Category: money

evat & the national debt

totoo yata ang tsismis na pabalik-cabinet si dating senador ralph “vilmasantos” recto, also known as the author of the evat law. why else would he be on anc talking about the evat on fuel and electricity and saying na hindi ito dapat i-lift dahil kailangan ni gma ang napakalaking datung na ito (some P90 billion) panggastos sa “development projects”.

yan na yan din ang say ni gary teves (na matagal nang natsitsismis na pa-exit na at papalitan mismo ni vilmasantos recto).

Finance Secretary Margarito Teves is bent on keeping the 12-percent Value-Added Tax (VAT) on oil products and power citing the need for government to collect revenues.

Teves, who spoke to reporters after a press briefing by the World Bank, said that the high oil and power costs as well as rising food prices is just a temporary situation. Tweaking a law, he said however, would be a more permanent measure.

“Well legally, it’s their (Congress’) prerogative,” Teves said, “But let’s remember that we have to have the revenues to be able to spend for various projects.

The finance chief instead proposed two things: first, for all power utilities, including Manila Electric co. (MERALCO) and National Power Corporation (NAPOCOR), not to pass on System Loss charges to consumers.

“If there’s no System Loss, there will be no VAT on this to pay,” said Teves.
The second is for all collections from VAT on oil and power to be used for “targeted spending” to help vulnerable sectors cope with the high costs.

Government estimates VAT collections from petroleum products to reach P73 billion this year, while VAT from power is projected to hit P12.6 billion.’

interesting the proposal that evat collections be used this time for “targeted spending to help vulnerable sectors cope with the high costs.” i suppose ito yung “development projects” ni vilmasantos recto.

question is, where did evat collections of 2005, 2006, and 2007 go? saan ginamit ang datung?

sa kaka-google ko i found the answer in a january 2008 manila times article by the freedom from debt coalition:

The reason why the government is hell-bent in defending an aggressive consumption tax measure (R-VAT) is in order to beef-up revenues. The Department of Finance (DOF) itself admitted that 70 percent of the revenues generated from R-VAT would go to debt service in the first six months of implementation, with only 30 percent going to social services and infrastructure programs.”

ah, so the rvat/evat collected in 2005, 2006, and 2007 went pala mostly to debt payments. but this time daw it will be going to teves’ “targeted spending” on vilmasantosrecto’s “development projects”? ganoon?

take note. the national budget for 2008 is a whopping php 1.23 TRILLION bucks!

how much of that is going to debt payments? according to the website of the department of budget and management:

php 269, 847, 000, 000.00 for interest payments
php 328, 341, 000, 000.00 for principal amortizations
php 598,188, 000, 000.00 total

that’s almost php 600 BILLION bucks! practically half of the budget! OMG. OF COURSE gma needs that php 90 billion from the evat on fuel and electricity. OF COURSE it’s going to debt payments as usual, ‘wag na tayong bolahin about “targeted spending” and “development projects”.

in fact, the total national debt has been growing and growing and growing under gma, but what does she care. hindi naman siya ang magbabayad. say ng fdc:

As of end-August 2007, the National Government (NG) Outstanding debt was pegged at P3.871 trillion, or US$81.91 billion. The bigger part of this debt was acquired domestically (55.98 percent), with Treasury Bonds debt pegged at P1.55 trillion. This is worse when Mrs. Arroyo acknowledged that the country was suffering from a fiscal crisis. In 2004, National Government debt was P3.81 trillion.

Our situation is rendered even more precarious with National Government contingent liabilities reported as having reached P537 billion by 2007, much of it foreign currency denominated. Contingent liabilities are commitments by the national government, expressed or implied, to directly assume the liability of another entity should it be unable to honor its obligations. Thus, contingent liabilities are potential debts. . . .

In truth, the total debt service is higher, not lower, contrary to the Arroyo administration’s claim. A close look at the proposed 2008 budget will reveal that payments for the principal amortization of debts actually went up by 6 percent, or P18.842 billion. Combined with the total of interest payments and principal amortization, debt expenditure actually went up by P11.296 billion, belying any claim of less expenditure for the debt. . . .

The Arroyo administration broke two major fiscal records-first, for being the most aggressive if not the most addictive borrower, and second, for being the largest payer of debts. From 2001 to 2006, Mrs. Arroyo borrowed a total of P2.83 trillion shaming the total P1.51 trillion combined borrowings of the Aquino, Ramos and Estrada administrations spanning 14 years.”

hay naku. definitely, absolutely, we the people must make the debt problem a central issue in the 2010 elections. for the sake of our children and apos, we want national leaders who will free us from debt by following these recommendations of the fdc:

  • audit all our debts so we have an accurate comprehensive picture of our humongous debt problem
  • promote critical study, analysis, and consensus
  • repeal the automatic debt service provision of the Revised Administrative Code of 1987

tama na. sobra na. palitan na.

koryente (updated)

so why is gloria so viciously picking on meralco these days?

can it be that out of the goodness of her heart she just wants to give us relief from high electricity prices, kawawa naman kasi tayo?

or is it just another diversionary tactic to keep jun lozada irrelevant now that she’s had to chill kuno on the rice shortage or else send rice prices skyhigh?

or she could just be doing it to initimidate the lopezes whose broadcasting network is not only critical of her administration but also poised to back a noli de castro presidency in 2010?

i’d say all of the above except the first, the one about the goodness of her heart wishing us cheaper electric bills.

correct me if i’m wrong, but according to my last bill only 25% goes to meralco (for distribution and subsidies). the bulk of it, the 75%, goes to government: 47% to napocor (for generation), 9.6% to transco (for transmission) and 10.3% to taxes for gma’s coffers.

hindi lang meralco ang puwedeng magbaba ng presyo, ang gobyerno rin, unang una na si gloria, by lifting the vat and other taxes. she should set the example and shame napocor and meralco into doing the same, doing the right thing, give us all a break.

otherwise tila tuloy ang senate investigation. for a clearer sense of what they’ll be talking about, here’s katrina’s quickie primer ripped off her personal blog:

Our Meralco bill is made up of the following: 1. Generation Charges, 2. Distribution Charges, 3. Subsidies, 4. Government Charges, and 5. Universal Charges. Under each of these five sections fall various other fees that are broken down at the back of our bills (their technical term for that is “unbundling”) as per the order of the Energy Regulatory Commission (ERC) after the PPA-brouhaha of 2004. Of these 5 things we pay for, Generation, Distribution and Government Taxes are the largest in any bill.

Meralco says it’s the Napocor’s and Independent Power Producers’ fault, for pricing electricity too high producing bloated Generation Charges; they also blame government for the Government Taxes. Government meanwhile blames Meralco for their high Distribution fees. But also there’s much on the bill that are glossed over given the fact that all they’ve talked about – the politicians, media, the capitalists – are the big(ger) fees. In fact, our money also goes to those smaller fees, and when you imagine how many of us pay it, then you know that much money’s collected from these as well.

1. Generation Charge – is the cost of power from Napocor and the Independent Power Producers. Meralco says this is a “pass on” or “pass-through” charge and none of it goes back to them as distributors; all of this goes straight to Napocor raw. Under this section falls the following:
1a. Prev Mos Adj on Gen Cost, an explanation for which I have yet to find.
1b. Transmission Charge – cost of bringing power from Napocor and IPP generators to distribution utilities like Meralco. This charge, according to Meralco, goes straight to Transco or the National Transmission Corporation.
1c. System Loss Charge – this is the cost of power losses that are due to technical or non-technical reasons. So everything from dissipated power by transformers to pilferage – as in pagnanakaw ng kuryente – we are being charged for. This is a scheme approved by the Energy Regulatory Commission, put into law by Republic Act 7832.

The basis for all these charges that fall under the Generation Charge, is your kwh consumed for the month. So let’s say, as with us, you consume 543 kwh for the past month, then that will be the basis of the amount you will have to pay even for the System Loss Charge. Which is really something that we shouldn’t be paying dahil hindi naman natin ginamit ang electricity na yon; actually, nagbabayad tayo para sa electricity na hindi nagamit ninuman.

Now this set-up has been blamed on the onerous contracts between Napocor and IPPs and distributors like Meralco. These contracts have a take-or-pay provision: which means consumers pay for electricity regardless of whether it is produced or delivered to them. Who to blame for this? Fidel Ramos himself, who approved – even railroaded – many of these contracts in 1991, as he freaked out about the power shortage then. (The PCIJ has an excellent piece on these contracts at http://www.pcij.org/stories/2002/ramos.html).

2. Distribution Charges – is the cost of having Meralco distribute electricity to us. This goes to what they say is the building, operations and maintenance of Meralco and their grids. This also fluctuates with the peso-dollar exchange rate. If we are to believe Meralco, that all they get is about 20% off the total amount of our electric bills (this is what they say on their website), then this distribution fee is all they get. Along with this fee (which changes every month), you also pay for the following:
2a. Metering Charge – This is the cost of reading, operations, and maintenance of our electricity and electric meters.
2b. Supply Charge – This is for the services that Meralco provides its customers: billing, collection, customer assistance, among others.

Again, all of these charged by Meralco are dependent on the amount of kwh we consume for the month. Which in itself is problematic. Kapag nagdagdag tayo ng appliance sa bahay, ibig sabihin ba non ay mas nagagamit natin ang customer o billing o collection services nila? Gaano rin ba kahirap mag-maintain ng metro? Gaano kadalas nila itong palitan, if at all? E kapag nanakawan nga tayo ng metro, magbabayad pa rin tayo para palitan ito diba? Dibale sana kung tumataas ang suweldo ng empleyado ng Meralco kapag tumataas ang konsumo natin ng kuryente, at therefore tumataas ang Metering at Supply Charges. E kumusta naman ang contractualization natin ng manggagawa diyan?

3. Subsidies – under this falls only one thing: the Lifeline Rate Subsidy, which is defined by the EPIRA as “the subsidized rate given to low-income captive market end-users who cannot afford to pay at full cost”. Ano daw? Apparently this is based on the idea of socialized pricing. Section 73 says that the Lifeline Rate “a socialized pricing mechanism <…> for the marginalized end-users shall be set by the ERC, which shall be exempted from the cross subsidy phase-out under this Act for a period often (10) years, unless extended by law. The level of consumption and the rate shall be determined by the ERC after due notice and hearing.”

Ano daw ulit yon? We are apparently subsidizing the electricity of consumers who use 100kwh or less every month. What happens is because we pay this fee, Lifeline Rate Users (the marginalized end-users as the law calls them) get 20 to 50 percent discounts every month off their Meralco bills. As of January 2008, Lifeline Rate Users number 1.55 million consumers, or 36.5 percent of Meralco customers.

This is, in effect, a (forced) donation from those of us who consume more than 100kwh of electricity every month, to those who consume less than that every month. Eto ang maganda: Meralco ang nagmamaganda in the end. Because they’re the ones who seem to be generous, giving all these discounts to those who consume the least electricity. Meanwhile we are left with no choice but to do this, even when we’re not sure where our money goes, and whether or not our subsidies really do affect those of us who can’t afford to pay for electricity. It’s so easy after all to just give out discounts – isn’t that the nature of capitalist enterprises if only to seem like they’re being kinder to consumers?

Who’s to blame for this one? GMA and her EPIRA which put it on our bills, to Meralco’s joy.

4. Universal Charges which is really only made up of the Missionary or Missionary Electrification and Environmental Charges.
4a. This is collected from all end-users with the goal of making electricity available to unprofitable parts of the country. So, based on our kwh consumption of electricity every month, we are being made to pay for the “total electrification of the country” according to the EPIRA or the Electric Power Industry Reform Act. This we can blame on Gloria Macapagal-Arroyo who rushed it soon after she came into office.
4b. This goes straight to the Power Sector Assets and Liabilities Management Corporation (PSALM) which is owned and controlled by government and created by RA 9136. This means that this is also a pass-on or pass-through charge. None of it goes to Meralco raw.

This may seem negligible, yes? Parang ang liit-liit ng P20.25 kumpara sa dalawang libo mahigit na singil para sa Distribution Charges na napupunta sa Napocor. But other than the fact na, uh, dapat yata hindi natin ‘to binabayaran buwan-buwan (kailan ito matatapos? kailan matutupad ang pangarap na “total electrification” ng Pilipinas? or better yet, alam ba nating doon napupunta ang pera natin?), take a look at how much they collected of the Universal Charges alone for March 2007: P138,264,690.45. Ano daw ‘yon? P138 million pesos? E bakit parati pa rin tayong nakakapanood ng dokyu sa i-witness tungkol sa mga lugar na hindi inaabot ng kuryente, at kung saan kailangang magbasa sa kandila ng mga pobreng estudyante?

5. Government Taxes – is self explanatory. What is not is everything that falls under it. And you will be surprised at what it is we’re being taxed for: it’s everything!
5a. Local Franchise Tax – any private utility company is required to pay this back to government. 2% of gross revenues goes to the national government as national franchise tax, and 0.05% to 0.75% goes to the local government in the form of the local franchise tax.
5b. Value Added Tax – which should be in the plural given the various other things that are taxed:
1. Generation Charge – 10.4% tax
2. Prev Mos Adj on Gen Cost – 9.32% tax
3. Transmission Charge – 10.69% tax
4. System Loss Charge – 10.49% tax
5. Distribution Rev and Subs – 12% tax

In effect, we are being taxed for most of our bill: the Generation Charge that goes to Napocor/IPPs, the Transmission Charge that goes to Transco, and the Distribution Charge that goes to Meralco. We also pay for the electricity that is unused, undelivered, or unproduced by the IPPs (as per those terrible Ramos era contracts). Eto and pinaka-punchline: we also pay taxes for the Lifeline Rate Subsidy AND the Local Franchise Tax. Both of these fall under “Subs” beside Distribution Rev. So nag-donate na nga tayo para sa electricity ng mahihirap, pinapagbayad pa tayo ng taxes; at taxed ulit ang Franchise Tax na binabayaran natin.

Pero eto na talaga ang pinaka, pinaka punchline sa lahat. Minus the Universal Charges (kase siguro nakakahiya namang i-tax pa tayo para sa page-electrify ng buong bayan through the Missionary fee), we are taxed by government again. Isa pang 10% tax ang pinapataw sa buong bill natin, over and above the individual taxes we paid under Government Taxes.

This is a pass-through charge, which means none of it goes to Meralco. Winner lang ang gobyerno. “

utang na loob

say ni senator nene pimentel, his con-ass cha-cha proposal to shift to a federal form of government needs to be discussed because it is what’s best for the country — federalism will stimulate economic growth in the regions and therefore the insurgency will dissipate and disappear. as in, no problem.

ano ba yan. sounds like a fairytale. why not speak the truth na lang, the truth that what congress really wants to do, intends to do, is to tinker with, amend, junk, if possible, the economic provisions of the constitution because they think, they are so sure, that the limits to full foreign ownership are the reason why we aren’t getting as much foreign investments as thailand and indonesia and vietnam, thats why daw we’re not growing.

i suggest that we all read walden bello‘s latest essay “In the shadow of debt: the sad but true tale behind a quarter century of stagnation,” posted both in the inquirer and freedom from debt coalition websites.

bello’s research and analysis confirm my pet theory that the key to economic growth — yung totoo, yung mararamdaman ng buong bayan, hindi lang ng mga kapitalista — is to STOP being a “model debtor country” and instead do as other heavily indebted countries have successfully done:

Thailand…pushed down interest payments from eight percent of government expenditure in 1980 to two percent in 1995 and raised capital expenditures from 23 percent to 33 percent. . . . Argentina’s five-year string of 10 percent annual GDP growth is due principally to President Nestor Kirchner’s courageous act of unilaterally writing down-that is, paying about 25 cents of every dollar owed to bondholders-on most of that country’s foreign debt and channelingthe money saved to domestic investment….

“Contrary to doctrinaire free-market economics, institutional economists argue that government financial resources devoted to building physical or social infrastructure or shoring up domestic demand ‘crowd in’ rather than ‘crowd out’ private investment, including foreign investment. For instance, one key study of a panel of developing economies from1980 to 1997 found that public investment complemented private investment, and that, on average, a 10-percent increase in public investment was associated with a two-percent increase in private investment….

“There is no doubt that government capital spending crowded in foreign investment in Thailand and the lack of it crowded out foreign investment in the Philippines. And there is no doubt that, as KunioYoshihara asserted, ‘This difference in the flow of foreign investment from [Japan, Korea, and Taiwan] produced a significant disparity in growth performance of the two countries during this period.

“Like all clear-thinking investors, the Japanese were not going (are not going) en masse to a place where infrastructure was (is) decaying and where the market was (is) depressed and poverty was (is) increasing owing to a political economy shackled by structural adjustment and battered by the priority given to repaying the foreign debt. They were (are), in short, not stupid.”

so there. 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.

of course there will be resistance, as usual, but these are unusually hard times, the interests of a few cannot must not prevail any longer over the interests of nation. this could be a matter of survival, a matter of life and death. if the palace and congress are truly after what’s best for the country, then this, not charter change, is the way to go. they owe us.

jun lozada corroborates joey de v. story & the madriaga file

missed the brave wee-hours-of-the-morning presscon of rodolfo “jun” lozada on the nbn-zte deal but caught snippets of anc’s replay later and wow! what a testimony to GREED that corroborates joey de venecia’s story (good for him) and also the madriaga file, posted by ellen tordesillas early this week:

The Madriaga file on broadband deal

THE following document landed in my mailbox. It’s supposed to have been written by a certain Dante Madriaga. (A check with UP alumni activities show a Dante Madriaga as earning a BSE from UP in 1966.). For what’s it worth, here it is.

***

I am an electronic/electrical engineer by profession. I attended the University of the Philippines and Texas A&M University. I have been in the communications industry for over 30 years.

I was a part owner of a company in the LISP in Cabuyao, Laguna that exported microwave radio transmitters. I was involved in the original design of the ARESCOM proposal using a concept similar to what Joey de Venecia thought about. I have been involved in the preparation and design of the NBN ZTE proposal since the beginning.

I have been a technical consultant for the project involved not only in the design but as a liaison to NEDA, DOTC/TELOF/CICT. I was involved in all discussions regarding the project including the names of other people involved, margins and actual pricing details.

ZTE International signed an MOU with the government on March 14 on a National Broadband Network project.

The following is my account of the project from the start to the time when the negotiations were turned over to the finance group. With the exception of the China trips I was present in all the meetings. There may be some omissions and oversights, some of it done on purpose.

May 2006: The project was brought to ZTE on May 5 by a person named Stephen Lai, who was originally with Arescom and is a personal friend oft the Arescom president Cris Ching. ZTE approached Chairman Abalos whom they knew to help on the political side.

Chairman Abalos enlisted the help of Ruben Reyes a golfing buddy to come up with a team to expedite matters. Ruben Reyes contacted General Quirino de la Torre and Leo San Miguel. I was approached by Leo San Miguel whom I had known before to work on the project. I provided Leo inputs on the Arescom proposal which ZTE used as a basis to start their design.

June 2006: Ruben Reyes, Leo San Miguel, General De la Torre, Stephen Lai, Yu Yong, Fan Yang met on June 16 at the Makati Shangri-La in a private environment to discuss the NBN project. They were later joined by Chairman Abalos who left first. We start the design work but are hindered by cost constrains. There is no possible way to achieve the $130M Arescom budget with the commissions that were needed. They decide to increase it to $190M and later added some more components to make it $262M.

Same group meets on June 18 with the addition of Secretary Mike Defensor and Abalos chief of staff Paz and without Stephen Lai meet in Wack-Wack to discuss details on the commissions.

July 2006: We make initial presentations to CICT and Telof at the CICT office. Chairman Sales was present together with then Telof Asec Frank Perez, the son of Sec Nani Perez, Commissioner Lorenzo Formoso, ZTE personnel and the DOTC/CICT technical staff.

Chairman Sales initial comment was that the NBN project was best left up to private but promised to review the proposal and make recommendations.

We made similar presentations to the NEDA infrastructure group, present was the ZTE group including Fan Yang and the accounting personnel of ZTE.

NEDA writes a letter to us citing objections to the initial design.

PGMA signs an MOU on July 12 designating Sec Favila to negotiate with ZTE on the government’s behalf. Group meets on July 25 in Wack-Wack to solve the problems.

August 2006: Then DOTC Asec Perez makes a presentation and objects to the cost and the design. I work with the NEDA group to smooth out their objections.

Asec Perez who openly discredits the project is promptly replaced by Commissioner Formoso who vowed to help with the implementation. Asec Formoso is a better choice than Asec Perez because he is an engineer and a lawyer and can defend the project well.

Chairman Sales reviews the project but is still not convinced; through back door channels he changes his tune at a later date.

Group on August 11 goes to China and demands an advance payment upon orders from the boss ostensibly to facilitate the approval and for PR. Chairman Abalos leaves first over the weekend. They get it after mentioning the name of the FG. Ruben Reyes is designated as the recipient.

Group comes back from China on August 15 and meets again with Chairman Abalos to tell of their success. US$1M was doled out, Ruben Reyes was designated as the recipient.

September 2006: Group meets regularly at Wack-Wack every weekend at night to discuss ways to facilitate the approval of the project.

NEDA status is ok but all of a sudden meets a sudden resistance from Director General Neri. Group meets at Wack-Wack on September 22 to address the problem.

We meet Sec Mendoza at his officeand make representations. Secretary does not hear the full presentation but endorses us to the then head of legal Atty. Noel Cruz.

DOTC legal returns the endorsement of the NBN project to the CICT.

Design is changed again trying to fit the commitments. ZTE and group argue on the profit margins, they finally decide on September 28 that the increasing the project amount to $270M will give them a margin of $70M each.

October 2006: The name Joey de Venecia suddenly comes into play and makes the group worried. He wants the same project but on a BOT scheme and is adamant about it, he had the idea long before Arescom and ZTE conceptualized it; in fact the whole idea the Arescom proposalcame from Joey.

Leo San Miguel is tasked to fix the problem since he personally knows Joey. The negotiations do not progress because of Joey’s distrust for the group. Group meets at Wack-Wack on October 11 and decides to ask the FG for help on how to handle Joey.

Ruben Reyes, Chairman Abalos and General De La Torre fly to China on October 14 and discuss the problem with the ZTE officials about Joey. ZTE is alarmed but is reassured that everything will be taken care of with the intervention of the FG.

November 2006: Group is notified on November 12 that the President does not want to borrow and instead wants a BOT scheme similar to the AHI proposal.

Group decides to compete with Joey and brings an alternate solution by bringing out a competing BOT offer.

Joey is unfazed since he holds all the cards at NEDA with his father’s help and stonewalls the group’s effort. Group meets almost daily to discuss ways to resolve the issues. ZTE is furious at group for not controlling the situation.

Group decides that the only way that Secretary Neri would not object is to offer him acommission of US$4M at that time the exchange rate of 50-1. Chairman Abalos is designated to fix the problem.

December 2006: Group submits a proposal to Chairman Sales changing strategy and hoping to revive the NBN proposal to a BOT similar to Joey’s proposal.

In a meeting in Wack-Wack in December 5, FG and Abalos try to convince Joey to just partner with them and quit his objection. In the meeting at Wack Wack FG threatens Joey by telling him to back off and stay out of the project.

ZTE tries to help out in the conflict and even designs the AHI network thereby exposing their pricing to Joey’s group.

Group goes to China on December 27 with Joey to fix the problem, they meet with ZTE officials at ZTE HQ but the negotiation fails. It was during these negotiations that Joey brought up the idea of ZTE partnering with Hwawei, another Chinese supplier. The suggestion is promptly dismissed by ZTE and negotiations break down. Group demands an advance and promptly got it from ZTE before the arrival of Joey De Venecia. Ruben Reyes is again designated as the recipient. US$5M was doled out.

January 2007: Group abandons the BOT proposal and decides to meet Joey De Venecia’s AHI group head-on with their own BOT proposal. Asec Formoso organizes a defense by creating a Technical Working Group (TWG) to evaluate the proposals of ZTE, AHI and Arescom.

It comes as no surprise that the TWG comes up with a report tilted in favor of ZTE because all of the members are either TELOF or DOTC personnel, they do not want the offer of AHI since it will be implemented by the private AHI group.

Group plots strategy and enlists Secretary Mendoza since Chairman Sales is a technocrat and Secretary Mendoza is a long-time ally. Group decides to move Telof back to DOTC citing the reason that CICT is a commission and cannot implement a project of this magnitude. In the end Secretary Sales signs the endorsement of the project anyway.

February 2007: TWG finishes the evaluation and hands it to the Technical Working Committee (TWC) who promptly endorses it to Secretary Mendoza.

ZTE is endorsed to NEDA by both Mendoza and Sales.

Joey is not impressed and files a complaint about the ZTE proposal to whoever would listen citing the disadvantages to the government. The project at NEDA is delayed and the much needed NEDA approval is stalled. Secretary Neri does not seem to be favoring the NBN and appears to be part of the problem because he likes the AHI proposal rather than the NBN which requires a government guarantee.

March 2007: On March 8, approval of GMA is secured in order to meet the deadline for final NEDA approval by the executive.

Group meets on March 12 in Wack Wack with Yu Yong and Fan Yang. They finally expand the proposed coverage to increase the amount to $329M.

Joey is furious when the NBN proposal is approved and threatens to expose all the dealings that stopped his much superior proposal. Group does not appear to be worried and thinks it is just sour graping. Upon approval by the NEDA, group meets on March 28 in Wack Wack with ZTE and demands another cash advance which they got. Ruben Reyes is the designated recipient again. US$10M is again doled out.

April 2006: Group meets again in Makati Shangri-La on April 4 with Yu Yong and Fan Yang of ZTE to discuss ways of getting upfront money to finance partly the elections and some personal needs. Ruben Reyes is again designated as the recipient. US$ 30M is again doled out.

Yu Yong agrees but on the condition that PGMA be present at the signing. PGMA promptly goes to China to witness the signing.

FG cannot participate since he is hospitalized and Abalos is busy with the elections. Ruben Reyes takes over all of the negotiations and transfer of funds.

Upon arrival from China on April 27, Secretary Mendoza and Secretary Favila visit the FG and inform him of the good news.

May 2007: Loan negotiation starts.”