The gains were generated without much fun-fare. The evidence is in the massive support of, and the big amounts being poured in, by the private sector into the construction of both middle class and socialized housing projects.
The success of the President is significantly due to two decisions. First, the decision to put Vice President Noli de Castro in charge of the housing sector. Second, the decision to retain the housing sector team, particularly the leadership of the Home Guaranty Corp. or HGC.
The facts speak for themselves. First, the HGC, since the President took over, battled with – and obviously triumphed – against the myriad of guaranty calls inherited by her administration due to numerous loan defaults. Housing loan borrowers defaulted in large numbers mainly because they thought the scheme was a dole out. Guaranty claims from financial institutions stood at P16.45 billion. Previous administrations failed to settle about 93 percent of those claims.
Failure to settle such claims frighten banks and make them stay away from financing the construction of new homes. And when housing loans are scarce, interest rates go up. Today, all of these guaranty claims (about P10.65 billion as of end-2005) have been paid by the HGC. With this feat, private financial institutions have opened the faucets wide for the funding of new homes. And about 60 percent of universal banks are actively into lending for the construction of new homes.
In fact, private sector support for the President’s shelter program reached an all-time high of P 51.39 billion in 2005, up from the previous record of P43.3 billion in 2003. Average annual new enrollments for 2001 to 2005 was P13.72 billion compared to the measly average of P9.28 billion from 1996 to 2000.
Kabayan Noli has performed creditably well as housing czar. He has kept the sector largely apolitical up to this point. He has basically retained the original Arroyo team of silent workers. Among them is the president of the HGC, Gonzalo Benjamin Bongolan .
Bongolan is one of the country’s most respected capital market experts. He raised more than P 4 billion from the capital market to turn the HGC around and got the money to answer these guaranty calls.
The business community is hoping Kabayan would be able to keep the housing sector apolitical. This way, low-key officials like HGC’s Bongolan could concentrate on their job of beefing up private sector confidence. This is one sure way the national leadership can help ordinary Filipinos have their own homes.
We agree 100 percent. We have specifically stated that it is a "take and pay" or "dispatchable" contract. In other words Meralco consumers will only pay for kilowatt-hours that are used. This may sound harmless but not when you look at what happened with a previous deal Meralco had with Duracom.
Sources say Duracom’s "dispatchable" oil-fired power generating barge sells power to Meralco at a high price of P7.50 per kwh. Meralco management says this is for "load following" and "voltage-regulation". Experts estimate that for this purpose, then Duracom barges would be dispatched by Meralco for only about 10 to15 percent of its capacity on the average. Currently however, Sunny Sun’s Duracom barges are dispatched at an annual average of between 40 to 50 percent of its capacity. And our sources now estimate the additional 40 percent dispatched annually from Duracom, at the rate of P7.50 per kwh is equivalent to about P5 billion a year – passed on by Meralco to consumers.
Meralco now seems to implicitly confirm that Duracom has had three upward adjustments to its pricing formula over the last three years. Duracom started with pricing that was pegged at a level five percent lower than the NPC rate in 1998, increasing steadily through the years and is now being hitched to WESM prices. However, since the start of WESM, sources tell us that Duracom has been linked to the peak hourly market pricing which for instance, during the June 26 to July 24, 2006 period, had reached an outrageous P19.8 per kwh!
In November 2004, ERC instructed Meralco and Duracom "to re-negotiate the pricing scheme of the contract taking into consideration Duracom’s true cost as an embedded generator" and further required that the re-negotiated contract be submitted to the commission for approval within one year. Why the command in an era of overcapacity in Luzon and while a special IPP renegotiation committee formed by government was mandating all utilities and NPC to re-negotiate all power supply contracts to bring costs downward for the consumer?
There are many other telltale signs in the relationship that also point to a highly anomalous affinity between Sun and Meralco’s top officials. Sun’s daughter works at Meralco. A special job request for a very special supplier. In reciprocating this favor, Sun hired a few key retired Meralco executives into his payroll. Sun’s YNN had Meralco Industrial and Engineering Services Corp. as their technical due diligence advisor during YNN’s failed Masinloc bid. Were it not for a vigilant public outcry, Meralco appeared willing to sign another sweetheart deal with YNN contrary to their own board’s policies of conducting a transparent public bidding for the procurement of future supply contracts.
• Quezon City is No.1 in so many things. This includes housing. No other than Vice President Noli de Castro made this prediction as he witnessed the continuous rise of various housing facilities in the city. Aside from Mayor Feliciano ‘Sonny’ Belmonte, there is another city official who has been stirring the local government’s shelter program in the right direction. Councilor Winnie Castelo, also chairman of the city council’s committee on subdivision, housing, and real estate, has been pouring all his efforts in providing shelter to Quezon City residents. The city in fact has generated a total of 13,495 lots covering 123 hectares just for housing from 2001 to 2006. Of this, Castelo said 90 percent was used for the community mortgage program benefitting around 60,000 poor residents while the remaining 10 percent went to high- end subdivisions such as Ayala, Filinvest and Sta. Lucia. Being the author of an ordinance creating the National Government Center East and West Side along Commonwealth Avenue, Castelo has also helped some 40,000 poor residents gain their own house and lots.
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