Category: congress

instead of chacha, revoke automatic appropriation for debt service!

my first reaction upon hearing of senate president enrile’s and house speaker belmonte’s joint call for charter change soon after the impeachment and ouster of the chief justice, of which they were prime movers, was to wonder, ano ito, quid-pro-quo?  the president owes them for corona and this is what they want, okay, hope for, in exchange?  it’s a relief, of course, that the prez was quick to reply that chacha is not a priority of his administration, kahit na i don’t agree with the it-aint-broke-so-why-fix-it rhetoric.

this time the arguments for deleting, changing, whatever, the nationalist, protective economic provisions are old and new.  old is the one about attracting foreign investments that our economy direly needs daw.  new is the one about giving the military a bigger budget than education, the better to build an armed force capable of driving away the chinese from west philippine sea territory.

re foreign investments, as usual some agree, some disagree: economist calixto chikiamco and senator joker arroyo agree; economist solita “winnie” monsod and columnist conrado de quiros disagree.  re an improved military budget, however, i have yet to hear anyone agreeing.  the palace via lacierda says there are already efforts to upgrade the capability of the military for a minimum defense position.  senator trillanes prefers the more prudent alternative of a peacefully resolving our differences with china and reviving our relationship as economic partners.  and senator miriam thinks charter change to boost military strength is “just wrong”:

“We just don’t have enough resources to be a world or even a regional military force… What we need is a more effective Coast Guard, not the Navy itself,” she said.

She added that she finds nothing wrong in the Constitutional provision requiring the government to allocate most of its annual budget to education.

“The hierarchy of priorities should begin with the mind. If we are clever, we can outclass the Chinese,” she said.

philstar columnist ana marie pamintuan also objects to a bigger budget for defense than for education.

The Constitution stipulates that the state “shall assign the highest budgetary priority to education…” Enrile thinks this should be subject to change depending on the nation’s needs.

Debt payments in fact have always eaten up the largest chunk of the annual national appropriation. Maybe Budget Secretary Butch Abad can devise a similar creative way of going around the constitutional provision to finance the achievement of the administration’s goal of minimum defense capability.

… As it is, education (and health, for that matter) are still pitifully lacking in funding. So if defense spending will be increased, it will have to be taken from other budgetary items.

indeed.  it’s not as if education’s budget is anywhere close to enough.  the dismal lack of classrooms and textbooks and toilets and running water for our public schools is public knowledge.  so is the low low pay of our teachers — no wonder they opt to work as domestic help abroad as a matter of survival.  so is the poor quality of public education hereabouts — k-12 won’t make a significant difference, promise!  not without money for teacher and curriculum upgrades.

so really, it’s a major major puzzlement how the senate president can even think of making bawas from that pitifully inadequate budget just to make dagdag to the defense budget.  yes, china is a problem.  yes, we need billions, even just for minimum defense, much more for the wishlist of jetfighters, mini-submarines, well-armed frigates, corvette-size combat vessels and minesweepers.  but changing the charter to take money away from education to fund any of that is simply daft, when we could, should, as pamintuan suggests, be looking instead at annual debt payments that eat up the biggest chunk of the budget.

pamintuan, however, is mistaken in thinking that the automatic appropriation for debt service is provided for in the constitution.  read the freedom from debt coalition (FDC)”s Briefer on the Automatic Debt Servicing Provision

It was during the Martial Law in the Philippines that automatic appropriation for debt service was first codified, in Section 31(B) of Presidential Decree 1177 (Budget Reform Decree of 1977). In consonance with her “honor-all-debts” policy, Aquino signed into law the Administrative code of 1987, copying en toto Section 31(B) of PD1177 into Section 26(B) of the code. Section 31(B) of PD1177 also serves as its legal basis.

read this explanatory note to House Bill 1962 authored by kabataan partylist rep mong palatino proposing the repeal of the automatic appropriation for debt service:

Because the government willingly binds itself to a law enacted not through the legislature, but by the decree of a dictator during the dark days of Martial Law to automatically spend more than a third of its annual budget on debt service, its spending on social services, from education to health care has always been grossly insufficient …

so there.  THAT deserves to be repealed, amended, undone.  THAT should be the priority of congress, not charter change.  i’m not saying let’s not pay our debts, i’m saying let’s pay in amounts we can afford.  what the senate and the house of reps should be wanting to change is not the constitution but this odious marcos decree that cory copied in full, unconditionally, without reservation, and which the fernan supreme court upheld :(

here’s senator angara, who also wants the policy changed:

Angara, vice chairman of the Senate Finance Committee, said that debt servicing eats up a significant portion of the national budget, depriving the poor of their right to social services. He said that at least 40 percent of the country’s budget goes to servicing of interest payments and principal amortization of debts.

During the interpellation for Senate Bill No. 2857, “An Act Institutionalizing the Participation of Civil Society Organizations (CSOS) in the Preparation and Authorization Process of the Annual National Budget, Providing Effective Mechanisms Therefore, and for Other Purposes”, Angara stressed that the policy on automatic appropriations on debt service further encourages reckless borrowing and spending as it guarantees payment without legislative intervention and without going through a thorough screening.

“The power to realign the budget and savings and the automatic debt appropriations make for a deadly combination as it allows the manipulation of the National Budget. As long as these loopholes exist, the temptation will always be present. We must therefore revisit and propose amendments to the budget laws to ensure fiscal discipline,” he proposed.

so, really, when i read this in the news today:

Senate President Juan Ponce Enrile said he did not have in mind doing away completely with the 60-40 ratio favoring Filipino investors over foreigners.

“Just that we need to give ourselves the flexibility by authorizing Congress to change the ratio when there is a need for it. But (the idea is) always to protect the interest of the Filipino people in controlling the economy,” Enrile explained in a radio interview over dzBB radio Sunday.

… my reaction was, OMG, invoking the interest of the filipino people in controlling the economy!  does he think we’re morons?  if the interest of the people were truly the guiding principle of congress, matagal na dapat na-undo ‘yang automatic appropriation for debt service na ‘yan.

read walden bello’s In the shadow of debt: the sad but true tale behind a quarter century of stagnation that i blogged about in may 2008, when gloria’s congress was pushing for con-ass.  i was against chacha then as i am against chacha now.

hindi charter change ang dapat nating pinag-uusapan.  not at all.  ang dapat nating pinag-uusapan ay ang pagbabago ng debt policy natin.  we spend on the average half of the budget on bayad-utang and bayad-interes para lang makautang uli.  ano ba yan.  enough na please of the model debtor strategy that has only made a basket case of our economy.

and in the comment section, TonGuE-tWisTeD wondered,

Do these big lenders give the president of a country incentives or commissions for paying early? Gloria says we need to take advantage of the strong peso by retiring most of our debts earlier. Fishy, no?

and president aquino has been doing exactly the same thing, sabay pahiram ng one billion dollars sa IMF, sabay gloat that we are no longer a debtor country but a creditor na daw.  LOL!  read Govt debt hits P5.147 trillion and weep.

 

EPIRA, epic fail

i’ve long been wondering about EPIRA or the Electric Power Industry Reform Act of 2001 that was enacted by congress supposedly to cut high power costs by privatizing the mismanaged and debt-ridden napocor.  obviously EPIRA hasn’t worked, doesn’t work.  read this from philstar‘s marichu villanueva, Thanks, P-Noy, for saying no to emergency powers and an appeal that he revisit EPIRA in the face of impending increases  in power rates.

The other day it was reported the Energy Regulatory Commission (ERC) has approved on March 26 the pending rate adjustment petitions by Napocor and the PSALM to enable them to recover costs incurred from 2007 to 2010. Based on the ERC decision, electricity rates for Luzon are up by 69.04 centavos per kilowatt-hour (kwh); Visayas, 60.60 centavos per kwh; and Mindanao, 4.42 centavos per kwh effective this May.

Speaking of ERC, the EPIRA authorized it to determine the universal charge. This gave distribution utilities like Meralco and Napocor the right to pass on the burden of paying for stranded costs under the IPP contracts to consumers.

Thus, more than a decade after its passage into law, EPIRA is obviously no cure-all to the problems of stable and affordable supply of electric power in our country. That is why there have been persistent calls to amend the EPIRA to correct the flaws of this law to really achieve its mandate to bring down the cost of electricity in our country, which is the highest in this part of the world.

Congress giving him emergency powers will not solve it. Let’s face it. Legislators will always try to suit their own selfish interests into the laws they craft.

indeed, there’s no counting on legislators to help us out here.  senator serge osmena‘s briefer on the mindanao power crisis simply sounds so complicit to me, as though everything’s as it should be in luzon and the visayas, as if spiralling costs to make power oligarchs happy, never mind the suffering middle-class and the masses, were not a form of corruption, too, and we’re not even talking VAT yet.  read this from tribune.  the history, the rumors of lagayan, the scam…

Serge’s Epira contradictions
Herman Tiu Laurel

The electricity spaghetti hit the ceiling fan last week, and the stench of the power oligarchs reeks all over the place. Now it’s not just electricity consumers charging the oligarchs and their captive government officials with conspiracy; local officials, such as North Cotabato Gov. Emilou Taliño-Mendoza and General Santos City Mayor Darlene Antonino-Custodio, are saying that the Mindanao power crisis is “intentional.” Even Sen. Koko Pimentel openly agrees with Mindanao Development Authority (MinDA) Chairman Lualhati Antonino’s assertion that the “artificial shortage” is the National Grid Corp. of the Philippines’ (NGCP) means to “have the Agus-Pulangi Power Plant privatized.”

The NGCP is by no means the main culprit. It goes way up to the oligarchy and the international corporatist mafia behind it. We must remember that the NGCP Frankenstein was sewn together by Fidel Ramos’ Monte Oro Corp., with the Carlyle Group catalyzing the entry of the State Grid Corp. of China, together with the Sy Group, to become the NGCP.

Monstrous as it became, the NGCP Frankenstein is but the son. The mother Frankenstein is the Electric Power Industry Reform Act (Epira), which, in its time, was sewn together by the International Monetary Fund (IMF), World Bank (WB), Asian Development Bank (ADB), the illegal Gloria Arroyo regime, the oligarchs and their Yellow “civil society,” together with the corrupt 12th Congress of Edsa II. They managed to use the thread of the ADB’s $900-million power sector loan and the IMF-WB’s $300-million rehabilitation loan release as conditions for the enactment of the Epira into law.

The local power oligarchs were also alleged to have contributed to a payola of P500,000 for every member of Congress under Speaker Sonny Belmonte, which emoluments were further spruced up by Gloria’s P10-million per congressman “O, Ilaw” project. And, like the current railroaded Corona “Articles of Impeachment,” it is doubtful that even half-a-dozen of the representatives or senators who signed the Epira even read it.

As for media, the oligarch-controlled “presstitute” (press-prostitute) merely suppressed the truth. Only a few, like this columnist and the Freedom from Debt Coalition (FDC), campaigned in the streets against it.

The argument for Epira was that the monopoly enjoyed by the government’s National Power Corp. (Napocor) was too big to be efficient and had to be broken up into smaller units. Fast forward to today and the chairman of the Senate energy committee, Serge Osmeña, himself a champion of the Epira, now argues for the expansion of the split-up units.

In his defense of Department of Energy (DoE) Secretary Rene Almendras’ disastrous handling of the Mindanao power crisis, Osmeña claims the Energy chief “is aware of economies of scale and that electricity would be cheaper for everyone if distributed over a bigger transmission grid than a smaller one…”

The shift in tone is obviously because much of the elite — a class to which Osmeña belongs — have already formed an oligopoly in the sector and are using their clout to blackmail the entire nation into swallowing the “highest power cost in Asia.”

Osmeña says, “The national reform policy on electricity… was to harness the finances and management talents of the private sector in ensuring that the country would be supplied in a timely manner with dependable, quality and reasonably priced power…” Really?

Independent power producers (IPP) are private utility companies established on the basis of state “sovereign guarantees” and/or securitization of captive consumers’ aggregate payments in a contract period. Here, securitization comes in “the form of financial instruments used to obtain funds from… investors… backed by amortizing cash flows.” These cash flows, in turn, are derived from the pockets of millions of electricity consumers.

Historically, securitization was done by the Republic of the Philippines to launch the Napocor; and as government did not shell out any money, only acting as an intermediary of the funds from power consumers, we can say that the power sector was never (repeat, NEVER) subsidized.

When the state’s power assets were still under Napocor control, the price of electricity in the Philippines was not only competitive but one of the lowest in Asia. Today, after Epira, power costs in this country have shot up way into the stratosphere.

In the case of Mindanao, we now see the IPPs blackmailing consumers, the way the privatized Aboitiz Group Power Barges 117 and 118 and the now Lopez-run Mt. Apo Geothermal are being used to force Mindanaoans into accepting 20-year, exorbitantly priced contracts, or else continue being denied much-needed electricity.

But wait. Isn’t price a reflection of these privateers’ much-vaunted “efficiency?” If so, aren’t they and other utilities like the Manila Electric Co. (Meralco) guilty of doing their jobs at a very high cost to the nation and, in fact, destroying its entire economy?

Therefore, given that these oligarchs are only “efficient” from the point of view of profit extraction, totally missing the mark of providing efficient and reliable electricity at the least cost to consumers, why should we accept any of this, in view of the fact that things have gone from bad to worse despite 90 percent of the power sector being privatized?

As if to further cover up the litany of lies that is the Epira, Osmeña raises another point, saying that “Napocor was bankrupt and that even if it sold all of its assets, it still could not cover its liabilities.”

Napocor was a very healthy and viable public corporation before Corazon Aquino, her Yellow gang, and her oligarch-patrons took over the reins of the Philippine Republic. They abolished the Ministry of Energy and placed its functions under the Office of the President to ensure an efficient dismantling of the nation’s energy development program. They established almost a dozen IPPs and cancelled half a dozen major energy projects (including the Bataan Nuclear Power Plant). All these led to a “Dark Age” under a Cory-appointed oligarch as Napocor head. What followed during the Ramos era were 43 more plundering IPP contracts that were to be the most massive bloodletting of Napocor’s resources to this day — via the $18-billion so-called stranded debts that Epira was supposed to have erased but never did. All these have transpired while the oligarchs have not paid $10 billion of what they owe government for these privatized assets.

The current Speaker, Sonny Belmonte, when pressed for a response to the crescendo of complaints from Mindanao lawmakers, said, “We have to investigate (the power crisis) to know what is going on.” Let’s see when the investigation will start and how far it will go (considering who the distribution source of the Epira payola in 2001 really is).

Still, on a slightly positive note, despite the elder Sen. Nene Pimentel’s signing of the Epira, we are hopeful that the younger Pimentel will take up the energy cause in the Upper Chamber this time. My only criticism is that he may have weakened his position when he stated, “If I need to personally beg to Senator Osmeña to hold the inquiry before the Holy Week break, I will have to.”

Why even beg, Koko? Your duty lies with the people and no one else.