The privatization of the National Power Corp. (Napocor) will not favor foreign investors and the so-called Estrada cronies, according to a government official.
"In fact, we have been encouraging foreign groups starting business in the energy sector to tap local partners," Napocor president Federico E. Puno said, in reaction to allegations from some congressional quarters.
Puno added that even those entering the exploration, generation and distribution of energy and energy-sources have found it viable to seek local partners. "Most foreign investors prefer to have a local partner so that they can be more attuned to the local business environment."
He cited as a good example the Malampaya natural gas project, which has the Philippine National Oil Corp. (PNOC) as a 10 percent equity partner of the Shell Philippines Exploration BV (Spex) and Texaco of the US. Or the Tiwi Makiling-Banahaw geothermal project wherein the dominant equity holder is a Philippine corporation while only 40 percent is controlled by the Philippine Geothermal Inc. (PGI), a subsidiary of Unocal Inc. of the US.
"The fact remains that the foreign groups have the technical expertise and the financial clout for energy-related projects," Napocor officials said.
Meanwhile, Puno said that a stronger and re-enforced Energy Regulatory Board (ERB) would safeguard the industry from the unhampered entry of the so-called cronies into the energy sector.
Based on the final version of House Bill 8457, otherwise known as the Comprehensive Energy Industry Reform bill, the ERB will be given extra powers to be able to closely monitor the workings of the deregulated power sector.
"The bill provides for a stronger ERB that will be empowered to make sure that there would be no collusion among industry players, and that such anti-competitive practices as price-fixing and market domination will not happen," the Napocor president said.
Congressional quarters have expressed fears that corporate giants like the Lopez group or the Gatmaitan group would dominate the bidding process for the Napocor assets, including the seven generation companies (gencos).
Bohol Rep. Ernesto Herrera expressed fears that close associates of Estrada were sure to win in Napocor's privatization. The former senator said that it would bring about a cartel similar to the powerful formation of oil majors Caltex Philippines Inc., Pilipinas Shell Petroleum Inc., and Petron Corp.
Cited as the "close associates" were the business and family conglomerates of the Lopezes, and plastic giant William Gatchalian. The Lopezes have huge interests in energy generation and distribution including the Manila Electric Corp. (Meralco) which controls over 70 percent of electricity distribution in Luzon.
Gatchalian is reportedly involved in fuel and energy distribution, and has shown interest in the Leyte transmission lines.
Meanwhile, Puno said that there would be frightening situations in the event that the privatization of Napocor is extensively stalled.
"There will be three basic scenarios if Napocor is not privatized. First, we have to be recapilitalized. The second scenario is that government would be constantly borrowing from local and foreign sources for refinancing of its annual operations, upgrading and expansion programs, and debt servicing," the Napocor chief executive said. Napocor's total liabilities are estimated to be over P600-billion.
The third scenario means a regime of high basic power rates for the industrial, commercial and residential clients. It could also mean the removal of subsidies between regions and regional grids, and between major sectoral groups.
The rate increase will be the alternative to any increase in authorized capital for Napocor if government does not approve a bigger budget for the government corporation.
"The simpliest route is really to reform the electric sector and privatize Napocor," Puno said earlier in a forum sponsored by the Washington Sycip Policy Forum Center. -