Press Release
February 22, 2015


Sen. Miriam Defensor Santiago today warned that the country's power industry has been infected by a "national-security virus," as she revealed that China has a stake in the company managing electricity transmission systems in the Philippines.

The senator said that a firm run by the Chinese government, the Philippines' rival in a bitter territorial dispute over the West Philippine Sea, holds 40 percent of the capital stock of the National Grid Corporation of the Philippines (NGCP).

The NGCP is the private firm operating the country's transmission system, the mechanism used to distribute electricity from generators to millions of consumers. "It is the core or the heart of the electric power industry," Santiago said.

"The Philippine Constitution is replete with requirements of nationalism but such a vital and strategic industry such as the electric power industry is infected by a national-security virus," the senator added.

Her statement comes as the Senate deliberates on Joint Resolution No. 12, which seeks to grant President Aquino emergency powers to address an alleged energy crisis. The House of Representatives approved its version of the measure in December last year.

Privatization of the energy industry

Santiago said that while the measure, which Malacañang certified as urgent in 2014, is dangerously overbroad, it still fails to address flaws in Republic Act No. 9136 or the Electric Industry Reform Act (EPIRA) of 2001.

The EPIRA was enacted to streamline processes in the local power industry by privatizing the assets of the state-run National Power Corporation.

Santiago questioned the privatization of the energy industry under the EPIRA, saying that it contradicts constitutional provisions on ownership of natural resources and Philippine obligations under the international law of human rights.

The senator, considered one of the leading constitutionalists in the country, said that under the Constitution, Article 12, Section 2, "all natural resources, in particular, all forces of potential energy are owned by the State."

"When the management, control, and ownership of the electric power industry were transferred from the government private monopolies, it is the Filipino power consumer who ultimately suffered increasing costs," she said.

Santiago also cited Article 27 of the International Covenant on Economic, Social and Cultural Rights, and Article 25 of the International Covenant on Civil and Political Rights, both of which the Philippines is state party. The provisions state:

Nothing in the present Covenant shall be interpreted as impairing the inherent right of all peoples to enjoy and utilize fully and freely their natural wealth and resources.

The senator said it is also provided in the common provisions, Article 1, Part 1 of both covenants that, "In no case may a people be deprived of its own means of subsistence."

The senator said the unbelievably high costs of electricity in the country, among the highest in the world, virtually deprive ordinary Filipinos of civilized means of livelihood and a sustainable standard of living.

A resolution cannot amend a law

Santiago cautioned that a mere legislative resolution is not a legitimate means to fix the flaws of a substantial law.

"What is the rationale of Joint Resolution No. 12? Is it to address a potentially serious short-run problem or is it to amend the EPIRA law? If the former, then it should do that, no more, no less," Santiago said.

She also said that if the resolution is meant to address an emerging shortage of power in Luzon for the summer months of 2015, it should be simple, easily implementable, and time-bound instead of open-ended.

"The reality is that the government is not a paragon of efficiency and effectiveness. Joint Resolution No. 12, in its present form, might be an example where the government intervention may create its own failure," the senator said.

"The shortage we are suffering is beyond electric power and go into the crisis of governance," the senator asked.

Lack of energy efficiency measure

Santiago, former chair of the Senate committee on energy and author of the Biofuels Act and the Renewable Energy Act, also highlighted the joint resolution's failure to include provisions on the adoption and execution of energy efficiency and conservation measures in both the public and private sectors.

"Energy saved is energy earned. This principle is embodied in the House version of the Joint Resolution, but missing in the Senate version. Why?" the senator asked.

Malampaya link

She also expressed concern over the cost of the Interruptible Load Program (ILP), even as she agreed that it is a quick and easy solution to the potential energy shortage.

Under the ILP, consumers capable of generating their own electricity may deload from the power grid. With an estimated 3,100 megawatts of private gensets in Luzon, up to 1,400 megawatts may be deloaded during peak hours on certain days.

Santiago noted that with the ILP in place, even without energy conservation, energy savings will be greater than the Department of Energy's maximum projected shortfall of 1,004 megawatts in Week 14 of 2015.

However, Santiago cautioned against tapping the controversial Malampaya Fund, composed of royalties from the Malampaya natural gas fields off Palawan, to cushion the immediate cost of the ILP.

"The Malampaya Fund, a fund designed for developing new sources of energy for the Philippines, should be used frugally and with caution," the senator said.

Amid the national investigation on the Priority Development Assistance Fund (PDAF) scam, there have been allegations that some P900 million from the Malampaya Fund went to bogus organizations linked to alleged scam mastermind Janet Lim Napoles.

"The total cost of the policy intervention as envisioned in Joint Resolution No. 12 could turn out to be costlier on the part of the Filipino taxpayers. The taxpayers should know the clear and hidden costs of government intervention," Santiago added.

Aside from the questioning the proposal to dip into the Malampaya Fund, the senator also probed into the cost to be shouldered by consumers, stressing how one of the responsibilities of the NGCP under the resolution is to recover the cost of the ILP.

"What is the meaning of this? Should private genset owners who deloaded from the grid continue to pay NGCP for the use of the grid? Please explain," Santiago said.

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