The formation of this entity is contained in Executive Order (EO) 474 which was signed by President Arroyo last Nov. 30.
The EO specifically calls for the creation of the Philippine Strategic Oil, Gas, Energy Resources and Power Infrastructure Office (PSOGERPIO) which will directly encroach in the functions and duties of the Department of Energy (DOE) and its attached agencies, primarily the Philippine National Oil Co.
Legal experts and lawmakers believe that the creation of such body could be illegal because the DOE and most of its attached agencies are created through a legislative act.
Under the EO, "all orders, rules, regulations and issuances or parts thereof which are inconsistent with the Order is hereby repealed or modified accordingly," which broadly entails possibility of negating those policies enunciated under the Electric Power Industry Reform Act (for the electricity sector); and the Downstream Oil Industry DeregulationAct.
Oil industry officials, on the other hand, said this EO could run counter to the objective of the market deregulation.
Observers also noted that the EO does not carry a provision which will set guidelines on how the "super body" would function and define the scope of its responsibilities.
"The EO is a mistake. Why would you have an EO that does not even define the parameters of what it wanted to do for the industry," the Independent Philippine Petroleum Companies Association said.
Public and private stakeholders believe that this is one form of "disrespect" to all the efforts that are exerted to bring structural reforms to the energy industry.
Rep. Joey Salceda, a government economic adviser, also criticized the EO saying "it is a product of a sick mind who just wants vast powers without accountability over a strategic industry."
Salceda said he will thoroughly discuss this matter with President Arroyo as this could result to a "policy blunder".
Rep. Alipio Cirilo Badelles, House committee on energy chairman, shared the sentiment of Salceda. Badelles believes this EO may create "chaos" in the energy industry as this may lead to overlapping of functions and powers.
The Philippine Independent Power Producers Association (PIPPA) also echoed its concern over the EO saying that this may be another stumbling block in enticing investors to come in to the power industry.
"It makes the government’s hand becoming too heavy," PIPPA said.
Under the EO, PSOGERPIO, to be headed by a Presidential Assistant, could mandate the DOE and PNOC and all its subsidiary companies "to prepare, integrate coordinate, supervise and control all plans, programs, projects and activities of the government related to exploration, development, production, utilization, distribution and conservation of energy."
The EO also has provisions allowing it to infringe on the functions of other key government agencies; such as in setting what should be treated as "national priority" in terms of the government’s economic goals.
The industry players noted that this function is already being performed by the National Economic and Development Authority (NEDA).