Notable idea, notable lie DIE HARD III Herman Tiu Laurel 10/17/2011 Late last week,

Notable idea, notable lie

DIE HARD III

Herman Tiu Laurel

10/17/2011
Late last week, two items in the news got my attention — one, a notable idea; the other, a notable lie. The first came from Vice President Jejomar Binay. In a recent meeting with the Philippine Chamber of Commerce and Industry (PCCI), he urged the national government to utilize its $75-billion gross international reserves to finance development programs as well as to make it available to local borrowers. This certainly echoes what we have been pushing for the past few months.

The other piece of news (which got my goat this time) came from the doyen of the ruling elite’s favored economists. In an interview with GMA News last Oct. 13, former Neda (National Economic Development Authority) chief Solita Monsod claimed that Philippine industrial electricity rates are definitely higher compared to residential rates and that the former even subsidizes the latter. Well, nothing could be further from the truth. Barring complete ignorance, it was a falsehood that could have portrayed her as deliberately lying through her teeth.

A 2010 study by a Perth-based consulting firm providing advisory services to companies operating in and associated with the private power sector in the Asia-Pacific region, International Energy Consultants, whose client base now includes some of the largest companies in the energy supply industry, reveals that “Philippine average residential retail electricity rates were (at that time already) $0.18/kilowatt-hour (kWh) while industrial rates were averaging $0.13/kWh (both in US dollars).” But that’s not all.

The Performance Based Rate (PBR) pricing scheme formulated by the Energy Regulatory Commission (ERC) in 2004 also did its “wonders.” First, it established a Maximum Average Price (MAP) based on claims of projected capital expenditures (capex) by the power distributor Meralco (Manila Electric Co.) on asset base factors that were allegedly overpriced by as much as 1,000 percent. Then, this MAP was further subjected to “rate translation,” where residential (distribution) rates rose from P1 to P4/kWh (check your bill and be shocked) while industrial/commercial rates were pegged as low as P0.25/kWh for the largest industrial users like the giant malls.

Mang Naro Lualhati, one of the complainants in the P39-billion Meralco refund case in 2003 that the public won, has a pending complaint at the ERC on the latest MAP and “rate translation” issues, which states that the MAP should only be P0.90/kWh, instead of the P1.60/kWh approved by the regulatory body, and that the so-called “rate translation” should be discarded as it is discriminatory and even violative of the severely flawed Epira (Electric Power Industry Reform Act).

In fact, under that law’s provision in Section 23 on “Functions of Distribution Utilities,” it states: “A distribution utility shall have the obligation to provide distribution services and connections to its system for any end-user… Any entity engaged therein shall provide open and NON-DISCRIMINATORY access to its distribution system to all users… in the least cost manner to its captive market… (emphasis supplied).”

Even as both the ERC and Meralco will interpret any law’s provisions to their advantage, there is no doubt that the ERC should never veer away from the “least cost” and “non-discriminatory” provisions so as not to disadvantage the public.

Now, as to the claim that residential rates are being subsidized, just look at your electricity bills. You will notice that paying residential consumers are in fact subsidizing “lifeline rates” and “missionary electrification” — not government or industrial/commercial users.

Monsod has been puffed up by mainstream media to be the “best” economist there is, so much so that the views she expresses are not being vetted. Well, how can they hide the fact that her husband Christian Monsod has been a long-time collaborator of the owners of Meralco, whether in politics and business; that he sat on its board and served as its counsel and consultant to the chairman for many years; and that he was richly rewarded for all this?

Other than favoring Big Business, Monsod’s patently erroneous claim, which prejudices the public’s understanding of the true picture of the power cost consumers are saddled with, was nothing but an outright lie that can never be supported by any factual evidence. If she were only truly interested, she could have easily checked the Internet or consulted power consumer advocates such as Mang Naro, Nasecore (National Association of Electricity Consumers for Reforms), FDC (Freedom from Debt Coalition), and others. But going by her incredulous statement, it seems these are not the parties she listens to.

As for Binay, while I have not said anything good or bad about him in this column since the last elections, I must now give credit to his call for our growing Gross International Reserves (GIR) to be used for public and private sector funding for infrastructure, development, and the like.

Since the GIR is already larger than the country’s overall foreign currency debt of around $61 billion, the surplus gives us a lot more room to maneuver. But Binay should also look into the huge P1.7-trillion Special Deposit Account (SDA) lying idle in the Bangko Sentral ng Pilipinas (BSP), which is used to pay interest to banks and other depositors in accordance with the desires of our foreign creditors. A push from the VP may just give our BSP officials the impetus to lower the interest paid out (by, say, 1 percent) in order to commit the fund for productive domestic use.

That Binay is beginning to show some understanding of the nation’s financial situation, which is essential to advance the national economy in a sovereign and independent way, shows real promise. Of course, his endorsement of Gloria Arroyo’s escalation of the eVAT (expanded value added tax) leaves much to be desired. But I believe that a closer examination of the simpler sales tax system proposed by Bataan Gov. Tet Garcia will make him see the light. After all, the many leakages in the graft-ridden tiers of input-output VAT computations (to the glee of corrupt tax agents) are designed only for the rich.

(Tune in to Sulo ng Pilipino/Radyo OpinYon, Monday to Friday, 5 to 6 p.m. on 1098AM; Talk News TV with HTL, Saturday, 8:15 to 9 p.m., with replay at 11 p.m., on GNN, Destiny Cable Channel 8; visit http://newkatipunero.blogspot.com for our articles plus TV and radio archives)

(Reprinted with permission from Mr. Herman Tiu-Laurel)


Source:  The Daily Tribune

URL: http://www.tribuneonline.org/commentary/20111017com4.html