Why is DoE defending this ‘independent’ firm?

A company with P7,000 paid-up capital has taken control of the wholesale electricity spot market (WESM). For every kilowatt-hour that consumers pay for, 50 centavos goes to the company “dubiously set up only in May 2018.” Within months it earned more than P100 million.

That favored company is Independent Electric Market Operator of the Philippines, Rep. Jericho Nograles exposed this week. How and why IEMOP gained management of WESM, the lawmaker who hails from Davao City wanted to know. There was no competitive selection process, he noted. With measly capitalization IEMOP was able to operate the multibillion-peso market. It even took over hundreds of millions worth of government-funded IT assets.

“Laway lang ang puhunan,” Nograles briefed the House committee on energy. “Ginigisa ang electric users – tayong lahat – sa sariling mantika.”

From submissions, IEMOP has no experience or assets to act as WESM operator. “It’s P7,000-paid-up is not even enough for a food cart franchise,” remarked Nograles, much more WESM, the trading bourse of electricity producers and distributors.

IEMOP was formed on May 15, 2018, with seven incorporators pitching in P1,000 each. It described itself as “non-stock, nonprofit ... to become the Independent Market Operator of the WESM.” Only four months old it then entered into an agreement with the original WESM operator, Philippine Electricity Market Corp. (PEMC), to run the market.

The Electric Power Industry Reform Act of 2001 mandates the creation of an independent operator to supersede PEMC, which the Secretary of Energy chaired and the state-owned National Transmission Corp. oversaw. Still, Nograles said, there should have been competitive selection to determine the most competent and best equipped.

The Dept. of Energy replied instantly in its Facebook account. Disavowing a sweetheart deal, DoE claimed that no competitive bidding was required under the EPIRA law. Besides, IEMOP collected only half a centavo, not 50¢, per kilowatt-hour. A transition plan was implemented, during which Energy Sec. Al Cusi first resigned as PEMC chairman, followed by the “spinoff” of IEMOP. Experience supposedly was derived from the transfer of PEMC’s “system” to the “independent” IEMOP.

Nograles rejected that: “The deal is against public interest and flouts EPIRA.” Rule 9, Section 6(a) of EPIRA’s implementing rules and regulations (IRR) requires the independent operator to be “financially and technically capable, with proven experience and expertise of not less than two (2) years as a leading independent operator of a similar or larger size electricity market.”

IEMOP clearly failed to meet those requirements, Nograles said. It smacked of the MRT-3 scam of 2012, but on a grander scale. There the metro rail maintenance contractor suddenly was replaced by a newborn, undercapitalized but politically influential firm, which took over the personnel, equipment and parts inventory.

Too, IEMOP is unauthorized to collect even the half-centavo per kilowatt-hour, or more than P50 million per month, from consumers, Nograles added. Unlike predecessor PEMC, it has no permission from the Energy Regulatory Commission, which approves all power exactions.

But why is DoE the one defending the supposedly independent IEMOP, Nograles asks.

The answer perhaps lies in part in Securities and Exchange Commission records. IEMOP‘s P7,000 incorporators in May 2018 were:

• Oscar E. Ala,

• Francis Saturnino C. Juan,

• Rauf A. Tan,

• Ma. Rene Ann Lourdes A. Garcia-Matibag,

• Jose Mari T. Bigornia,

• Jose M. Layug Jr., and

• Carroll U. Tang.

In their Sep. 2018 Operating Agreement, Oscar Ala and Francis Saturnino Juan signed as presidents of PEMC and IEMOP, respectively. Rauf Tan witnessed, as PEMC director/CGO.

Garcia-Matibag is the wife of Melvin Matibag, president/CEO of the DoE’s National Transmission Corp. Under the EPIRA law, Transco supervised PEMC, including its transition to IEMOP. Matibag was Terminal 3 manager when Cusi was Manila International Airport general manager in the 2000s. He later succeeded Cusi as GM.

Where there’s smoke there’s fire. Lawyer Nograles alleges breach of public interest in a deal involving presidential appointees. The Presidential Anti-Corruption Commission might wish to investigate. As well, the Ombudsman. It would be for the good of all.

*      *      *

Evacuees from five towns around slow-boiling Taal Volcano understandably are restive. It is hard to just sit by in a refugee camp while their abandoned pets and livestock starve, their houses and vehicles need cleaning from corrosive sulfuric ash fall, and their farms and businesses need tending. Denial, anger, bargaining and depression can be contagious in cramped living conditions. Acceptance is farthest from their mind, while at the same time hoping for an explosion or a simmer down to get it over and done with. Thus they defy police lockdowns and attempt to sneak back to their homes, farms, fish pens and shops. Some have been videoed fishing for tilapia in the caldera, well within the danger zone. A senior couple dared the cops to shoot them in their honest desire to retrieve some valuables at home. A vice mayor even belittled state volcanologists’ warnings of imminent eruption, based on the magma rise, steam emissions, ground fissures, and earth shakes. They direly need medical and psychological care.

*      *      *

Catch Sapol radio show, Saturdays, 8-10 a.m., DWIZ (882-AM).

Gotcha archives: www.philstar.com/columns/134276/gotcha