Oil deregulation, Power industry

Greed amid calamity

Bayan and its member groups and allies have launched efforts to generate relief goods for flood victims. See table below for a partial list of drop-off centers.

The country’s largest and most profitable firms are oblivious to the devastation being wrought by torrential rains on Metro Manila and various provinces in Luzon. Displaying barefaced greed, oil companies led by Petron Corp. hiked their pump prices, the fifth round in as many weeks since July. Then, the Manila Electric Co. (Meralco) announced a new increase in its generation charge this month. Also, the Business Process Outsourcing Association of the Philippines (BPAP) asked for an exemption from the work suspension order issued by Malacañang.

All these even as hundreds of thousands of mostly poor people are still struggling to survive the worst downpour since tropical storm Ondoy hit the country in 2009. According to the latest update (as of Aug.7, 5 p.m.) from the National Disaster Risk Reduction and Management Council (NDRRMC), the heavy rains spawned by the southwest monsoon have submerged 46 cities and municipalities in Metro Manila and Regions I, III and IV-A, affecting more than 541,000 people. Sixteen have been reported dead.

Such display of cold-blooded corporate greed amid a grave natural disaster is most unconscionable. We have yet to cope with this latest tragedy (and still reeling from the impact of typhoon Gener that preceded the heavy monsoon rains), and already we are being battered by increases in oil prices and electricity rates. Many families have yet to be rescued and still call center firms are requiring their employees to report for work.

But we must not forget that these profit-gluttonous companies have the temerity to do what they do because government allows them. They abuse and oppress the people with impunity because they know that government policies favor them, because they know that they are Aquino’s real bosses.

Petron, owned by presidential uncle Danding Cojuangco, and other oil firms increased their pump prices despite the calamity because the Oil Deregulation Law, which President Aquino has staunchly defended amid criticisms and allegations of overpricing, gives them the right to automatically hike their prices without a public hearing.

Meralco, also owned by Danding and known presidential allies Manny Pangilinan and the Lopez family, increased its generation charge despite the calamity because the Electric Power Industry Reform Act (Epira), whose full implementation is being pushed by Aquino despite strong opposition from Mindanao and other sectors, allows it to automatically increase its generation rates without a public hearing.

BPAP, meanwhile, knows that the BPO industry is one of the few supposedly growth areas prioritized by Aquino in his medium-term Philippine Development Plan (PDP) 2011-2016 for government promotion. I’m not sure if the administration has granted BPAP’s request. But Executive Secretary Jojo Ochoa said that call centers and other private firms that will require their employees to report for work should just “ensure personnel safety and give premium pay”. Para saan pa ang suspension order?

These intolerable acts of greed by the oil companies, Meralco and BPO firms bolster our argument for government to rethink and undo its current policies and programs. Especially during times of calamities, Aquino could not claim helplessness to stop oil price and power rate hikes because his predecessors, as dictated by foreign creditors, chose to deregulate the setting of pump prices and generation charge.

Government must revise its economic plan and stop relying on externally-driven growth sources like the BPO that is so detached from our own development needs, and in this particular case, from our domestic realities. BPO serves American and other foreign clients. Ano bang malay nila kung binabagyo na tayo at nalulunod na sa baha ang mga Pilipinong call center agents?

Unfortunately, Aquino has shown time and again that he is incapable and unwilling to implement the fundamental policy reforms we need.

For an in-depth discussion of these issues, click here (oil), here (power) and here (government’s development plan).


The Bagong Alyansang Makabayan (Bayan) and its member groups and allies have launched efforts to generate relief goods for flood victims. Please refer to the table below for a partial list of these initiatives and see which drop-off center for relief goods is nearest to you. Some of the groups have also provided bank accounts where you can deposit cash donations.

Climate change, Events

BALSA: an urgent appeal to help the victims of typhoon Pedring

To help in the ongoing relief efforts by various sectors for victims of typhoon Pedring, the Bagong Alyansang Makabayan (BAYAN) has re-launched the Bayanihan Alay sa Sambayanan (BALSA), a multisectoral campaign to raise relief goods and conduct relief distribution operations in calamity-hit communities. The group is currently accepting donations for its BALSA relief campaign. (See poster above for details)

According to the National Disaster Risk Reduction and Management Council(NDRRMC), Pedring has affected more than 582,626 families or almost 2.73 million people in 3,252 barangays/300 municipalities/41 cities in 34 provinces of Regions I, II, III, IV-A, IV-B, the Cordillera Administrative Region (CAR), and the National Capital Region (NCR). Some 80,889 families or 362,552 people have been relocated to various evacuation centers. Meanwhile, official estimates as of Oct. 3 peg the cost of Pedring’s damage to properties and livelihood at more than P8.8 billion (or almost US$205 million at P43/US$), of which P7.55 billion (almost US$176 million) represent the cost of destroyed crops, livestock, and fisheries. Pedring also destroyed almost P1.25 billion (around US$29 million) worth of school buildings, hospitals, roads, bridges, and other important infrastructure. (Read the complete report of the NDRRMC here.)

In 2009, BAYAN also initiated BALSA relief drives to help those affected by typhoons Ondoy and Pepeng in Metro Manila, Laguna, Pangasinan, and Baguio. With the support of various organizations, relief formations, and institutions, BAYAN provided relief goods to around 4,300 families in 12 barangays in three cities and two provinces badly hit by the flooding and landslides.

(Read the complete report of the BALSA 2009 relief campaign here.)

For the victims of Pedring, BAYAN has already distributed last Oct. 1 the first batch of relief goods it has collected from various donors to residents of San Mateo, Rizal. (See photos here.)

Meanwhile, the Aquino administration blames climate change for the devastating storms that have hit the country in recent years, including Pedring, Ondoy, and Pepeng. But as BAYAN pointed out, while the string of calamities “served as a grim reminder of the reality of climate change and how vulnerable the country is especially with a government that is obviously ill-prepared to deal with natural disasters”, the calamities also showed “how policies and projects long opposed by the people like large-scale dams and foreign mining do cause death and destruction, and thus the urgent need to institute policy reforms.”

While BAYAN will continue to demand accountability from the national government and campaign for policy changes to avoid a repeat of the enormous devastation of lives, properties and livelihood due to typhoons, it also intends, through the BALSA, to bring attention to the remarkable spirit of bayanihan (“helping one another”) among Filipinos. As the group said, “For BAYAN and our member-organizations, partners and friends, the slogan ‘Serve the people’ has always been more than just a catchphrase, but a way of life.” #

Economy, Poverty

A regime of high prices: Aquino’s apathy towards the poor

More than half a year since Aquino became President, the only substantial change people have seen is the drastic increase in prices of almost everything

(This article was first published by the Philippine Online Chronicles)

Slammed by critics for his landlord roots and rich kid fascination for luxury cars, President Benigno Aquino III is increasingly being perceived as having no concern for the poor.

When he promised change during the campaign, many voters apparently believed him. But more than half a year since Aquino became the Chief Executive, the only substantial change that the people have seen so far is the drastic increase in prices of almost everything. Inflation in January recorded 3.5 percent, the fastest since August last year, said the National Statistics Office (NSO).

While Malacañang has expressed concern over the sharp rise in prices, alas it does not intend to directly intervene. It merely said that the Bangko Sentral ng Pilipinas (BSP) has to manage inflation through setting of the official interest rate. Setting higher interest rates, for instance, is expected to limit money in circulation and thus temper demand and prices. But the impact of the central bank intervention on ordinary consumers is uncertain and possible benefits are further down the line.

The BSP itself as well as the National Economic and Development Authority (NEDA) aren’t very worried and predicted a worst-case inflation of 5 percent this year. Overall, the Aquino administration has remained passive on the issue of high prices despite warnings including from the United Nations’ (UN) Food and Agriculture Organization (FAO) that the skyrocketing costs of basic goods could fuel unrest. Hunger riots have already erupted around the world and, in Tunisia, even led to the ouster of its current government.

Indeed, in poor countries like the Philippines, where some 3.4 million families experience hunger, said a recent survey, high prices easily become a political issue. At the same time, it also highlights the basic flaws in the kind of economic policies being espoused by the Aquino administration, which continues the past governments’ bias towards so-called market forces, the interest of private investors, and minimal state intervention.

Thus, the situation today requires much more than asking the central bank to manage inflation. Drastic political action is needed for immediate economic relief. Otherwise, Aquino’s much-touted high political capital will be eroded rather quickly amid the growing public perception of his ineptness in running the country and in addressing the poverty that grips a great majority of the people.

Food prices

How much have prices increased since Aquino took over? A comparison of the retail prices of basic food commodities in Metro Manila shows a steep hike between June 29, 2010 – a day before Aquino’s inauguration – and February 5, 2011, which is the latest monitored date by the Bureau of Agricultural Statistics (BAS).

Onion, for example, shot up by P140 per kilo during the period while Galunggong jumped by P40 a kilo. The retail prices of sugar have also increased by P12 to P13 while cooking oil went up by P30 per longneck bottle. The increases in prices are often justified by tight supply amid high demand. Others, however, are the result of policy decisions made by the Executive. For instance, the retail price of rice being sold through the National Food Authority (NFA) increased by P2 (well-milled) to P4 per kilo (premium).  The NFA, which is mandated to sell subsidized rice to ensure food security especially of the poor, increased the prices in December supposedly to ensure the “long-term viability” of the food agency. (See Table 1)

Oil prices

Similarly, the pump prices of petroleum products have also jumped significantly in the past seven months. The average retail price of oil products in January 2011 was pegged at P47.61 per liter or more than P5 higher than its June 2010 average. During the same period, the pump prices of gasoline products have increased by around P6 while diesel, which is used by public utility jeepneys, has seen its retail price grow by almost P5. The retail price of LPG has already increased by P6.95 per liter or P136.76 for each 11-kilogram cylinder tank commonly used by households. (See Table 2)

This week, oil companies have again raised pump prices by P0.75 a liter for diesel and gasoline and P1 for kerosene. Like its immediate predecessor, the Aquino administration claims it is helpless since local prices are supposedly dictated by the global oil market, which has been seeing an astronomical rise in prices similar to the situation in 2008. Apart from publishing on the Department of Energy (DOE) website the formula in computing price adjustments, government has not taken a more proactive stance in ensuring fair oil prices despite persistent allegations of overpricing. While the President has indicated that he is open to amending the Oil Deregulation Law (Republic Act 8479) and study further factors affecting prices, this was not included in the list of priority bills that Malacañang recently bared.

Utility rates

Another aspect of high prices under the Aquino administration is the extraordinary increases in the rates being charged by almost all utilities – from water and power to toll and mass transportation fares. Aquino, of course, can claim that these increases are the result of privatization obligations forged and petitions approved long before his administration came to power. But Malacañang chose to justify these increases, calling for instance the increase in water rates and jeepney fares “minimal”.

The first seven months of the Aquino administration saw the basic charge of Manila Water increase by P3.46 per cubic meter (m³) (There is no published data on the average increase in Maynilad’s basic charge although news reports say that for its customers using 30 m³ a month, the rate hike will result in additional P2.3 per m³). The rate hike was the second tranche of increases in the basic charge arising from the 2009 extension of their Concession Agreement with the Metropolitan Waterworks and Sewerage System (MWSS). In December last year, the Energy Regulatory Commission (ERC) granted the rate hike petition of the Manila Electric Co. (Meralco) that raised the average distribution charge by 15.47 centavos per kilowatt-hour (kWh). Jeepney and taxi fares have also increased in February amid continuing rise in oil prices. (See Table 3)

But the largest increases are being felt by motorists that regularly use the South Luzon Expressway (SLEX). After a prolonged court battle, the South Luzon Tollway Corp. (SLTC), which is owned by Malaysian investors, has finally been allowed by the Supreme Court (SC) to increase tolls at the SLEX by 300 percent. As of February, SLEX toll rates have jumped by 259 to 270 percent from its previous level with the full increase to be implemented by April.

This kind of situation, where investors’ profits are undermined by regulatory intervention such as by the judiciary, is the circumstances that the President wants to address with his so-called regulatory risk guarantee. “If private investors are impeded from collecting contractually agreed fees by regulators, courts, or the legislature, then our government will use its own resources to ensure that they are kept whole,” Aquino said in his speech at the public-private partnership (PPP) summit last year.

LRT, MRT fares

Like in the issue of higher price of NFA rice, fares in Metro Manila’s light rail transit system are also set to go up due to Aquino’s direct order. Seen by critics as a prelude to privatization, the Light Rail Transit Authority (LRTA) and the Department of Transportation and Communications (DOTC) have “provisionally” approved a fare hike of as much as P10 in LRT 1 (Baclaran to Roosevelt line), LRT 2 (Recto to Santolan line), and MRT (along EDSA). (See Table 4)

Aquino first hinted his intention to raise the fares in LRT and MRT in his State of the Nation Address (SONA) last year when he accused the Arroyo administration of artificially lowering the fares for political brownie points. Consistent with Aquino’s PPP scheme, the LRTA-DOTC, in a study, has said that the fare hike is intended to “send clear signal to private sector investors that regulatory risks will be minimized in future public-private partnership projects”. Groups opposing the fare hike, meanwhile, have pointed out that the increase is meant to pass on to the commuters an increasing portion of the LRT and MRT’s debt burden, which includes onerous loans and contractual obligations. Despite widespread opposition, as shown during the two-day public consultation, it appears that the authorities will go ahead with the fare hike. More than a million daily commuters – of whom 8 out 10 are ordinary workers and students – will shoulder the fare increase.

Political intervention

There is a clear and urgent need for the Chief Executive to exercise his vast political power and influence to protect the people from the prevailing regime of high prices. Indicators show that the situation will not ease soon. Global oil prices, for example, will continue its uptrend as the world market is again facing massive speculation due to the tension in Egypt (2-3 million barrels of oil pass through its Suez Canal).

Aquino could not rely on his controversial P21-billion conditional cash transfer (CCT) program or the Pantawid Pamilyang Pilipino Program (4Ps). This program, which covers only less than half of the poor as measured by government, also excludes millions of families who are not poor by official standards but still feel the impact of high prices. Authorities, for example, are reportedly considering the CCT to cushion the impact of the LRT and MRT fare hike on the poor. However, a great majority of CCT beneficiaries who are extremely poor does not even use the LRT and MRT.

There are immediate solutions which only require political will and genuine concern for the poor. For one, Aquino can withdraw his order to increase the LRT and MRT fares and direct the NFA to roll back the retail prices of its subsidized rice. Another is to impose a price cap on prime commodities, especially food, which the President has the authority to do under the current Price Act (RA 7581). Lastly, he can suspend the collection of the 12 percent value added tax (VAT) especially on oil products and electricity and convince allies in Congress to repeal the Oil Deregulation Law and the Electric Power Industry Reform Act (EPIRA or RA 9136), which allowed utility rates to soar.

These are remedial measures, however, that do not substitute for long-term reforms that address the underlying reasons behind escalating prices and worsening hunger and chronic poverty in the country. Genuine change is truly a long way to go. (end)

Fiscal issues

Drowned by Ondoy, drowned by debt

A community in Pasig City remains flooded days after tropical storm Ondoy hit Metro Manila and nearby provinces (photo from Bayan - NCR)

A community in Pasig City remains flooded days after tropical storm Ondoy hit Metro Manila and nearby provinces (photo from Bayan - NCR)

Malacañang admitted Thursday (Oct 1) that government’s calamity fund of P1 billion is in danger of being depleted. Thus, members of the Senate and the House of Representatives held an emergency meeting with some Cabinet officials and agreed to pass a P10-billion supplemental budget in the wake of Ondoy’s onslaught in Metro Manila and adjacent provinces last weekend (Sep 26-27).

The problem is where to source the money. Not surprisingly, Department of Finance (DOF) Secretary Margarito Teves announced that they will tap the global bond market again in order to raise funds for relief and rehabilitation of “Ondoy” victims. This would be the third round of global bond issuance for the Philippine government this year, after the $1.5-billion bond sale in January and the $750-million sold in July, and would come ahead of the scheduled Samurai bond issuance later in the year.

But instead of borrowing more which will only aggravate the country’s debt problems, the more sensible step would be for government to cancel debt payments to free up billions of pesos in public funds that can be used for disaster relief and rehabilitation in the immediate, and provide much needed social services in the medium and long-term.

Debt servicing, since the time of the dictator Ferdinand Marcos, has been siphoning valuable public resources from the country, with the current Arroyo administration paying out the biggest amount of public funds for debt servicing. Debt servicing (interest payments and principal amortization) under Mrs. Arroyo has been, on the average, more than 10% of the country’s gross domestic product (GDP) – higher than Aquino’s 8.1%, Ramos’s 6.8% and Estrada’s 6.6 percent.

Under its proposed national budget for 2010, the Arroyo administration will shell out a huge P746.18 billion for debt servicing covering interest payments and principal amortization. In 2009 and 2008, government spent P702.6 billion and P612.68 billion for debt servicing, respectively. These are huge amounts of money, with interest payments in 2010, for instance, eating up 22.1% of the national budget compared with housing’s 0.4%, health’s 2.5%, and education’s 15.3% – all of which will surely require more funds now because of Ondoy and other stronger typhoons expected to hit the country.

Is debt cancellation possible? Ecuador just did it earlier this year, with its President calling the country’s foreign debt “immoral”.

Considering the still unfolding humanitarian crisis that Ondoy has caused and threats of more super typhoons, the

Youth groups under the Serve the People Brigade join relief efforts for Ondoy victims in Laguna (photo from Kabataan party-list - Southern Tagalog)

Youth groups under the Serve the People Brigade join relief efforts for Ondoy victims in Laguna (photo from Kabataan party-list - Southern Tagalog)

Philippines can justify its move to cancel debt servicing and attend to the more immediate needs of its people. On top of this is the long-standing issue that many of the country’s debts are considered odious and thus the people should not be burdened to pay for them.

Current debt-funded projects such as the multi-million dollar road projects being bankrolled by Asian Development Bank (ADB) and the Japan Bank for International Cooperation (JBIC), $100-million text book project of the World Bank, China’s $885.4-million South Luzon railways project, ADB’s $750-million power sector reform programs and projects, among others are tainted with irregularities and corruption and should be considered for debt cancellation.

While emergency grant assistance for disaster relief from foreign donors are welcome, debt cancellation should be a top option for the Philippines in terms of raising sufficient resources in a sustainable manner to deal with disasters and other immediate and basic needs of its people.

As an initial move, Congress must repeal the Marcosian automatic debt servicing rule as provided under the revised Administrative Code of 1987 and rechannel funds allocated to debt servicing in the 2010 national budget to social services and disaster relief and rehabilitation.


BALSA: Relief effort for “Ondoy” victims

balsa poster copy 2

Affected number of families, by area, as monitored and compiled by Bagong Alyansang Makabayan – National Capital Region (Bayan-NCR)

Manila Area, Caloocan Area:
Dam Site 452 families
Dagat Dagatan500 families
Hapiland 450 families
Bagong Silang 500 families
Parola 520 families
Basco 600 families
Dapo Ilang Ilang 2,325 families

Valenzuela Area:
Kahilom 250 families
Marulas 150 families
Banana 300 families
Malinta 150 families

Quezon City Area, Marikina Area:
Payatas 2,000 families
Tumana and Malanday 1,000 families
Bagong Silangan 1,000 families (29 dead 109 missing)
Tatalon 1,000 families

Malabon Area:
Frisco 1,000 families
Tonsuyan 500 families
Damayang Lagi 800 families
Panghulo 500 families
Brgy. Old Balara 1,500 families
Catmon 500 families (3 dead San Jose, Daanghari 300 families 20 missing)
San Roque NBBS 300 families
Brgy. Bagong Bayan 100 families
NBBN Tanza 400 famlies
Brgy. Pansol 300 families
Daang Tubo 50 families

Pasig Area:
Quirino 500 families
Maybunga, Floodway 1,500 families
Project 4 450 families
Sta. Lucia Eastbank 569 famlies
Brgy. E. Rodriguez 400 families
Westbank Floodway 700 famlies
Kalawaan 500 families

Muntinlupa Area, Taguig Area:
Sucat Creek and Lawa 1,785 famlies
Tipas 30,000 families
Buli 120 families
Bagong Bayan 3,000 families
Cupang 1600 families
West Bicutan 2,000 families
Alabang 200 families
Putatan 1,650 families
Poblacion 450 families
Tunasan Sukatville 120 families
Advan BWLU 250 families