The financial bleeding of Napocor continued under EPIRA because the law legitimized the onerous contracts signed by Napocor with the IPPs
The petition for another 39-centavo per kilowatt-hour (kWh) hike in power rates through the universal charge is anti-consumer, according to research group IBON.
The petition filed this week by the Power Sector Assets and Liabilities Management Inc. (PSALM) before the Energy Regulatory Commission (ERC) aims to recover the so-called stranded debt and stranded contract cost of the National Power Corporation (Napocor) through the universal charge.
IBON criticizes the Electric Power Industry Reform Act (EPIRA) of 2001 for the impending rate hike in the universal charge, saying that the law allowed onerous charges to be passed on to electricity consumers such as the stranded costs of Napocor, which has been undergoing privatization.
The group said that electricity rates in the Philippines are already the highest in Asia, encumbering both ordinary households as well as businesses operating in the country. Just recently, the Manila Electric Company (Meralco) announced that starting July, consumers will have to pay an additional 51 centavos per kWh for the generation charge. Adjustments in generation charges by distribution utilities like Meralco have already been deregulated under EPIRA.
That consumers will be further burdened by rate hikes because of the stranded costs of Napocor is further proof that the restructuring of the power industry under EPIRA has been a gross failure. The group noted that proponents made the public believe that privatization will solve the financial woes of Napocor, which stood at US$16.39 billion or some Php834.29 billion (at Php50.99/US dollar).
The remaining debt of Napocor as of 2010 is US$15.82 billion. After 10 years, only US$570 million have been shaved from the state power firm’s 2001 debt of $16.39 billion, the group noted. At US$15.82 billion or Php713.64 billion (at Php45.11 per US dollar), the debt of Napocor comprised a still significant 15% of government’s outstanding debt. Thus, the current 39-centavo rate hike bid of Napocor could just be one of more increases in the future considering that it only seeks to recover Php139 billion in Napocor stranded costs, which is just a portion of the remaining debts of the state power firm.
Worse, PSALM has already shelled out US$18 billion to settle the obligations of Napocor from 2001 to 2010. Of the said amount, US$6.7 billion went to principal amortization; US$4.3 billion for interest payments; and US$7 billion for obligations to independent power producers (IPPs). IBON said that the financial bleeding of Napocor continued under EPIRA because the law legitimized the onerous contracts signed by Napocor with the IPPs such as the take or pay provisions.
The only way out of this debacle, the research group said, is to cancel the onerous debts of Napocor and halt its privatization by repealing the failed EPIRA. (end)