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Aquino cronies taking advantage of power privatization at the people’s expense

Posted on 07 June 2012 by admin

11th year of Electric Power Industry Reform Act (Epira)
Aquino cronies taking advantage of power privatization at the people’s expense

Press statement
June 8, 2012
Reference: Eleanor de Guzman (Deputy Secretary-General)

As President Benigno Aquino III boasts of the supposedly inclusive growth of the economy, the policies he implements have been excluding the poor while further enriching the rich, including his relatives and cronies. This is clearly illustrated in the case of the Electric Power Industry Reform Act (Epira), which today marks its 11th year of implementation.

Enacted on June 8, 2001 in compliance to conditions set by foreign creditors Asian Development Bank (ADB) and the World Bank, Epira, or the privatization and deregulation of the power industry, is one of the most oppressive programs started by the Arroyo administration. Aquino has faithfully embraced this flawed policy that has been harming the people and the economy with exorbitant power rates and energy insecurity. It is further proof that while promising reforms, Aquino in reality is no different from his predecessor especially in terms of economic programs and policies.

Today, the country is being saddled with the most expensive power rates in Asia due to the privatization and deregulation of electricity under Epira. From an average residential rate of P4.87 per kWh in 2000, the rate of the Manila Electric Company (Meralco) has ballooned to as much as P12.97 today – or an increase of more than 166 percent. There is no end in sight for the surge in power costs. This month, Meralco is again hiking its rates by more than 54 centavos per kWh to supposedly cover for increases in the generation charge. This is on top of Meralco’s separate petition to also hike its distribution, metering and supply charges of 3.21 centavos per kWh, which will take effect in July when approved by the Energy Regulatory Commission (ERC).

Instead of reconsidering Epira due to its harmful effects on the people and the economy, the administration is intent to complete its implementation. In Mindanao, where Epira is not yet fully applied, Aquino has been pushing for the privatization of the Agus-Pulangi hydropower complex despite resistance from various sectors including local government units (LGUs). The President even said that Mindanao has to accept higher power rates to supposedly address its serious supply insecurity, unmindful of the fact that the region is already paying for electricity rates which are much higher than those in richer cities in Asia.

Who benefits from the privatization of the power industry? Under Epira, only three groups now control about 52% of the country’s total generating capacity – San Miguel Corporation (SMC) of Aquino’s uncle, Danding Cojuangco (20%); and First Gen. Corp. of the Lopezes (17%) and energy firms held by the Aboitizes (15%) – both long-time and close allies of the Aquino family. These families also own the biggest distribution utilities (DUs) in the country. SMC and the Lopezes control Meralco, together with Manny Pangilinan, who is Aquino’s point person in clinching business deals with American companies, being the founding co-chairman of the newly-formed US-Philippines Society. The Aboitiz family, meanwhile, controls the dominant DUs in the Visayas and Mindanao – the Visayan Electric Co. (Veco) and Davao Light and Power Co.

By promoting the Epira, Aquino is creating an even more favorable condition for these families to further milk the people dry through ever increasing electricity rates. This belies Aquino’s oft-repeated claim that his government is pushing for political and economic reforms that will benefit the people under his much-hyped “daang matuwid”. In reality, it is business as usual for the rich and powerful under Aquino, at the great expense of the people, especially the poor.

We reiterate our demand for policy makers to junk Epira and reverse the privatization and deregulation of the power sector. In the immediate, the Agus-Pulangi complex in Mindanao and the remaining power plants of the National Power Corporation should not be sold to profit-seeking private investors. Rate increases should also be stopped pending the legislation of a new law that will scrap the Epira and will effectively regulate the power industry, including the setting of reasonable rates. #

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