Press Release
October 23, 2014


Q: Can we get the 1000MW without the emergency powers to mandate them to join the ILP?

Serge: No. I'm not going to recommend mandating. Talagang sasama iyan. Kasi magba-brownout din sila. If we put all our small contributions together, they can easily give us 1,000-1,200MW.

Q: For the record, how do we intend to settle the issues? It's really the case with the captive market and the RESA...

Serge: That's what I asked them to resolve already. Kasi solvable lahat iyan. It might be complicated to us, especially those who are not familiar with the power industry but to them, like ERC, they can solve it. We are not reinventing anything here. It's been done in other countries, except that we have not yet asked the other countries to teach us how to do it. So we still have 4 months to go. And I am pretty sure that we can easily brisk through this.

Q: May mga problems na nire-raise iyong mga companies kaya they don't want to join the ILP...

Serge: There are technical problems, we will solve it. Kami sa management, we are problem solvers, there is always a new problem everyday. Kayo din sa bahay ninyo, sa opisina ninyo, there's always a problem. Your editor in chief will have a new problem every 10 minutes. And they have to solve it. But it is solvable. We've just never encountered the problem before and we are not overwhelmed by it. The power is here, and the customer is here. And all we have to do is to make a smooth transition, so okay lang.

Q: What's keeping these companies from joining the ILP?

Serge: Walang rules eh. They want to see the rules, they want to know the mechanics, they want to see what the contract looks like. It was only this week that I saw a draft of the contract, draft lang ha kasi it has yet to be approved by the ERC.

Q: Who will make the rules and the mechanics?

Serge: That's being ironed out, the regulator here is ERC.

Q: May time period po ba ang ERC to produce the guidelines or the mechanics?

Serge: None. I don't give them deadlines. I just ask them to speed things up. Because that's the reason you have hesitancy now, kasi hindi pa alam kung ano ang rules. But me, since I have seen this in other countries and I have read about it, that's not a problem.

I remember before, when we were passing the law, we had 2 big issues: how do you privatize the TRANSCO, ang haba ng usapan namin and in the end, concession - the Filipino people still owns the asset but we will grant a concession contract for so many to a proponent who will pay for the upgrade, who will manage the TRANSCO and that's what we have now --- NGCP.

There was a problem also on how to privatize the purchase power agreements. Nandiyan na sila... we can sell the right to sell electricity in the market to a third party. We were able to privatize all of the PPAs.

Q: PNOY said economy stands to lose P23 billion if the emergency powers is not approved by Congress...

Serge: I don't know. Since the purchase of the generating diesel sets that they wanted to buy or lease for P6 billion is already out of the question because they needed a 6-months lead time and we only have 4 months left, academic na iyang emergency power. He doesn't anymore emergency powers. Because the emergency power only has to do with an exemption from the EPIRA that says that the government must not own any power plants any longer, hindi na magko-compete sa private sector. Malaking pera ang inilagay ng private sector, pagkatapos papasok ka uli. Kapag pumasok ang gobyerno, politicized na iyong rate. Magde-demonstrate na sa Malacanang, sa Mendiola, na ibaba ang rates. So, ibababa ngayon ang rates ng utility, eh di ang investors ngayon masusuya naman ngayon.

We Filipinos have already developed the notoriety for changing horses in the middle of the stream or for changing rules in the middle of the game. At ayaw kong magkaganun ulit dito.

So what I informed the secretary, I am willing to recommend to the committee for the President to use the Malampaya Fund to compensate some participants in the ILP that would meet additional expenses, like transmission lines connect, at ano pa diyan.

Q: Sabi niyo P1 billion lang?

Serge: That was just off the top of my head. Hindi ko naman talaga alam kung magkano. But I thought that P1 billion would be reasonable. They were asking for P6 billion but that's to actually lease. Eto, I was actually hoping that 1/2 of the increase would be passed on to the consumer. Q: Magkano sir?

Serge: 2 centavos or 3 centavos... per kilowatt hour. For one month lang iyan, bawi na. Sa Cebu, 4 centavos per kilowatt hour, 1/3 of their power was lost and they got from the private sector 65MW. They were able to bring it down to 4 centavos/kwh for one month, they recovered everything.

But I want the customer to learn that the more power that he consumes, the more he will have to pay. Para magkakaroon ng disiplina. Kung hindi, tuloy ang ligaya. Ganun din ang gasoline eh. If you don't allow the market to factor in the price increases, kasi tumataas ang presyo kapag may shortage, everybody would consume gasoline in the same way as if there was no shortage.

Q: Estimate on how much it would cost to tap the ILP players?

Serge: The protocol rights now is that the MERALCO, as the distribution utility, cam charge it to all its customers in the area. Gaya nga sa Cebu, the government did not spend a cent, the government did not ask for emergency powers. And it has been going on for 4 years na pala, since 2010 up to today. So, automatic iyan. Kapag may ILP, babayaran nila ng P14/kwh kasi mas mahal ang fuel, minus what they would have paid VECO, so mga P6-P9 net, and then divided by everybody, it's 4 centavos.

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