PEMC-Iemop deal null and void from the start, lawmaker insists

By Lenie Lectura -February 13, 2020
from Business Mirror

PUWERSA ng Bayaning Atleta (PBA) Party-list Rep. Jericho Nograles on Wednesday urged the  Department of Energy (DoE) to declare null and void the contract between the Philippine Electricity Market Corporation (PEMC) and the Independent Electricity Market Operator of the Philippines Inc. (Iemop) because the deal was not approved by President Duterte.

In a statement, Nograles said the contract is “void ab initio” or invalid from the very beginning. He said PEMC must seek the endorsement of the Governance Commission for Government-Owned or -Controlled Corporations (GCG) and thereafter seek final approval from the President.

PEMC used to be the operator of the Wholesale Electricity Spot Market (WESM) before Iemop took over. PEMC remains the governing arm of WESM.

According to Nograles, PEMC’s claimed transition from being a GOCC to a fully privatized company was “not proper and not legally-binding” because this was not approved by the President.

Nograles said PEMC has neither the recommendation of the Governance Commission of GOCCs nor the approval of the President, thus making the PEMC-Iemop contract void from the very beginning.

“The continued collection of market fees from consumers is illegal because the contract is illegal. I sincerely believe that the President was blindsided that something this massive happened. If the President knew that this is going to happen, he would have affixed his signature to privatize PEMC. PEMC was never privatized. The President does not know that this happened,” Nograles said.

PEMC used to collect about one centavo for every kilowatt-hour (kWh) from the consumers’ monthly electric bill. The Energy Regulatory Commission (ERC) authorized this in 2014. But IemopP, now the operator of WESM, has yet to secure a similar approval from the ERC.

“So, who approved this deal? Congress will get to the bottom this. In the last two committee hearings, I think Congress has enough evidence and information to declare the contract void ab initio,” Nograles said, adding that the identity of “the persons behind this illegal contract is something we have yet to establish and I intend to pursue this to the end.”

Nograles noted that the deal, which allowed a 7,000 peso-company like Iemop P to take over and use PEMC’s P781-million computer equipment for free and automatically deduct at least .84 centavos pe kWh from electricity consumers, is anomalous and could be the basis of filing multiple cases against its officials.

“A typical household that consumes about 200kWh pays Iemop around P2 per month. Multiply that by the millions of households and Iemop collects over a billion pesos a year. This is very alarming because Iemop does not even have any ERC approval to do so,” Nograles said.

“We see a variety of Republic Acts violated in this corrupt deal. For the next Committee on Energy hearing, we will invite the Energy Regulatory Commission, the Philippine Competition Commission, and again the Governance Commission for GOCCs as the regulatory agencies that have been bypassed by PEMC. There is clear corruption in this power scam,” Nograles added.

Nograles said that since all transactions involving IEMOP as an independent market operator are questionable, the DOE should declare the contract null and void.

The DOE, PEMC and Iemop, for their parts, earlier said that the latter was created by virtue of the enactment of DOE Department Circular 2018-01-0002 dated January 17, 2020 and consequently the IMO Transition Plan, which are based on Section 30 of the Electric Power Industry Reform Act (Epira), which were jointly approved by the DOE and the Electric Power Participants.

Also, the DOE said a competitive bidding was required only for foreign participants as an option under the Epira if the IMO was created in 2007.