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Favorite playground for big-time grafters and plunderers

SINCE President Duterte has already trained his sights on big-time grafters and plunderers, he must look no further than the multitrillion-peso energy sector because this is where he will find many of them.

With the Department of Justice and the Ombudsman as the lead agencies to effectively investigate, the best place to start with is the National Power Corp. (NPC), the state agency that served as the country’s lynchpin of the entire energy operations.

Between 1977 and 1985 in President Ferdinand E. Marcos’s time, the NPC’s income rose from P0.4 billion to P18 billion in sales revenue and had total assets of P107.2 billion, almost 10 times what it had in 1977.

A few months after the 1986 Edsa uprising that ended the Marcos regime, President Corazon Cojuangco Aquino’s administration strangely broke up the NPC, dissipated its assets and privatized the majority of its operations, including generations, transmissions and distribution under the guise of ridding government monopoly in the energy industry.

Over a period of 31 years, five presidents had succeeded Marcos, from Mrs. Aquino, her son Benigno S. Aquino III and the three others between them, Fidel V. Ramos, Joseph Ejercito Estrada and Gloria Macapagal-Arroyo, while the key positions of NPC chairman, president and board of directors had changed hands many times. It was during this lengthy period that scams of every size, make and shape had taken place in the energy sector.

Curiously, by June 2003, the NPC had $7 billion worth of debt to its name. These debts do not include the $250-million bond partly backed by the Overseas Private Investment Corp. (around $500 million of the $7 billion had matured toward the end of 2003) and other sovereign contingent guarantees.

As of mid-2004 the NPC’s obligations reached more than P1 trillion, P700 billion of which was due the independent power producers (IPPs). The NPC’s financial obligations represented, at one time, almost one-fifth of the P5.39-trillion national debt that time.

Earlier, a government study commissioned by the Credit Suisse First Boston and Arthur Andersen estimated the NPC’s net liabilities from obligations to the IPPs at a staggering range between $6.1 billion and $6.77 billion. Worse, these liabilities and obligations continue to grow up to this time.

The Philippines had an oversupply of electricity in 1994, but President Ramos’s administration still entered into new contracts with IPPs, many of them enjoyed financial backing from export credit agencies (ECAs) with Philippine sovereign guarantees.

In fact, ECAs supported three of the five IPP contracts found onerous by the government Interagency IPP Review Committee. These were the Casecnan Multipurpose
Irrigation and Power Project (CMIPP), the Sual Coal-Fired Power Plant and the San Roque Hydropower Project, touted as the country’s biggest hydropower.

In these deals, the government committed to pay the CMIPP a whopping P80.77 billion, or $1.454 billion, or $72.7 million ($=55.55) a year for 20 years to Cal Energy (CE–Casecnan), whether the US firm actually delivered the contracted water to Pantabangan Dam.

Aside from tax exemptions, CE-Casecnan is also assured of P40.4 billion, or $728.00 million, or $36.4 million yearly for the same period as fees for the hydropower created in the course of delivering the contracted water. There is no assurance whatsoever that the CMIPP would generate power monthly.

Sovereign guarantee on payments for IPPs’s expensive power, regardless of actual need and performance, appeared to be the major source of graft, greed and plunder, and thus, it set the stage for the NPC’s financial ruin. Within a short span of time, or by 2000, the principal balance of the NPC’s financial debt obligations had surged to $6.77 billion; $1.23 billion of it is owed to various ECAs.

 

To reach the writer, e-mail cecilio.arillo@gmail.com.

 

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