Transcript of Senator Miriam Defensor Santiago ’s interview

After the Senate Committee on Energy Hearing With The Respresentatives from the Various Foreign Chambers of Commerce

The Joint Foreign Chambers (JFC) apologized to the Philippine Senate for that letter they sent Pres. Arroyo after Sen. Enrile and I, plus Sen. Arroyo, took turns chastising them for breaking protocol. If they have anything to say about pending legislation, they should say it to the Senate. They should not write the President because it implies that the President could order a co-equal branch of government to do what she wants. And they should not write such a letter and make it public when the Senate is in the middle of debating the amended Epira law which has already took several years. The time to have expressed those sentiments should have been during the committee hearings when the Senate hears all kinds of opinions for and against.

The senators resented the letter for we were expected to lay aside all the things we have been doing on the amended Epira law and give way to the demand of foreign investors to stop amending our own law. But they issued an apology, and in my capacity as chair of the Committee on Energy, the apology is accepted.

However, beyond that, we wanted to know ano ba talaga ang reklamo ninyo na amendahin ang Epira. Sapagkat ang layunin nun ay ibaba ang presyo ng kuryente. Pitong taon na, hindi pa rin bumababa ang presyo ng kuryente kaya tinitignan naming sa Senado kung ano ang magagwa naming hakbang para bumaba ang presyo ng kuryente. Sabi nila (ng JFC) basta wag daw munang amendahin ang Epira.

Pero paulit-ulit naming tinatanong ng mga senador kung ano ba talaga ang ayaw nila jan. Pero ang sagot nila lagi ay malapit ng maprivatize ang Napocor sa katapusang nitong taon kaya’t bakit pa kelangang baguhin ang mga regulasyon. Tinanong sila kung nabasa nila, kasi 60 pages ang amended Epira, pero mukhang hindi. Ang sagot nila ay wala dahil ang mga technical consultants nila ay wala dito.

In my view, they are afraid that the amended Epira will visit or discuss all over again the very notorious IPP contracts where the foreigners are involved. The IPPs are independent power producers; the main power producer in our country is the government through the Napocor. But because of the brownout, Ramos signed contracts with the IPPs at exorbitant costs; and still, we are operating under that legacy. That’s one of the reasons why the price of electricity is very very high.

Under an IPP contract, there is no risk that the investor takes. We are already paying it the capacity service fee and operation and maintenance fee so how come may take-or-pay pa. Binabayaran natin lahat ng ginagamit nila at paggawa nila ng kuryente e bakit pag hindi nating gagamtin ang kuryente pababayarin pa rin tayo? Hindi tama yun. That’s why the public are up in arms against the IPP contracts. I suspect that the evasiveness of the foreign investors today indicate that they do not want to reveal the real reason, which is they don’t want the amended Epira to even mention the IPP contracts.

Nakakasuspetsa talaga kung ano ang angulo nito. Ang angulo natin ay ipagtanggol natin ang ating mga consumer na Pilipino. Ang angulo nila ay gumawa sila ng tubo. Wala namang masama dun kaya natin kinumbida sila e, pero wag naman sana sa pamamagitan nitong mga IPP.

There’s no provision of IPPs on the amended Epira. I think that they are just speculating on fear that maybe someone will stand up during the debates and propose such a position.

Can Congress remove the onerous provision on the take-or-pay?

That’s already part of the amended Epira. That’s what they are afraid of.

With respect to existing contracts we will respect that until the expiration date of that particular contract. We are talking of future IPP contracts.

I think their apology is only an indication that the letter was precipitate, was impulsive; it was an immediate reflex of people who are used to dictating to developing countries our own economic policies. Many of our lawmakers today have been schooled in their very universities and colleges so we’re just reflecting what we’ve learned. Now that we are an independent nation, why is it being held against us that we are able to think for ourselves?

On the conflict of interest that some of the members of the JFC are also partners of local power producers

Yes, they themselves admit it. I said, how can you be so sure that we should not patch Epira, because according to you, power generation will soon be subjected to open access—that is, we can now buy our electricity not only from Napocor but other IPPs. But how can you be so sure that there will be enough IPPs since the law today requires that there should be 70% privatization of Napocor before we can allow open access, before we can allow any power producer to present itself in the market. There are no foreign bidders in Napocor, there are only local bidders and then immediately one of them said, “Ah, we have a big investment in First Gen.” So you see, the foreigners are interested in making profits out of the IPPs, that is the real reason that’s why we’re going around in circles.

They will be called back on the hearings of the anti-trust law. Anti-trust means prevention in monopolies of trade. I am very happy at least the foreigners have been given forewarning at least on the part of the Senate not to dictate our economic policies, not to raise unfounded fears and not to speak in generalities. If only out of courtesy, they should specify what exactly it is that is hurting them in the proposed amended Epira.

Tama lang ba na pagalitan ang mga opisyal ng JFC?

E kung may rason naman kasi. Kung hindi natin itataas ang boses natin sa dayuhan maski mali ang ginagawa mamaya aapakan nalang nila tayo. I think yun yung punto ni Sen. Enrile. He is very capable of exploding, just like me.

They (representatives of the foreign chambers of commers) were very cooperative except that their answers were evasive, they were non-responsive. You cannot blame a witness for trying to get out of a sticky situation.

Can we afford the consequences of displaying our pride?

This is not just mere pride; this is really an assertion of independence from foreigners. We all want you to come here and invest in our country, but please respect our legal system. That’s the point we are trying to make.

Investors watching the hearing will understand that the Senate is responsive to the needs of the times. We cannot calcify into rock the old Epira law because they are more comfortable with it. We are not concerned with the welfare of foreign investors in that way. Our highest concern is the welfare of the Filipino consumer. If those two welfares coincide then we are very happy. If not, then we’ll simply prioritize lower priced power cost.

Can President Arroyo use her emergency powers if the present economic crisis worsens?

The economic crisis is out of our hands, it is being caused by the higher price of oil and by the international food shortage. There is nothing we can do. We are not an isolated island where all of these things are just happening to us. These are world wide afflictions on the entire poor community of the world. If that is the case, upon proper findings, the president, may of course properly exercise her emergency powers but she should adhere strictly to the conditions of the constitution and the Senate will be the first to protest if she does it prematurely.

MIRIAM HITS FOREIGN CHAMBERS ON IPPs

Sen. Miriam Defensor Santiago, chair of the Senate energy committee, said that the Joint Foreign Chambers of the Philippines (JFC) oppose amending Epira because they do not want a review of the IPP contracts.

Epira is the Electric Power Industry Reform Act, while IPP is an industry power producer.

“The foreign chambers have a conflict of interest. They want to preserve Epira, but at the same time they do not want a review of the IPP contracts, apparently because they want to protect their economic interests and investment returns,” Santiago said.

Santiago said that under the IPP law, any proposed electric generating facility should prove that it can generate electric energy cheaper than can be generated by Napocor (NPC), by accessing lower cost of capital, cheaper plant investment, and locally manufactured equipment.

She said that according to a study, in all types of power plants, the IPP costs are higher than NPC generation costs.

“Napocor IPP contracts are like the BOT contracts. They are not standard PPAs which take some levels of business risks,” Santiago said.

BOT stands for build-operate-transfer, while PPA stands for purchase power agreement.

“The IPPs make windfall profits at the expense of consumers. The IPP contracts are unconscionable because the IPPs are already paid for capacity, and for operation and maintenance. Yet at the same time they have a take-over-pay level for variable energy conversion fees. The take-or-pay provisions are excessive,” the senator said.

Santiago said that IPPs follow a fee structure of dollars per kilowatt hour, where the standard procedure is based on pesos per kilowatt hour.

Santiago listed the alleged inconsistencies in the JFC letter to Pres. Arroyo, as follows:

• JFC objects to Epira amendment, but does not particularly explain why.
• JFC contradicts itself because it rejects Epira amendment, but at the same time supports earlier open access. To achieve earlier open access, Epira has to be amended.
  
• JPC contradicts itself by calling for transparent and competitive electricity industry market and yet it rejects at the same time a review of IPP contracts. This is also conflict of interest on the part of JFC.
  
• JFC makes a bare statement that amending Epira will negatively impact the power industry market, without specifying the ways in which negative impact would result.

Santiago said that JFC issued the statement on the presumption that by the end of 2008, NPC will complete 70% privatization.

“What is the basis for this presumption? Will JFC members participate in bids for the JPC assets? At present, no foreign companies are involved in bidding for NPC assets. The only active bidders are local investors,” the senator said.

Santiago said virtually the entire Senate rose to criticize the recent JPC letter to Pres. Arroyo opposing Epira amendment, because the letter should have been addressed to the Congress.

“Lawmaking is the sole prerogative of Congress,” Santiago said.

Santiago said that the senators did not like the letter, because it appears to be an attempt by foreigners to meddle in Philippine policy making.

MIRIAM INVITES FOREIGN CHAMBERS OF COMMERCE TO SENATE ENERGY HEARING

Senator Miriam Defensor Santiago called for a Senate Committee on Energy hearing for Friday (June 6) following senators’ collective condemnation of the statement from foreign chambers of commerce regarding the country’s energy policy.

In a letter last May 27, the Joint Foreign Chambers (JFC) urged President Gloria Macapagal Arroyo not to renegotiate the government contracts with independent power producers (IPPs) nor amend the Electric Power Industry Reform Act (Epira). This drew the ire of senators, saying that the foreign business group is meddling with lawmakers’ efforts to reduce power rates.

Santiago said that it is a question of what kind of amendment the JFC doesn’t want, since Congress is only changing certain provisions of the Epira and not its entirety.

“The only problem with the IPPs is that they have a take-or-pay provision which is very onerous to the Filipino taxpayer. The foreigners can source their electricity from IPPs with take-or-pay provisions but it should not be a standard clause in our contracts of the government and the IPPs,” the senator said.

Santiago invited presidents of various foreign business groups to the hearing, among them Rick Santos of the American Chamber of Commerce of the Philippines, Richard Barclay of the Australian-New Zealand Chamber of Commerce of the Philippines, Stewart Hall of the Canadian Chamber of Commerce of the Philippines, Hubert D’Aboville of the European Chamber of Commerce of the Philippines, Toshifumi Inami of the Japanese Chamber of Commerce of the Philippines, Jae Jang of the Korean Chamber of Commerce of the Philippines, and Shameem Qurashi of the Philippine Association of Multinational Companies Regional Headquarters, Inc.

Also invited to the hearing are Energy Secretary Angelo Reyes, National Power Corporation President Cyril C. Del Callar, Power Sector Assets & Liabilities Management Corporation President Jose C. Ibazeta, Energy Regulatory Commission Chair Rodolfo Albano Jr., and Ernesto Pantangco, president of the Philippine Independent Power Producers Association.

14 January 2008

MIRIAM TO CONGRESS: “DECELERATE” BIOFUEL

Sen. Miriam Defensor Santiago, chair of the powerful Joint Congressional Power Commission (JCPC) said she will write Senate President Manny Villar and Speaker Jose de Venecia to provide funds for the newly created Biofuels Oversight Committee, to ensure that “food acreage will not be prejudiced by biofuel acreage.”

Santiago was reacting to a statement in Manila last week of Dr. Hartmut Michel, 1998 Nobel prizewinner for chemistry, that biofuel development is counterproductive, because it produces little energy, compared to other alternative sources.

Ironically, Santiago was the Senate author and sponsor of the Biofuels Act signed by President Arroyo into law in January last year.

“The Biofuels Act is only a cushion for the global increase in oil prices. It is only meant to be a runup to the Renewable Energy Bill, which I will sponsor in the Senate when session opens at the end of the month,” Santiago said.

The Biofuels Act requires a minimum 1 percent biodiesel blend in diesel fuel, and 5 percent bioethanol blend in gasoline fuel, prompting business speculators to call for the conversion of riceland to sugarcane, corn, cassava, nipa, jatropha, palm, soy, grapeseed, and coconut.

“The Biofuels Oversight Committee is intended not only to ensure that the law will reduce the country’s dependence on imported oil, but also to prevent corporate greed and political opportunism from endangering food security,” Santiago said.

Santiago , chair of the Senate energy committee, said that at a recent meeting, her committee voted to adopt all the proceedings of the prior Congress, meaning that the proposed Renewable Energy Bill can go immediately without additional public hearings to the plenary session for debate.

“The Biofuels Act merely addresses energy use in the transport sector. But the renewable energy bill will cover all energy applications outside the transport sector,” Santiago said.

Santiago said that the main emphasis of the renewable energy program should not be biofuel, but hydropower, geothermal, solar, wind, and biomass power.

“Some politicians have overhyped the Biofuels Act to burnish their image, thus misleading the public. The Biofuels Act raises a serious debate on food versus biofuels in a small island country like ours,” she said.

Santiago enthusiastically supported Dr. Michel’s suggestions at the Nobel forum last week that instead of putting money in biofuel development, the government should put money in wind power.

“Biofuel is landbased, and will eventually compete with food. Because the Philippines has a small land area, biofuel production will tend to encroach on food production. Corporations are already searching for millions of hectares for jatropha alone. We have to step on the brakes and decelerate,” Santiago said.

She said that during President Arroyo’s state visit to Spain , Spanish businessmen expressed strong interest in helping the development of wind energy in the Philippines .

Santiago said that the renewable energy bill, like the Electric Power Industry Reform Act (EPIRA), will establish a renewable energy market and a wholesale electricity spot market.

“The renewable energy bill provide for the green energy option, which gives consumers the choice to use renewable energy, and accelerate open access,” Santiago said.

Santiago said that the renewable energy bill will provide fiscal incentives to eligible proponents such as income tax holiday, preferential realty tax rate, exemptions from import duties, and reduction of the government share from royalties.

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