26 September 2003
The country’s transmission sector is a natural monopoly that is imbued with public interest. This being the case, the transmission sector should remain in full and effective public control.
The Freedom from Debt Coalition demands that government cancel its plan to privatize the National Transmission Corporation (Transco). Consequently, the government should desist from entering into a negotiated bid with Singapore Power following the failure of the second attempt to secure investors for the transmission privatization.
This failure should send a clear signal to the government that selling Transco is disadvantageous to the government and taxpayers: any attempt to privatize the transmission sector can yield bargain prices for these assets.
It is thus illogical for government to continue pushing for the Transco privatization when investors themselves refuse to buy the assets. Then why does government stubbornly press for the immediate privatization of Transco?
Government argues that privatizing Transco will yield considerable savings for the public coffers. This may be true, but at the expense of consumers.
Electric transmission is a public service; putting this service in private hands will turn the natural monopoly into a private monopoly that puts higher priority to bigger profits and lesser costs.
Advocates of privatization claim better and efficient services, not to mention purported savings in the government funds. This is not always the case. In fact, water privatization has resulted in higher water rates and even greater inefficiency. Government has also had to shoulder the obligations of the water concessionaires in billions of pesos. In addition, the proliferation of independent power producers has unduly burdened consumers with the oppressive purchased power adjustment (PPA) cost. Likewise, government bears the costs of providing guaranteed profits to these IPPs, which costs (almost P500 billion) are then passed on to the taxpayers.
Why should Transco privatization be any better?
The government should thus hold off its plan to sell Transco. To protect public interest and ensure public accountability, the government should retain full and effective public control and ownership of the transmission sector.