Press Release
December 13, 2007

Transcript of Sen. Miriam Defensor Santiago's Interview

On the JCPC hearing on the sale of PNOC-EDC

We are on the verge of losing our patience because the issue simply is how much the EDC has contributed to the national treasury. We already know how much it was sold for: some P58 billion. If it (EDC) contributed more than that to the national treasury, then why sell it? Because then it would be able to make more money than it is being sold for in the very near future. They (the government panel) cannot give us a ballpark figure. These are huge amounts of money and we are entitled to an explanation why we are selling a profitable government enterprise.

During the time of President Aquino, the sales of government assets were confined only to those that were non-performing assets or government corporations that were losing money. We never sold any profit-making assets because if we sold it to a private owner he would pay today and we would have today the amount that he paid, but the entire revenue stream or the entire potential earnings of the enterprise would have absolutely stopped. It would be like looking only at the short-term but not at the long-term. It would be trading instant gratification for future security.

(But) the most basic problem is why they didn't inform us that they were selling it. All the while we thought that just trying to prepare for the sale of certain assets of the EDC like its geothermal fields and steam sales agreements. We didn't have any inkling that they were selling sixty percent of EDC which would make government lose control of a geothermal firm that is considered one of the first in the whole world. We are number one in steam sales technology and number two in steam sales production. Now PNOC-EDC, through the chair of the Privatization Council (the Finance Secretary) and the president of PNOC-EDC himself, wants to sell this valuable asset for what?

Plus, I have a personal concern on why did the winning bidder, Red Vulcan, bid P 58.5 billion, which is P13.5 billion higher than the floor price. In other words, the Privatization Council and PNOC-EDC undervalued the valuable assets of our government. Even the buyer himself admitted that the floor price was an undervalue of the asset. Why make it easy to sell something that is making money? Their argument there is very weak, and that is that now it (EDC) is in its peak price and we will never be able to sell it in the same amount again. How did they know that? Do they have any fact-based data to support their argument?

In the case of the JCPC, we have one particular instance in the past when, owing to the intervention of a public official, a sale that has already taken place, was cancelled or aborted... it turned out that the cancellation of the government asset sale, I'm talking about Malampaya EC, was correct because eventually the price of oil rose from $30/barrel to $100/barrel, so the income from Malampaya rose as well. If we have not stopped that sale at that time, we would have lost a valuable asset forever, and it is now making a lot of money for the government. That is more or less the same situation as EDC.

Can the JCPC still block the sale?

[The sale] has not yet been implemented. In a sense it has been consummated because the winning bidder has been announced, and was able to make full payment in cash. The next thing that should happen is that it should now take over control of EDC. But not if the JCPC can help it. If we need to go to court, then we will go court. But first we will give the Secretary of Finance and the PNOC President, the two officers responsible for the sale, an opportunity to explain themselves. What I am doing here is I'm making a compilation of all the questions that were raised today and I will give them until next week to give me a specific answer for each question. They were saying this morning that they don't have the exact figures. We find that hard to believe. You would have at least some rounded or ballpark figures in your head if you are dealing with an amount as big as P 168 billion.

The power of the JCPC is to monitor the privatization of the power industry and to ensure compliance of the Epira. Epira provides that we must optimize the value of our assets that are being sold. If we find that the value has not optimized and we therefore reach the conclusion that the law has not been followed, we would have good legal grounds for ordering them to withdraw their approval, just as they did in Malampaya.

You insinuated earlier that somebody must have received commissions and kickbacks

It cannot be helped because these people could at least have given the senators and the congressmen the basic courtesy of notice. Sa tingin ko may kumita dito. Bakit mo ililihim kung wala kang itinatago? Napag-usapan na ito sa JCPC noon pa. Sinabi namin na huwag na nating ibenta ang shares of stock o control ng EDC, ibenta na lang natin ang mga assets niya. Nagulat na lang kaming lahat na ibebenta na pala. That is mainly the burden of the JCPC. We are trying to understand why they didn't give us due notice and wait for us. What is the rush, since the sale price of P58.5 billion is meant to go only to make up for the budget deficit. That is not the function of the Privatization Council or the Department of Finance.

They could not even answer the question [how much the government lost in the sale of EDC]. I want to know how much has EDC given to the national treasury. At first they said P71 billion. Kita mo na: binenta natin ng P58 billion ang kumikita ng P71 billion. Tapos ang sabi nila " Mali pala kami, meron pa pala kaming ide-deduct diyan." Ang mga kumisyon daw ng mga broker at underwriter sa kanilang benta. Hindi raw kumpleto ang listahan nila. Iyon na nga ang problema, may mga kumikita nang hindi alam ng publiko.

On citing Transco President Arthur Aguilar for contempt

I cited him for contempt because pinag-uusapan dito kung maayos ang pagbenta ng Transco. Biro mo, presidente siya ng Transco hindi siya dumating, nagpadala lang ng vice president niya dahil nagpreside daw siya ng nationwide bidding ng mga subordinate at regional managers niya. Pinag-uusapan ang P160 billion ng gobyerno dito, at mas gusto niya na makihalubilo sa mga subordinates niya. He is not giving the JCPC the proper courtesy of at least his physical appearance.

I gave him 3 days to file a motion for reconsideration, but I have already said that we will not find it acceptable that he explains himself by merely saying that "I am sorry but I am presiding over a nationwide conference." E di magpa-preside siya ng ibang tao at bumalik siya ng hapon. Anong deperensya? Anong problema? But we will ask him to explain in writing what the details of (the sale of) Transco are.

My reading of the JCPC law is that we can detain or imprison him for less than one year, and we can impose a fine of less than P50,000.

On Ibazeta's defense on charges of conflict of interest over the sale of Transco

Myself as chair and Rep. Arroyo as co-chair the explanation to be reasonable and therefore valid. He (Ibazeta) is saying that "There is no conflict of interest. I am chair of a terminal services corporation and we are here dealing with the power sector, so I don't see any conflict between terminal services and the power sector." Besides, he inhibited himself from the bidding process because of the ethical question that has been raised. Unless there is further evidence, we find that he has acquitted himself successfully on the charge of conflict of interest. Whether there is any irregularity in the bidding process itself or in the projected dire consequences of the sale to this winning bidder, that will be taken up by another committee.

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