Friday, August 05, 2005

IPP Blues

As I See It : IPP with P14,000 to build P800-M power plant?

Neal Cruz
Inquirer News Service

PRESIDENT Gloria Macapagal-Arroyo dared the opposition to impeach her. Don't march in the streets, she challenged, impeach me. She refused to answer directly accusations against her. "I will answer you in the proper forum [meaning, in the impeachment trial]; prove your case in court" was her mantra.

Now it is becoming clear why she prefers to be impeached. There may never be an impeachment trial. Pro-administration congressmen will block the impeachment bid because they have the numbers.

"We have an overwhelming majority in the House," boasted Speaker Jose de Venecia. And MalacaƱang itself has boasted that it has signed up 170 congressmen who pledge to crush the impeachment bid. Expect pork-barrel allocations to flood the districts (and pockets) of pro-administration congressmen. Expect the coffers of the National Treasury to be drained even more. Far from our taxes going back to us in the form of services, they go instead to the yawning pockets of congressmen.

That is why an impeachment trial is a very imperfect way of replacing abusive, corrupt and incompetent presidents. A president may be as guilty as hell, but he/she goes or stays not on the basis of guilt but on how many legislators are in his/her pocket.

The opposition is not disheartened, though. It believes there are still enough congressmen out there who will sign the impeachment complaint when the time comes. They just don't want to come out now so that administration operators will not twist their arms to support President Arroyo.

Yes, you congressmen were elected by the people. You represent them, not Ms Arroyo. Eight out of every 10 Filipinos don't want her as president anymore. Do as the people order you to do.

* * *

Some over-smart power plant operators apparently think Fidel V. Ramos is still president of the Philippines, or is its president again, from the way an independent power producer (IPP) is trying to smuggle a deal with the government. Ramos was notorious for signing so many onerous contracts with IPPs during his term that are now one of the main reasons for our very high electricity prices.

Oriental Mindoro province, with 400,000 electricity consumers, is serviced by one electric cooperative, Oriental Mindoro Electric Cooperative (Ormeco). It has a long-term contract with Mirant, a big international firm with other power plants all over the Philippines, to supply it with electricity. The contract still has many years to go.

However, Ormeco entered into a contract with a new IPP named Power One to supply it with electricity, long before its contract with Mirant expires. Luckily, before the contract becomes valid, it has to be approved by the Energy Regulatory Commission (ERC).

Under the agreement, Power One would have to put up a power plant costing at least P800 million to be able to supply electricity to Ormeco. During public hearings conducted by the ERC in Mindoro, however, it was found out that Power One has an authorized capital stock of only P1.56 million, with cash on hand of only P14,000! Furthermore, Power One has no track record to speak of in the energy industry. How can a company with P14,000 cash on hand build a power plant costing close to P1 billion?

Needless to say, all the local officials of Oriental Mindoro and the two congressmen of the province, oppose the contract. The City Council of Calapan (site of the proposed facility), represented by city legal officer Dante A. Manzo, has urged the ERC to dismiss the application of Ormeco to register its contract with Power One. Manzo questioned the "undue haste" with which Ormeco concluded the Energy Sale Agreement with Power One without the benefit of a competitive selection process in clear violation of guidelines set by the Department of Energy (DOE).

Evidently, the bilateral contract was fast-tracked without going through the processes mandated by the DOE and ERC for contracts of such nature.

Rep. Rodolfo Valencia, a former governor, cited the risk to the energy requirements of the province of entering into contracts with entities that may fail to deliver a vital service such as electricity. Why did Ormeco close such a controversial deal with Power One?

Valencia warned of negative repercussions for the population of Oriental Mindoro serviced by Ormeco should Power One fail to deliver. "Why must we needlessly risk the energy security of our province?" he asked. "It is unthinkable to depend on an entity that has not even put up a single power plant nor have the resources to do that."

Besides, if the contract with Mirant is unilaterally canceled, Mirant will have to sue Ormeco and the ERC for breach of contract and damages going into hundreds of millions of pesos.