Congress wants final say on Transco franchise award

The privatization of the transmission assets of the National Power Corp. (Napocor) hit a snag anew yesterday after senators insisted that Congress, not Malacañang, should approve the concessionaire to whom the National Transmission Corp. (Transco) would assign its franchise.

Opposition to the Transco franchise gained bipartisan support after energy officials admitted that the privatization of Napocor’s transmission assets would not guarantee lower electricity rates as originally assured by the Arroyo administration.

Administration and opposition senators expressed their opposition in a joint hearing of three Senate committees that is considering House Bill No. 4882, or Transco’s 50-year franchise.

The senators questioned certain provisions of HB 4882 that would allow Transco to assign its franchise to a concessionaire without congressional approval.

Transco is the government corporation created by the Electric Power Industry Reform Act (EPIRA) to manage the privatization of Napocor’s transmission facilities.

Under HB 4882, Transco will be granted an "assignable franchise" to privatize Napocor’s transmission assets by leasing them to a concessionaire for 25 years, renewable for another 25 years, raising some P2 billion to pay for Napocor’s burgeoning debt.

Energy Secretary Vincent Perez explained during the hearing that HB 4882 was designed in such a way that the concessionaire which would win the public bidding would not have to apply for a separate franchise from Congress.

But Senators Joker Arroyo, chairman of the joint hearing, Vicente Sotto III, John Osmeña and Ralph Recto said the executive department would be usurping the constitutional mandate of Congress to scrutinize concessionaires applying for public franchises.

But Perez denied that the Transco franchise would take away congressional authority over public franchises.

"The franchise will still be with Transco, only the functions and assets will be assigned to the concessionaire," Perez told the Senate committees on public services, energy, and ways and means.

He also told the senators that it was already agreed during the deliberations on the EPIRA that the concessionaire that would win the public bidding would not have to apply for a separate congressional franchise.

He said EPIRA already contains certain provisions that will safeguard the Transco privatization process since it already sets standards and qualifications for the bidders.

Energy officials had earlier said that at least six foreign companies have expressed interest in bidding for the concession, including Asea Brown Boveri, a company owned by Hong Kong billionaire Li Kashing, and a French company.

Edgardo del Fonso, acting chairman of the Power Sector Assets and Liabilities Management Corp., said the privatization of Transco’s transmission facilities would dramatically improve power distribution services. PSALM was also created by EPIRA to manage Napocor’s assets and liabilities.

Del Fonso admitted, however, that the approval of the Transco franchise would not really guarantee lower electricity rates for homes and factories.

Senator Arroyo, chairman of the Senate committee on public services, said Del Fonso’s statement was a complete turnaround from the Arroyo administration’s "selling point" when its energy officials were urging Congress to pass the EPIRA.

"They said before that we should pass the EPIRA if we want lower rates. Now, you are saying lower rates are not forthcoming," Arroyo accosted Del Fonso, who responded that he was not yet with the Napocor when the EPIRA was being considered by Congress.

Moreover, Del Fonso admitted that the government would still shoulder about $2 billion of Napocor’s liabilities even after the privatization of its transmission and generating facilities.

But Del Fonso said Napocor could not meet its maturing obligations of about $800 million a year except through the privatization of its assets.

During the hearing, Arroyo also sought guarantees that proceeds from the privatization program would indeed be used to pay Napocor debts.