The other side of the coin

In our column last Sunday, we wrote about how GSIS head Winston Garcia declared war against the Manila Electric Co. in his pursuit of a possible change in management and good corporate governance.

Many agree with Garcia’s published motives. But others say his moves are only meant to distract the public’s attention from moves to revise the EPIRA law.

But is there really a need to change EPIRA?

Observers note that for the first time since EPIRA was passed in 2001, all’s well for the privatization of Napocor. Even the long-delayed privatization of the Napocor IPP contracts which may generate about $13 billion is pushing through according to PSALM.

Unfortunately, it is claimed that the impending privatization of Napocor’s IPP contracts will cut off the Napocor mafia’s power to procure fuel for the Napocor IPP plants, particularly the coal plants. Remember that more than P20 billion worth of overpriced coal is purchased by NPC every year for these IPPs.

Already a case had been filed with the Ombudsman against Napocor president Cyril del Callar and his cohorts for anomalous coal procurements that are more than P600 million overpriced, not to mention the furor over the recent award of coal supply contract by the same cohorts of Del Callar to a dubious entity with capitalization of less than P65,000.

So the Napocor mafia now turns its guns on its favorite scapegoat/punching bag — Meralco. It is said that the mafia is working with some cohorts in the Palace in feeding the President grossly inaccurate information.

Case in point. Observers note that when the President asked recently why power costs in the Luzon urban beltway is so high when Luzon is reliant on imported oil for only one percent of its power and accuses Meralco of charging higher rates than its counterparts in Cebu, Davao and the electric coops, evidently nobody explained to her that aside from oil, the Luzon grid uses coal.

In the Luzon grid, coal fired power plants accounts for close to 35 percent of the total kilowatt-hours and majority of the coal for these plants is procured by Napocor. Still, management refuses to sign up any long-term coal contracts when markets were calmer.

The other big contributor to the price of electricity in the Luzon grid is natural gas. But why is natural gas from Camago-Malampaya taxed at least 10 times more than that levied on imported coal? We are the only country in Asia that penalizes its citizens in this manner when they consume their own indigenous natural gas.

The President also said she will lower Napocor’s rates by half. The last time she did that in 2002, Napocor registered its largest loss in its history (P110-billion net loss in 2003). This will happen again if Napocor’s selling prices fail to reflect the true cost of fuel and power purchased from its IPPs.

Secret NTC deals?

The National Telecommunications Commission (NTC) better come up with a good explanation, and fast.

The telco industry is worried by reports that the NTC has been secretly granting Liberty Broadcasting Network Inc. (LBNI), a company under court receivership since 2005, certain broadband frequencies when everyone else is lining up for these very valuable assets.

Among the first to demand an explanation is Lopez-owned Bayan Communications which has asked the government to further strengthen the regulatory environment in the telecommunications industry by instituting stricter measures against the grant of new broadband network licenses.

LBNI, being under rehabilitation, obviously does not have the financial capability to operate a broadband network. All its assets have been attached by its creditors. The company has not been operating.

During the recent Kapihan sa Sulo Hotel, John Rojo, Bayan’s director for corporate branding says that though they welcome competition, urged the NTC to be very cautious in granting broadband network licenses to new entrants.

Bayan, along with PLDT and Globe, are worried. Frequencies are scarce resources. These should be granted by the NTC only to those who can show beyond doubt that they are in a position to best utilize these frequencies for the good of the consumers.

According to Rojo, Bayan will appeal the grant of the license to Liberty Communications before the NTC in the next few days.

Just recently, we reported that the Regional Trial Court of Makati has asked the NTC to inform the court of any disposition, reallocation, or assignment of frequencies made by LBNI, Liberty Telecoms Holdings Inc. and Skyphone Logistics Inc. made from Aug. 15, 2007 up to the present, as well as to inform it whether the court “whether there is such a confidential nature of the frequencies assigned to said three companies.”

Apparently, former NTC Commissioner Abesamis last year granted to LBNI  certain frequencies (2540-2545 MHz, 2580-2595 MHz, 2535-2540 MHz, and 2565-2580 MHz) as shown by two NTC letters to LBNI dated June 26 and 28, 2007. However, the logbook of the frequency management department (FMD) does not show that an application was received for the said assignments, not were these frequencies found in the FMD database.

Because there was no way to truly account for the frequencies that LBNI has, the NTC has not prepared a listing of the frequencies assigned to LBNI.

The court now wants to find out if there is truth to reports that the grant of these frequencies to LBNI and its owner Raymund Moreno was “confidential in nature,” as well as certain claims that these frequencies are being resold by LBNI to certain telcos with the blessings of NTC.

This, LBNI cannot do legally because to do so would be tantamount to defrauding its creditors to which it owes at least P1.4 billion.

Why would former Commissioner Abesamis allocate valuable broadband wireless access (BWA) frequencies to a company which obviously does not have the financial and technical capability to provide telecommunications services to the public?

The bigger question now is: What has the present NTC management done about this?

For comments and feeds, e-mail at [email protected]