Group welcomes breaking up of energy, telecom cartel; warns against further liberalization

May 23, 2016


Scientist activist group Advocates of Science and Technology for the People (AGHAM) welcomes presumptive Pres. Rodrigo Duterte’s plan to break up cartels in the energy and telecommunications industry to improve its services.

Liberalization of telecom industry
The group, however, criticized Duterte on his proposal to open up the telecommunication industry to foreign investors saying that it would not solve the problems of the industry but would lead to a worse situation once foreign companies dominate it.

“A case in point is our experience in the power industry. We allowed foreign investments to flood the industry but to no apparent benefit in terms of lowering rates and improving the supply,” said Feny Cosico, Secretary General of Agham.

In 2011, 32% of the generating capacity of the country is influenced by foreign companies through their local partners, the Aboitiz and Lopez groups. On the other hand, the transmission sector run by National Grid Corporation of the Philippines is 40% owned by the State Grid Corporation of China.

“This not only generates virtual cartels and monopolies, but puts our national security and sovereignty in peril. The exact situation would happen in the telecom industry should Duterte push through with its further liberalization,” said Cosico.

EPIRA and power industry
The group also says that breaking up cartels will address only a small part of the power problem.

“At the root of the power crisis we continuously face is the privatization of the power industry through EPIRA. A more strategic direction for the next administration will be to reclaim the government control over it by replacing EPIRA,” said Cosico.

EPIRA or the Electric Power Industry Reform Act systematized and expanded the privatization and deregulation of the power sector when it was signed into law in 2001. Among the promises of EPIRA’s proponents were lower power rates and more stable energy supply.

“After fifteen years of EPIRA’s implementation, we do not see any improvement on the power sector from the consumers’ point of view. Power rates remain very high despite the decreases in the past months, and the power supply remains unstable,” said Engr. Mon Ramirez, lead convenor of POWER (People Opposed to unWarranted Electricity Rates) Alliance.

The average Meralco effective residential rate for 200KWh-consumers from 2011-2016 is Php10.17 (approx. US $0.22) per KWh while the ASEAN average residential rates in 2011 was US$ 0.13. Also, Meralco’s average effective rate in 2016, which is at PhP8.63/KWh, is 77.2% higher than pre-EPIRA rates.

“We urge Pres. Duterte to learn from the mistakes of the past administrations. To truly improve the industry, his power policy must include, apart from breaking up cartels, the halting of privatization of remaining government-owned power plants, the nationalization of privatized assets, and support to electric cooperatives. More importantly, Pres. Duterte must retake the state’s responsibility to establish its own generation plants,” said Cosico. ####

Reference: Feny Cosico, Agham Secretary General, 0917 811 5445