Press Release
June 7, 2012


Q: PSALM loss?

Serge: There's no simple answer to that. There are 4 reasons: 1. The foreign exchange rat, sa pag-estimate ng utang. P25 is to $1 pa nun, tapos umakyat ng P50. So, lumaki ang current cost. Halimbawa, I owed $1 billion, which at the time was P25 billion, tapos the peso devalued to P50, so nagging P50 billion. So lumaki ang current at binabayaran mo 'yun. Number 2, 'yung P200 billion na sinabi ng government na i-a-assume nila, they didn't assume it until 4 years later. At the time, interest rates were abouy 12-13 percent. Our national bonds were 11 point and percent. And that's the best credit we get in our country. So if we're going to obtain 12%, that's P24 billion a year, and in 4 years, that's P100 billion! Third, inorder ni GMA na i-cut, ni-limit ni Gloria 'yung rate increase adjustments, sabi niya hanggang 40 centavos lang. 'Yan ang sinasabi ko eh. That's why rates have politicized, the government owns eh. Because they try to be popular, so in the meantime, lumalaki ng lumalaki ang utang mo because hindi mo mako-kolekta ang mga adjustments na allowed tayo by law.

Marami diyan na utang owed to us. Kasi pagbenta ng mga planta, accounts receivables 'yan, 30% down, 70% you pay to me in 5 years, in 10 years... If you look at the asset side, malaki 'yan. So it is not as big as we think it is. 'Yung sinasabi na $16 billion, you have to look at the asset side, too. Anong balancing factor diyan kasi double entry 'yan eh.

For example, I owe you P1 billion and he owes me P500 million, so ang net bale P500 million lang. So you have to look at both sides. You just don't look at one side.

Q: Where are we now? How much do we owe....

Serge: It's hard to say how much it is. Kasi nakita ko 'yung mga binigay nila, they tried to simplify it but I said hindi pa ito maiintindihan ng taumbayan.

Q: Ano ang point of reference? Before EPIRA, magkano 'yung debt?

Serge: Before EPIRA became law, it was P830 billion. Now, it's about P700 billion.

Q: What's the next move of the oversight?

Serge: I will study the numbers, I will clarify, and I will ask PSALM to submit to us in a simple format, na pati 'yung grade school maintindihan niya.

Q: Wala na bang Mindanao power crisis?

Serge: Hindi po tama na sabihin na wala ng crisis. Walang brownouts today, pero magkakaroon uli ng brownouts next summer - March, April and May. Bakit? Because the additional power coming in is not enough. Now, the shortage in Mindanao is due to the shortage of water during summer time, lalong-lalo na kapag tumama ang El Niño, apektado talaga 'yun, and that's when you need additional power to come in to make up for the short fall. So next year, there will be another shortfall because we are not able to bring the emergency plants into play.

'Yan uli ang pulitika. Sabi nila, don't sell the power barges. Ang nangyayari, delayed ng delayed ang pagbenta ng power barge.

Q: 300MW ang shortage?

Serge: During peak during summer. 300MW to 350MW.

Q: And that should be filled up by the private sector or the government?

Serge: It should be filled up by the private sector because that is the way that we are running, that is the regime that we have adopted for the power sector businesses. Luzon and Visayas, private sector 'yan.

Q: So kelangan agapan kasi next summer, election period?

Serge: Yes. It's gonna be election next year.

Q: But there's resistance to the privatization of the power barges?

Serge: Yes, but they don't understand energy economics. Mahirap talaga.

Q: Agus-Pulangi daw has the monopoly? Kelangan ban g consortium? It supplies the bulk of power in Mindanao?

Serge: 52% is not monopoly. Monopoly is 100%. What you are saying is that, EPIRA limits any one ownership to 30% of the installed capacity of a grid. And if you sell it as a whole, Agus-Pulangi supplies sell it as a whole, Agus-Pulangi supplies 52% of the grid. So, we split into 2. No problem!

Q: Profit-driven lang daw kung ipa-privatize?

Serge: Ang sinasabi nila, tataas ang presyo. But if I sign a contract with you for 10 years and I sell it to you at 50 centavos, ano ang profit-driven diyan? Puwede naman sa contract 'yan eh. So just sell it to the private sector para hindi na magsasaling-pusa ang government kasi magagalit ang mga tao. Parang ang nangyayari ngayon, they only want to buy power at P3. But it should be at P5.50, then you're crying, and you insist that we, the consumers in Luzon, have to subsidize your P3, and it's costing P4 to produce power, I have to pay the P1? Ano ba naman 'yun?

Q: So is that why Meralco is raising its rates again?

Serge: Meralco is different. Meralco is ERC naman eh.

Q: Hindi pwedeng awatin?

Serge: The energy cost of Meralco will come down. They were able to renegotiate their contracts. They gave the generators 10-year contracts, they broke it down from P5.30 to P4.60. Kaya nahihirapan ang mga power generators ngayon. Kaya lumalapit sila sa mga tulad ni Henry Sy of MOA. How much? P5.10. No way! Meralco is giving it to me at P4.60. Kasi nilo-long term nila.

And that's the advantage of the EPIRA. Because of the competition, they go long-term, so if you own a power plant, sige you give me a 10-year contract, and I'll give it to you at P4.60. So, Meralco's cost of power went down because before I was paying more kasi ang contracts mga 1 year, 2 years...the cost is higher. But if I give you long term, like 10 years, I can give it to you lower at P4.60. And I'm advancing that cost to my customers because the energy charge is a pass-through...


Q: Pano 'yung 3rd AMLA bill?

Serge: I have to work on that, magiging very bloody 'yan.

Q: Pero itutulak niyo pa rin? Hindi ba hinihingi yan ng FATF?

Serge: Oo, kailangan. Baka nga i-blacklist na nga tayo ngayon eh.

Q: Hindi pa ba substantial compliance 'yung 2?

Serge: Hindi ko alam how you would measure substantial compliance because first, we have finally included terrorist financing as a crime, it was not a crime before. In other words, you're going to send money to her, you're a terrorist and you send it to me, you're committing a crime. Before, you have to wait until she gets her hands on the money. But now, financing alone, it's a crime. Number 2, 'yung related accounts. Noon, 'yung account lang niya. Pero now, kahit na 'yung asawa niya, girlfriend niya, kasama na. Tapos third, 'yung ex parte. Noon, sasabihin muna ng AMLA sa kanya, sa account owner, I am going to open your account, so nawawala na 'yung pera.

Q: Repeated deposits and withdrawals?

Serge: Not repeated. Abnormal. Out of the ordinary for that person. For example, si Henry Sy, he's depositing P1 billion or P2 billion, that's not a suspicious driver. But if he's my driver and he deposits P1 million, P2 million, suspicious iyon, ipapa-check 'yun. The AMLC has the right to look into that.

Lotto is one time lang. Usually what they're looking for is a series of transactions.

Q: Hindi assurance na hindi tayo maba-blacklist kahit naipasa na natin 'yung 2?

Serge: No assurance. There's no assurance from anybody. I never said that there is assurance that we will not be blacklisted.

Q: 'Yung pinasa natin will not suffice?

Serge: I will not guess. Baka sabihin ko naman yes tapos hindi naman pala. Tapos iba-blacklist din tayo.

Q: Sabi ni Vic Aquino, kailangan yung 3?

Serge: Yes, that's what he says. Pero we can talk to them. Now whether they will say, o sige, I will give you 2 more months to pass the expansion. But you're asking me, but I don't know.

Q: Paano kung naipasa na nating lahat, pero blacklisted na tayo, paano natin mali-lilft 'yun?

Serge: Eh di mag-migrate na tayo. Kausapin natin si Corona and ask how to translate pesos to dollars.

Q: Aside from OFW remittances, ano pa ang ibang epekto sa atin ng blacklist?

Serge: Financial transactions. Because it's done through the banks. Forget whether its OFW, traders, airlines or what. It's the banks. Example. You're a bank in the United States. JP Morgan Chase, City Bank. Wells Fargo. Bank of America. One of the big banks. You're used to sending money all over the world. May mga customer ka na businessmen, sabihin nila they will send money halimbawa to Bolivia, or a big player in Venezuela or another one would say I am sending $100,000 to my son in Manila because he wants to buy a car, ganun. Or somebody says San Miguel is sending me $2M because they just bought a plant from me. Those are financial transactions, hundreds of thousands of transactions a day. So the cost to the bank is very small, 1 cent, 2 cents, 3 cents, depending on the size of the transaction, may $1 or $2. Ngayon sasabihin mo, I want you to particularly check into transactions with the Philippines because they have become very porous as far as terrorist financing is concerned, as far as money laundering for drugs is concerned, so I want you to give me an extra piece of paper that warns me about this transactions. Ang sasabihin ng bangko, magha-hire pa ako ng 6 clerks, a new form will cost me an additional 2 cents, malulugi ako dito. Sasabihin nila, teka muna, 'yung mga transactions sa Pilipinas huwag mo munang galawin. I will tell my correspondent bank, I will not deal with you guys first until you get out of the blacklist because it's costing me more money. Or else, I will raise my transaction cost to you, I will charge you an additional 2 cents, 5 cents, US yan ha. Times 40, that will be P20. So iiyak din 'yung bangko. Iiyak din ang customer.

It's not any one big thing. It's a series of small things...

Q: We're already on the verge of getting there...

Serge: We're already on the dark grey list.


Q: Any statement on the proposed privatization of power barges? To stop the continued bleeding of PSALM because of that?

Serge: The power barges, the cost to Napocor is P14/kwh. If the private sector buys it, it will only be P9/kwh. You go figure it out...

Q: Why?

Serge: Because government is very inefficient. Kaya nagulat kami ditto, ano ito, P146 million, divided...P14?! The price of the private sector is only P9!

Q: Besides the cost?

Serge: Cost is enough.

Q: Bakit kapag government inefficient?

Serge: Here's the thing with the power barge. There are 4 power barges, with a nameplate capacity of 28MW each, if you add all of it that's 112MW. You know what they're operating today? 64 megwatts! Variable cost 'yan, 'yung cost of fuel, 'yan 'yung fixed cost. The fixed cost is P146 million. Now P146M, divided by 64MW, that's P14, because P146M, divided 112MW, that'll probably be P9. But since the government, it's not their money, okay lang...hindi inaayos. If I own that, kung ako ang may-ari niyan, I will bring it up to 28MW (each barge or 112MW total) right away. 1MW, or 28MW, you'd still need 8 security guards, anyway.

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