Facts about NPO & APO

Employees of the National Printing Office (NPO), formerly Bureau of Printing, are up in arms against government plans to merge NPO with APO production unit (formerly Asian Productivity Office), and worse, to abolish NPO eventually.

The NPO is mandated to print exclusively the accountable forms of the government, the Government Appropriations Act, the Official Gazette, the official ballots and on a non-exclusive authority, the other printing materials of the government.

Meanwhile, it was former President Marcos by virtue of Letter of Instruction 197 who allowed and authorized the APO to solicit and accept printing jobs with the other agencies of, or corporations owned and controlled by, the government to sustain its operations. APO is actually a non-stock corporation registered with the Securities and Exchange Commission.

APO was established to create a modern international editorial and information of media exchange and distribution program which shall serve to stimulate the development and upgrading of creative and technical skills in Asia, especially in the Philippines’ printing and audio-visual industries; to provide needed copy of technical information materials requested by member countries of the APO, drawn from world sources; to engage in the production and distribution of printed materials, among others.

During the start of its operations, the company incurred loans from the Philippine National Bank, Philippine Veterans Bank and the Lank Bank of the Philippines in order to purchase machines. In 1986, APO’s loan to PNB of P86 million was assigned to Asset Privatization Trust (APT). APO was later was transferred to the Office of the President, then to the Philippine Information Agency, and back to OPS in 2006. APO’s debts had since this ballooned to P2.3 billion.

APO incurred net loss of P63. 5 million in 2009 and P37.02 million in 2008.

On July 30, 2010 President Benigno Aquino attached APO to the Presidential Communications Operations Office (PCOO).

Then last June 6, APO was declared a GOCC under the newly enacted GOCC law.

There is now a pending case before the RTC of Quezon City questioning the personality of APO being a private entity. Its employees are covered by the SSS and are not under the Salary Standardization Law. Its board of directors are receiving a salary of P100,000 exclusive of commissions.

NPO employees are staging their noontime rally everyday to oppose the impending merging of NPO and APO, worst the abolition of the former. A 110-year old institution in danger of being abolished in favor of the heavily indebted APO.

For us taxpayers, the bigger question that needs to be answered is this: who will now pay for APO’s P2.3 billion loan now that it has become a GOCC?

Reforms at the GSIS

Kudos to the GSIS for the reforms it has instituted in its system specifically on the re-insurance of government properties. GSIS is mandated to insure all government properties. It however reinsures these properties to private insurance companies to lessen its exposure and risk.

With the new board in the GSIS, the re-insurance of National Grid Corp. of the Philippines was bidded out for the first time in several years. For the past years, the re-insurance was always renegotiated with the existing re-insurer, Malayan Insurance. 

Moreover, the members were able to reduce the amount of premium on the re-insurance of the NGCP as well as lower the deductible level making recovery of losses and damages easier and less cumbersome to the Filipino taxpayer.

From 2008 to 2010, the NGCP through the GSIS was paying a premium ranging from $5.57 million to $6.69 million. The amount of deductible on Industrial All Risk/Submarine Cable and Sabotage and Terrorism was at a high of $5 million in the aggregate and $2 million for each and every loss thereafter.

This means that the NGCP should first have an accumulated claim of $5 million or around P230 million before it could recover. If its claim is below the deductible amount, it could not recover.

This raised some questions because the amount of deductible was high. Just take the problem that arose from the calamity brought about by typhoons Ondoy and Pepeng and the terrorist bombing in Lanao Del Norte in 2009 in one of NGCP transmission lines.

Because of typhoons Ondoy and Pepeng and the bombing in Lanao Del Norte, NGCP incurred damages in the amount of P172.82 million. It could not however recover from its insurance because it did not meet the amount of deductible which is around P230 million.

NGCP then had no choice but to recover such damage from electricity consumers. Such re-insurance terms will lead to higher power rates. Because of the very high deductible set in the re-insurance, power consumers will pay of a total of P1.145/kwh over the next five years starting this year;

With the new board, the terms were far better because the premium was lowered to just $1 million and the deductible was likewise lowered to $1 million and $1 million for every loss thereafter.

Re-insurance rigged? Insiders have raised the suspicion that the bidding terms were tailored-fit in favor of the current reinsurer because the mechanisms were crafted in such a way to prevent other interested bidders to take part.

The old GSIS board only gave interested bidders 12 days to submit all the documents required. Prospective bidders have time and again requested the GSIS to extend the 12-day period because it would be impossible for them to submit all the voluminous documents. But the requests fell on deaf ears.

This is the reason why there is always failure in bidding because no other bidder could comply with the requirements. The reinsurance contract was then renegotiated and extended with the current reinsurer.

With the entry of the new administration, the NGCP requested the new GSIS to institute changes in its re-insurance to prevent power consumers from shouldering losses that could not be recovered from the insurance.

The new board agreed and extended the compliance period of submission of documents of prospective bidders to 60 days from the previous 12 days.

The premium and deductible were also lowered.

Because of the changes, the GSIS attracted quite a number of prospective bidders and the pension fund conducted a successful bidding just recently.

The NGCP said getting the best insurance terms is vital to the economy and to the power consumers because any damage to its transmission lines that would not be covered by insurance would be passed on to consumers, translating to higher power rates.

But aside from instituting reforms in the reinsurance process, the GSIS must not stop until all aspects of this case is reviewed and studied so that a repeat is prevented.

There are allegations that the re-insurance of the GSIS has been used as a milking cow by some officials in the past as as much as 30 percent commission is being collected from the premium.

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