Onerous and anomalous

One of the usual destructive effects of a raging storm is the inevitable shutdown of electricity in the areas along the typhoon’s path. This power crisis is expected especially if the storm is as strong as the on-coming tropical cyclone “Ruby.” Considered as the strongest storm to hit our country this year, there will surely be blackouts in wide areas because of toppled electric posts and cut wires. Hence we are always warned ahead of time to buy flashlights and/or transistor radios or recharge or replace the batteries of the gadgets we may already have in the house. Fortunately, typhoons last only a few days so electricity is usually restored in matter of days after the end of the storm.

But in our country especially this coming year 2015, we will have a longer and more debilitating power crisis even without any storm, if Malacanang is to be believed. As previously announced by the government, there will be a longer electric power crisis the coming year due to lack of power supply. Hence the President has asked Congress to grant him special powers in order to meet the said looming emergency situation that appears to be much harder to overcome and to solve than typhoon-related power outages.

To be sure, this is not the first energy crisis that occurred in our shores. It also happened during the administration of P-Noy’s late mother Cory Aquino. The crisis at that time really happened as everybody felt it especially the business sector. Our economic situation at that time really slowed down and even deteriorated thus prompting Congress to grant Cory’s successor, Fidel V. Ramos, emergency powers akin to the special powers P-Noy has asked Congress now.

The only difference at this time is that doubts exist whether we will really have a shortage of power come 2015. Some Senators believe that this anticipated energy crisis is just conceived in order to give P-Noy more powers during the last years of his term so he will not appear to be a lame duck president. Others say that this is just an artificial shortage cooked up by the Independent Powers Producers (IPPs) which have already been raking in lots of profits under their existing contracts entered into with the government agency in charge of providing us with electricity, the National Power Corporation (Napocor) following the previous energy crisis. So, fears have been expressed that the special powers may again be used to favor these power generating companies.

Indeed the annals of the Lower House of Congress will show that eleven or more years ago, Congressman Herminio G. Teves of Negros Oriental, who was then Chairman of the Committee on Ways and Means, already pointed out in one of his privilege speeches that Napocor’s obligation to the IPPs had already reached US $14 billion or P700 billion. In fact according to Teves, in the year 2001 alone Napocor paid a total of P61.8 billion for energy fees to the IPPs.

Teves mentioned these figures after discovering a sentence inserted in Republic Act No. 9136 otherwise known as the “Electric Power Industry Reform Act (EPIRA) of 2001,” which was not in House Bill No. 8457, the consolidated Lower House version of the EPIRA taken from eight other bills filed in said chamber. HB 8457 was approved on third reading by the House of Representatives last April 12, 2000 without that sentence which gave the electric generating companies or the IPPs a VAT zero rated privilege in their sale of generated power to Napocor. But in the Bicameral Conference Committee meeting on May 31, 2001 a sentence was inserted in Section 6 of the EPIRA reading, “pursuant to the objective of lowering electricity rates to end-users, sales of generated power by generation companies shall be value added tax zero rated.”

Teves pointed this out to his colleagues in the Lower House and tried to introduce a bill (HB 5242) amending the EPIRA law which would terminate the VAT zero rated privilege of the IPPs by deleting said inserted sentence in the law. He contended that this midnight insertion was unconstitutional as it violates Section 24 Article VI of the Constitution giving to the House of Representatives the unique power to initiate tax legislation. He also called the attention of his colleagues to the fact that because of this insertion, the government had actually given up revenues estimated at over P6 billion consisting of the 10% VAT it could have collected from the total of P61.6 billion energy fees paid by Napocor to the IPPs in 2001 alone.

The termination of this tax perk would not also increase electricity rates and prejudice consumers for as long as the IPPs would faithfully comply with their contracts according to Teves. Almost all of these contracts already provided for generous tax privileges and other fiscal incentives to the IPPs and they were already factored in when the basic electricity rates and other government obligations were computed. “The VAT zero rated perk was just an additional benefit surreptitiously inserted under the law to help ensure that the IPPs continue to enjoy sky-high profits,” Teves said.

Thus it would seem that some of our Senators now are correct in saying that power crisis years in our country are already gone because we already have an excess supply of power. They seem to agree with the observation of ex-Congressman Teves that “the nation is still in crisis not because of inadequate power supply, but because of the excess power that we pay owing to our onerous and anomalous contractual obligations with the IPPs.”

Maybe, when P-Noy assumes his special powers at the onset of this anticipated power crisis, the first things he should examine are these onerous contracts and the provision in the EPIRA granting IPPs zero rated VAT privilege. It is really quite perplexing why the government did not oppose this VAT exemption to the IPPs when it is now opposing the giving of tax exemption to employees’ bonuses allegedly because this measure will adversely affect its revenue targets. Once more this is a confirmation that only the rich are getting richer in this country indeed.

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