DOE should regulate NGCP

By DEMAND AND SUPPLY – Boo Chanco – January 12, 2024 | 12:00am
from The Philippine Star

The messy situation between the DOE and NGCP is responsible for problems that inconvenience electricity consumers. According to a DOE Usec, NGCP is not recognizing DOE’s regulatory powers over them… only the ERC regulates them daw. This has resulted in the finger pointing we are seeing in the case of the Panay power blackout.

The situation is untenable. How can the DOE not have the authority to regulate NGCP when it is being held accountable every time there is a massive NGCP failure? Malacanang must resolve this issue with an executive order or maybe Congress can pass legislation making clear the DOE’s mandate and authority. Otherwise, just abolish the DOE for being an utterly useless department. It can’t regulate the oil industry that much either because the regulation is market driven. Pang monitoring lang.

Responding to my observation that the DOE should help NGCP get right of way (ROW), the DOE says the problem is NGCP insists on applying under its own name, but expects the  DOE and TransCo (National Transmission Corp.) to do the heavy lifting. TransCo is the government agency supposedly responsible for ROW requirements and TransCo reports to the DOE. Applications should be under the name of TransCo, consistent with the concession agreement that transmission assets are owned by the government. This also gives government personality and interest in facilitating ROW acquisition.

So there… Perhaps ERC should clarify the matter too. Useless finger pointing is muddling the fact that the DOE, TransCo, ERC and NGCP have failed to act in the public interest. The idea of imposing a fine for NGCP failures is a good one, but unless Malacanang makes it clear who is accountable for power failures, the public interest gets no benefit.

I see a failure of regulation by the ERC through the years, given NGCP’s ability to print profits while unable to deliver projects on schedule. Justice Usec Geronimo Sy said as much in an article published by BusinessWorld in December 2019.

“The related problem is under-investment. In public utilities with consistently good margins, it can mean two things: one, the rates or fees are higher than necessary, or, two, under-invest so that the yields will be higher. It can be that these two are happening at the expense of optimization of the grid infrastructure that is necessary to power a developing economy like the Philippines and at the expense of consumers, especially the poor and the middle class who may otherwise use the savings for education and health.

“As a concessionaire with a mandate given by law, it is expected to comply with all the conditions. One requirement is to undertake an initial public offering (IPO) of 20 percent of its stock 10 years from 2009. The year 2019 is ending. The NGCP continues to cite pending matters to delay the public ownership of a portion of it as a ‘public’ utility. This is a way to redistribute the profits from the private to the public. It is also to make a vital installation more transparent.”

NGCP, according to a DOE Usec, has a total of 37 delayed projects. Assuming this figure is correct, ERC must also be blamed because it clearly has regulatory supervision over NGCP and has allowed this to happen. The alphabet soup of agencies responsible for energy must get their act together. Taxpayers are wasting good money on their upkeep and getting nothing in return. I suggest that the next Senate hearing should get the four agencies together so remedial legislation can be passed to get them to work with each other.

I had a frustrating exchange of messages with a DOE Usec on Viber. She seems more interested in winning the finger pointing debate than offering a viable solution to the problem. It is important daw to pinpoint accountability. Sure, but that gets tiresome and pointless because nothing gets done and blackouts happen.

The other thing the DOE Usec said they are doing is visiting LGUs all over the country and asking the Supreme Court for help, wala nga lang good results. They have also created a transmission committee with all the agencies. Perfect solution for a bureaucrat. Create a committee and consider the work done.

ROW is just NGCP’s excuse to explain its inability to get the construction work completed on time, the DOE Usec said. Probably true, but what has the DOE done to remove that excuse from NGCP’s repertoire of explanations?

The DOE has its own litany of excuses. According to Sec. Popo, energy resources are stretched as energy GOCCs are financially constrained by government – like the COVID ‘sweep’ and direct remittance to the Treasury, prior congressional approval for annual budget, and GCG (Governance Commission for GOCCs) approval as well.

I agree a Senate investigation is needed, specially on the matter of the Chinese presence at NGCP. My colleague, economist Alex Escucha, laid the basis for the hearing:

“A Congressional review might be conducted along the lines of the US Congressional Committee on Foreign Investments in the US (CFIUS) where specific deals, projects, and investments are reviewed for possible risk to national security. This review should include not only investments, but also the shareholder agreements. In the last five years, CFIUS has been invoked more often.

“Germany and other European countries have asserted similar CFIUS-type reviews to block or limit Chinese entry in strategic industries like energy and cybersecurity, as mentioned in the book by Dr. Zoey Liu (China Sovereign Funds: How the Chinese Communist Party Finances its Global Ambitions) and Winston Ma, former North America head of CIC (The Hunt for Unicorns).”

Despite denials, it is difficult to believe that the Chinese Communist Party cannot order a power blackout in the Philippines from Beijing. Given China’s aggressive harassment of our Coast Guard in our own EEZ at the WPS and the tough warnings by China’s foreign ministry, we cannot consider China a friendly country. Whoever allowed a supposedly private consortium, in alliance with China, to control the management of our national power grid has put us at great risk.

I agree with Usec Sy’s conclusion: “The governance course of action is to amend the law (or the NGCP franchise). No justification is necessary. Any country has the right to protect itself.”

Boo Chanco’s email address is bchanco@gmail.com. Follow him on X or Twitter @boochanco.