28 June 2004
The Freedom from Debt Coalition strongly denounces the recent petition of the National Power Corporation (NPC) and the Power Sector Assets and Liabilities Management (PSALM) Corporation to increase further the already high power rates. The Asian Development Bank (ADB), the World Bank (WB), and newly proclaimed President Gloria Macapagal Arroyo are equally accountable for conspiring against the interest of the public.
As if the high electricity rates in the country, the fourth highest in the world, were not enough, consumers are about to face yet another increase of P1.87 per kilowatthour - eighty percent higher than the current basic power generation rates of NPC. This impending rates increase is on top of the recently approved rates adjustment of both Meralco and NPC amounting to a 30-centavo increase starting July.
Government officials say the rates increase is aimed at making the power industry attractive to investors who have allegedly been hesitant to enter the industry because of supposedly artificially low and therefore uncompetitive rates. The rates increase applied for by NPC and PSALM is at the prodding of ADB and WB - major architects of and lenders to the privatization of the power industry in the Philippines and in other countries.
It has been three years since the power privatization law was passed and only very few investors have signified interest in buying into the industry. According to the government, the ADB and the World Bank, the privatization of NPC is key to the settlement of the industry's problems. They say that proceeds from the privatization of NPC will be used to partly settle its debts, and that bringing in the private sector will ensure that the industry will be run more efficiently.
A large part of NPC debts were accumulated through onerous transactions and contracts with private corporations. We have been carrying the burden of these debts as taxpayers and consumers. Now, the government intends to double the already extremely high electricity rates in the face of successive increases in oil prices, fares, and cost of basic commodities and services. Obviously their idea of a more efficient industry is an industry more profitable for the private sector at the expense of consumers, especially the poor.
This is a prime example of the government's pro- creditor, pro- private big business and anti-poor economic policies. It is also one of the many instances of government deceit and lies - when they were trying to make the public accept the power privatization policy - they claimed that privatization will NOT lead to higher prices.
FDC challenges the Arroyo government to back off from its plan to further add to the suffering of the people. Instead, the coalition reiterates its calls for:
- An immediate and thorough audit of NPC's finances, including its debts and losses
- Stop payment of debts from onerous transactions and deals, beginning with debts from the Bataan Nuclear Power Plant
- Disclosure of the results of the government renegotiations with Independent Power Producers (IPPs)
- A clear program to pursue cancellation of all onerous provisions and agreements with IPPs
- An overhaul of the Power Privatization law
We are also serving notice that the Freedom from Debt Coalition will be one of many organizations that will surely sweep the country with protest mobilizations if the government goes ahead with the increase.