Power Reform Act:
Paving the way for further foreign domination of the economy

Basahin ang artikulong ito sa Pilipino

Gloria Macapagal-Arroyo served as a major instrument in the enactment of the antipeople and pro-imperialist RA 9136 or Power Reform Act. Just to have it passed, she had a special session called on the eve of the closing of the 11th congress. She pushed for the passing of the law despite widespread opposition from various sectors of society. Immediately after its passage by congress, Macapagal-Arroyo signed it into law on June 8.

The new law deregulates electrical services and privatizes the National Power Corporation (Napocor) - the government agency that has primary control over the production, transmission and distribution of electricity. The Macapagal-Arroyo regime supported the law in accordance with the imperialist framework of "globalization" and "free trade" and the dictates of the International Monetary Fund (IMF). The law has eliminated all remaining barriers to private and foreign ownership and control over power services nationwide.

The US-Macapagal-Arroyo regime has completely ceded the nation's prerogative to have the strategic power industry cater to the people's interests and serve the needs of national industrialization. Even the formal provision in the reactionary constitution prohibiting the sale of strategic industries and public utilities, such as power services, to foreigners has been discarded.

This is a mark of the regime's zealousness in serving the interests of big foreign and local capitalists to the people's detriment. It likewise indicates its desperation to acquire a $950-million loan from the IMF, World Bank, Asian Development Bank and Export-Import Bank of Japan.

The privatization of Napocor primarily serves big foreign monopoly capitalist and comprador interest to control the country's power industry. Electricite de France, California Electricity International, Power Corporation of Australia and the United Kingdom National Power Plc. are among such interested companies. Only they have the capacity to purchase Napocor. They are in cahoots with the local big comprador bourgeoisie in the power industry, such as the Lopezes, Aboitizes and Gokongweis.

As for the people, all they will get out of this are never-ending hikes in electricity rates and a heavier burden on their shoulders. The deregulation of power services and the privatization of Napocor also serve to further open the economy to the control and domination of foreigners.

With Napocor's privatization, almost 8,000 workers are set to lose their jobs.

To promote the law, Macapagal-Arroyo has boasted that the Power Reform Act will reduce the price of electricity by 30 centavos per kilowatt-hour for the next three years. In reality, in the near future, if not immediately, consumers and the rest of the people will still have to pay this amount in various ways and forms:

Despite the privatization of Napocor, its debts amounting to P900 billion will continue being a burden to the people. At present, the Napocor's value stands $4.5 billion while its debts amount to $6.7 billion. Only a portion of Napocor's debts will be covered by its sale. Added to this are almost P480 worth of Napocor's stranded contract costs. Stranded contract costs represent the difference of more than one peso in the price of Napocor-generated power compared with that generated by private independent power producers (IPP) contracted by Napocor. The amount is added to the charge per kilowatt-hour used by consumers.

In addition, the reactionary government will be imposing a new tax, a "universal charge" on all consumers of electricity in order to service the debts not only of Napocor but also of Meralco and other "qualified distribution utilities in the process of implementing the law." This is part of Napocor's P200 billion debt that has supposedly been absorbed by the government. In actuality, the collection by government of a "universal charge" for IPPs is a type of subsidy given to guarantee their profitability. At present, stranded costs are imposed on the people through thre purchased power adjustment (PPA or adjustment in charges for electricity bought from IPPs).

The government will also continue to honor the provisions of other anomalous contracts entered into by Napocor with IPPs from the Ramos era up the present. This includes the the purchase by government of a minimum quantity of electricity at a minimum price from the IPPs. This usually involves 70-90% of the capacity of IPPs. Supposedly, this is meant to guarantee the availability of reserve energy in case another widespread brownout takes place and is in preparation for annual increases in the demand for electricity. The IPPs usually need to avail of only 11-38% of their capacity to service daily power consumption needs. Napocor passes the burden of paying for all this on to the consumers. Should the IPPs no longer produce more than this quantity and should such quantity no longer be used by consumers; should the IPPs suffer from defects, or bog down or be unable to function, they will still be paid for the capacity stipulated in the contract. Thus, all payments end up as guaranteed, pure profits for the IPPs. Napocor will also automatically pay for all additional costs, including those resulting from oil price increases, higher dollar rates and others and will, as usual, pass this on to consumers.

Big foreign and local entities who will be in control of power service in the country will rake in more profits, especially since the law provides for the deregulation of both the production and transmission of electricity. The law gives them the right to dictate charges for these aspects of electrical service.

The law also gives greater opportunity for big foreign and local companies in the power service industry to form monopolies. It allows cross-ownership (ownership by the same IPPs of the various aspects of power service-production, transmission, distribution), as in the case of Meralco. This provision will serve as a means for the Lopezes and Aboitizes to expand and strengthen their monopoly of electric services in general. Other big foreign and local companies that will be coming in will also be able to form monopolies.

The Power Reform Act also provides conditions for cross-ownership subsidies. Thus, whatever subsidies are granted by the government, now or in the future, for the only regulated aspect of electrical service (distribution), will be taken advantage of by the monopoly owners of both the distribution aspect and the deregulated aspects (production and transmission). In this regard, the benefits of any law providing for the regulation of power distribution will be negated.

Section 28, which was inserted by Sen John Osme�a, is allegedly meant to "demonopolize" electrical services. This is supposed to be accomplished by obligating IPPs to sell their shares at the stock market. In reality, Section 28 aims to facilitate the gobbling up of small IPPs by big monopolies.

The deregulation and privatization of the power industry, as well as the deregulation and privatization of other strategic industries and public utilities such as oil and water, run counter to a genuine program of national industrialization. Public utilities must be put under the control of the democratic state in order for the country to advance along the path of genuine industrialization and economic development.

Tactically, the people must thoroughly oppose the Power Reform Act and the US-Macapagal-Arroyo regime's servility to the dictates of imperialism.

Revolutionaries and progressive forces must persevere in order to expose the puppetry of the US-Macapagal-Arroyo regime. The people must be mobilized to resist all measures being undertaken by the puppet regime to serve the interests of imperialism and undermine the people's welfare.

Along with this, the people must also fight for the abrogation of the Foreign Investments Act, Mining Act, Retail Trade Law, Oil Deregulation Law, Bank Liberalization Law and other laws and schemes that allow big foreign capitalists to dominate and control the Philippine economy and cause the Filipino people to suffer.

June 2001
English Edition

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