, neglect, exploitation and violence.

We, in Kaalagad Katipunang Kristiyano, wish to join your provincemates in celebration and thanksgiving on your election as governor of Pampanga.

Many thanks for your article on our microfinancing services initiative, Hapinoy. This is an initiative that we definitely hope will help tens of thousands of our fellow countrymen, and will be a powerful tool in poverty alleviation.