President’s powers usurped in electricity GOCC ‘spinoff’

Does the new operator of the wholesale electricity spot market have a signed presidential consent to take over? If none, then President Rody Duterte’s power to privatize a government-owned and -controlled corporation (GOCC) was usurped. A penal offense, usurpation of authority is punishable with imprisonment.

Citing the Governance Commission on GOCCs law, Rep. Jericho Nograles said stringent processes cover privatizations of state firms. He is asking if Dept. of Energy (DoE) officials followed the prescriptions in spinning off the “private” Independent Electricity Market Operator of the Philippines.

IEMOP, according to DoE, is a “spin-off” of its original spot-market operator, the Philippine Electricity Market Corp. PEMC, a GOCC, is supervised by the DoE’s National Transmission Company, or TransCo.

Last Wednesday the GCG told the House committee on energy that neither PEMC nor IEMOP applied for or were allowed to privatize. There is no presidential approval, GCG legal officer Michael Pabalinas replied to congressmen’s inquiries. “That’s usurpation,” Nograles said.

With only P7,000 paid-up capital, IEMOP took over operation of the multibillion-peso wholesale electricity spot market (WESM) in late Sep. 2018. Collecting 0.86¢ per kilowatt-hour paid for by consumers, it raked in P322 million in three months to yearend-2018. It continued to get more than P100 million a month in 2019 till today, 16 months so far. Electricity rates in the Philippines are the costliest in Asia.

IEMOP’s collections are without consent of the Energy Regulatory Commission. IEMOP’s selection flouted the Electric Power Industry Reform Act of 2001. Nograles has warned that DoE officials behind IEMOP’s “spinoff” could be liable for plunder. IEMOP’s incorporation and operation show interrelated interests.

R.A. 10149 formed the GCG under the Office of the President. It oversees dozens of GOCCs; reviews their performance and remunerations, and evaluates which need to be “reorganized, merged, streamlined, abolished or privatized, in consultation with the department or agency to which a GOCC is attached.”

IEMOP and PEMC are covered by Section 5, Nograles said, to wit:

“Upon determination by the GCG that it is to the best interest of the State that a GOCC should be reorganized, merged, streamlined, abolished or privatized, it shall:

“(i) Implement the reorganization, merger or streamlining of the GOCC, unless otherwise directed by the President; or

“(ii) Recommend to the President the abolition or privatization of the GOCC, and upon the approval of the President, implement such abolition or privatization, unless the President designates another agency to implement such abolition or privatization.”

“I am sure that President Duterte is unaware of this deal,” Nograles said. “Sigurado ako blind-sided ang Pangulo dahil bago pa mailipat ng PEMC ang assets na ngayon ay ginagamit ng IEMOP, kakailanganin muna ang pirma niya.”

PEMC president Oscar E. Ala nodded when Nograles asked if PEMC is sticking to its old claim in the House committee. That is, that it ceased to be a GOCC when Energy Sec. Alfonso Cusi resigned as its chairman preparatory to spinning off IEMOP.

GCG’s Pabalinas insisted that PEMC remains a GOCC. As of Jan. 7, 2020, PEMC is listed as No. 61 in GCG’S roster of OGCCs (https://icrs.gcg.gov.ph/files/UM2bsQhenyb0hbePyv2K.pdf). “So PEMC and its spinoff IEMOP are still covered by the GCG rules on privatization,” Nograles said.

Cusi last Friday ordered PEMC and IEMOP presidents Ala and Richard Nethercott, respectively, to review the spinoff and their operations. Nograles welcomed it. In the hearing DoE Usec. Felix William Fuentebella read for Cusi a statement that the spinoff was above board.

Rep. Rosanna Vergara (3rd district, Nueva Ecija) also noted that lawyer Nethercott seemed to not have any background in energy, contrary to the requirement of the EPIRA Law for WESM operator. WESM is the trading bourse of electricity generators and distributors.

Under questioning, Nethercott admitted to be the spouse of DoE Asst. Sec. Caron Aicitel E. Lascano.

“So where is the independence there?” Vergara retorted. The  EPIRA Law states that PEMC may be replaced by an “independent market operator.”

Other committee members said there could be a violation of the Anti-Graft and Corrupt Practices Act, which forbids employment of a close relative in a firm transacting with or regulated by the government agency.

Nethercott said that after he and Lascano wedded, he inquired from IEMOP if he should resign from the board. Again when he was appointed president he inquired if he should accept. Both times, he said, the IEMOP board opined there was nothing wrong.

Vergara said the board is entitled to its opinion, “but the law is still there, and it is clear.”

Nethercott also admitted that TransCo president Melvin Matibag is the spouse of IEMOP incorporator-treasurer Ma. Rene Ann Lourdes A. Garcia-Matibag.

Last week TransCo spokesman Atty. Andre R. de Jesus warned of legal action against those who “maliciously implicate” the Matibags. De Jesus stated that Ms. Matibag is also “head of corporate services of PEMC.” TransCo under the EPIRA Law supervises PEMC.

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