Privatization, ‘cartel’ blamed for Mindanao power crisis

MALAYBALAY CITY (MindaNews/12 April) – Two party-list lawmakers have pointed to the privatization of the country’s power industry as the culprit behind the so-called power crisis in Mindanao.

“The cause of the power crisis – present and near future – is a power cartel,” Trade Union Congress Party Rep. Raymond Democrito C. Mendoza said in a statement Thursday, a day before the Mindanao Power Summit in Davao City where President Aquino is expected to attend.

Mendoza said the alleged cartel is made up of six families: Aboitiz, Lopez, Pangilinan, Ang and Cojuangco, Alcantara, and Sy.

He accused the six families of carving up “specific areas of the country so that all three island grids are now in thrall of an electricity monopsony.”

Monopsony means a situation in which the entire market demand for a product or service consists of only one buyer.

“These families frequently control the industry through the vertical integration of the power production and electricity distribution functions. Power is generated by the Aboitiz group and sold to the Aboitiz-held Davao Light and Power and Visayas Electric Corporation.

In like manner, Pangilinan-owned plants sell power to the Pangilinan-owned MERALCO to distribute. So within the areas carved out by each oligarch, there is no competition at all and instead we have ‘sweetheart deals which drive rates up between the generator and the distributor,” said Mendoza.

Bayan Muna Rep. Teddy Casiño meanwhile called for the scrapping of the Electric Power Industry Reform Act and the reversal of the privatization policy to solve the crisis.

“EPIRA’s privatization policy is not only a mistake, it is a fatal mistake. It is a major factor for the power crisis in Mindanao. The reason for neglecting the rehabilitation of the Agus and Pulangui hydroelectric plants is because government planned to sell it,”  Casiño said in a statement Thursday.

“On the whole, EPIRA systematized and expanded the privatization and deregulation of the power sector. It completely transferred the control and administration of generation plants to private companies.

It also privatized the transmission of power. Thus, private corporations, which have long controlled the distribution utilities, have become even more powerful since they now own the generation plants as well,” he added.

Casiño said that power rates have doubled and Napocor rates have jumped by at least 95 percent 10 years after Epira was implemented.

“More than half of the total generation capacity, the entire transmission system and a large part of distribution, are now controlled by a few large companies. After privatization, only three groups control 52 percent of generation capacity – San Miguel Corporation, Aboitiz, and Lopez,” he said.

He added that Napocor remains indebted despite paying billions of debts over the past 10 years. “From 2001 to 2010, Napocor shelled out $18 billion to service its financial obligations. Yet, from $16.4 billion in 2001, Napocor’s debts remained high at $15.8 billion as of 2010.”

Mendoza said the privatization of most NPC assets has failed to bring down electricity rates nor increased the island’s power capacity because the government “compromised national energy policy and national energy security to the greed of the few.”

He said private power firms are spreading “disinformation” by blaming the crisis on Mindanao’s policy regime of cheap hydropower.

“Now we would have their agents and apologists in high places further add to the disinformation by blaming what is happening to Mindanao on the Mindanaoans being ‘spoiled’ and by convincing all that Mindanaoans should now bite the bullet,” said Mendoza, referring to Energy Secretary Jose Rene Almendras’ circular 2012-03-0004 last week ordering Mindanao electric cooperatives to buy power from the Aboitiz power barges at P14 per kwh, with government shouldering the P9/kwh diesel cost.

“If that is the case then the power summit would just be a rubber stamp for DOE circular 2012-03-0004 which forces consumers to pay an additional 50 to 80 centavos per kWh for their electricity due to the manipulations of favored private power generators like Therma Marine Inc. owned by the Aboitizes, ”  Casiño said on Monday.

“The summit is also meant to convince the people of Mindanao of the supposed need to deploy more coal-fired and diesel power plants despite Mindanao’s abundance in clean and renewable energy sources,” he added.

The lawmaker said he found it strange that government is willing to subsidize diesel power at P9/kWh when it would be cheaper and sustainable to subsidize solar and other renewable energy sources.

“Is there a conspiracy to ram fossil-fuel power as the solution? Would this not reduce the power summit to a farce, giving Mindanao consumers no choice but to stick to more expensive, dirty, non-renewable power?” Casiño asked.

Mendoza also alleged that the summit was meant to justify the power supply contract with the Aboitiz-owned firm. “By coming up with the grand plan of forcing electric cooperatives to buy expensive diesel power from the Aboitiz-owned Therma Marine power barges, the DOE would want the summit to legitimize the de facto power of oligarchs to control our access to power and its resultant costs.”

The lawmaker said the government is providing a technical answer – electricity from power barges – to a political question, referring to the alleged cartel.

“We must definitely demand accountability for those bringing up our power rates so that we are now the highest in Asia while not investing an additional capacity to prevent power shortages,” said Mendoza.

He warned that the country’s high power rates, said to be the fourth highest in the world, may drive investors away.

Casiño meanwhile urged the government to rely more on renewable energy. (H. Marcos C. Mordeno/MindaNews)