More expensive electricity via climate tax

* This is my column in BusinessWorld on August 22, 2019.

“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary”

— H. L. Mencken, December 1921

The main purpose of climate alarmism is to expedite government environmental and energy taxation to further expand government and the United Nations (UN). Scare the public endlessly, like declaring a “climate crisis/emergency” whatever the weather and climate: less rain and more rain, less flood and more flood, less storms and more storms, less cold and more cold.

There is a legislative proposal to impose a “climate tax on electricity” (CTE) for residential customers under HB 1245 of Congressman Luis Raymund Villafuerte, Jr. The proposed CTE will be P1 per kilogram of carbon dioxide (CO2) emission. It claims that since CO2 emission comprises 0.553 kg per kWh of electricity, then CTE = 0.553 x electricity consumption in a month.

In our house for instance, our average electricity use from May to July was around 280 kWh/month. If the Villafuerte bill becomes a law, then we must pay P155/month extra for this CTE, on top of feed in tariff allowance (FIT-All) of around P65-P70/month that goes to the favored and privileged mostly solar-wind companies.

This year, we experienced frequent “yellow alert” warnings (thin reserves) from the National Grid Corporation of the Philippines (NGCP) for five months, March to July. There were few days where “red alert” was raised, meaning short rotating black-outs were made to forcibly reduce power demand.

The good news is that new big power plants will begin operation in the Luzon grid starting August-September 2019 until 2021.

I made a short-term projection of power supply-demand, limited to the Luzon grid due to space constraints. Peak demand from 2015-2018 was rising by 5.7% a year on average, so for 2019-2023, I projected a 5.5% annual increase due to GDP growth deceleration recently. From there, I computed the projected reserves (see table).

Now, since most of those new big power plants run on fossil fuels especially coal, then Rep. Villafuerte and allies will likely push their lousy and idiotic proposal to further raise the cost of already costly electricity in the country. The Philippines has the third most expensive electricity in Asia next to Japan and Singapore.

Note also that the high reserves percentage can be deceiving because many existing power plants are old, especially coal and hydro plants, they tend to experience unscheduled and forced outages, and extended maintenance shutdown. Thus, actual reserves can be lower than these projections.

The House Committee on Ways and Means and Congress as a whole should junk this and related bills that intend to make electricity more expensive.

Things can worsen though if the triumvirate of the Department of Finance, Department of Budget and Management, and National Economic and Development Authority support this bill in the name of helping “save the planet.” Recall the hike in the excise tax on oil under the TRAIN law by P6/liter over 2018-2020 was pushed by the triumvirate to finance various welfare programs and partly to “save the planet” by discouraging more oil use. Oil consumption of course did not decrease because it is a necessary and useful commodity that is used in many sectors and machines from tractors and fishing boats to cars, busses and airplanes.

The triumvirate should learn their lesson that more expensive energy means higher inflation, which helped pull down overall GDP growth. They plus the Department of Energy should call for the junking of this and related bills in Congress.

Cheaper electricity, lower inflation, sustained high growth, more investments and job creation, no additional and distortionary energy taxes, these should be the primary goals of the administration in its last three years.

How government restricts energy development

* My column in BusinessWorld on August 08, 2019.

In the first week of August this year, I saw seven energy-related stories in BusinessWorld Economy section alone:

1. “SolGen appeals Supreme Court ruling on power deal competitive selection” (Aug. 1).

2. “Solar Para sa Bayan franchise signed” (Aug. 2).

3. “MinDa added to energy investment council” (Aug. 2).

4. “PCC, ERC agree to cooperate to push competition in power sector” (Aug. 6).

5. “Energy efficiency firms call for new law’s IRR to reflect BoI perks” (Aug. 6).

6. “High court seeks Meralco, ERC comment on bill deposits case” (Aug. 7).

7. “DoE promises to seek other ways to make fuel prices more transparent” (Aug. 7).

The subjects within energy vary but there is one common trend in them — there are government agencies involved in all issues, which implies that electricity and petroleum concerns remain highly politicized until now.

Of those seven stories, the following stand out:

No. 2. What I call Solar para sa Politika. This is a very unique energy company in the Philippines: It is the only power generation company and distributor with a Congressional franchise; it is the only electricity distributor that covers so many provinces and encroaches on the geographical areas of other franchised electric cooperatives; it is the only renewable energy company opposed by almost all other renewable energy developers like Developers of Renewable Energy for AdvanceMent, Inc. (DREAM) because of certain privileges it gets that appear to be un-Constitutional; it is the only energy company whose franchise is questioned or outrightly opposed by other energy industry associations like Philippine Independent Power Producers Association and Philippine Rural Electric Cooperatives Association, major local business associations like Makati Business Club and Management Association of the Philippines, and foreign business groups like the American Chamber of Commerce; and, it is the only energy company whose owner is the son of an influential legislator. The ex-senator headed the Senate Finance Committee, the position alone could terrorize the Department of Energy (DoE) and Energy Regulatory Commission (ERC) and their budget if they join the chorus to oppose the franchise. Shameless corporation.

No. 5. Energy efficiency should be done even without legislation but this one sought legislation to target fiscal perks. The Department of Finance is the natural opposition because it wants to reduce perks and exemptions in exchange for lower corporate income tax (CIT). Another precedent, so other energy sub-sectors would also seek legislation to get their own share of perks and tax exemptions.

No. 7. The DoE knows that the “expensive oil is beautiful” policy under the TRAIN law (Tax Reform for Acceleration and Inclusion) is the biggest contributor to recent high oil prices. For diesel the excise tax, P2.50/liter increase in 2018, P2 this year, sub-total P4.50/liter increase plus VAT on excise tax. And another P1.50/liter increase in 2020. Yet the DoE instead turned its eyes on oil companies and imposed an implicit price control, prohibiting them from raising their prices unless they notify the DoE in advance and submit weekly reports about the components of their pricing. All players have trade secrets, like one has cheaper monthly land rent than others. These business secrets should not be divulged to others.

I also read in another newspaper that the leftist Makabayan bloc in Congress attacked Meralco for entertaining the competitive selection process (CSP) bid of its allied firms. Politicians as much as possible should stay away from the market dynamics of players once the government’s general rules have been issued, like the mandatory CSP instead of the regular bilateral power supply agreements with power generating companies.

So in the above stories, various government agencies aside from DoE and ERC — Supreme Court, Solicitor General, the Board of Investments, Philippine Competition Commission, Congress — are involved in various forms of regulations. Not mentioned there are other agencies that are also involved in power bureaucratization like the local government units, National Commission on Indigenous Peoples, Department of Agrarian Reform, Department of Agriculture.

The Philippines has among the lowest, poorest energy availability when compared with its many neighbors. See these numbers from the International Energy Agency (IEA), Key World Energy Statistics (KWES) 2018 report. (See Table).

The various energy regulators and law makers from the Executive, Legislative, and Judiciary should be aware and even be ashamed of this poor condition of Filipinos and Philippine-based businesses. Too much government intervention, regulations and prohibitions are bad for more energy development, more power supply addition, and cheaper electricity prices via more power supply addition and competition.

Private players should also avoid seeking new legislation for whatever bleeding-heart arguments they have and help depoliticize the energy sector. Many existing laws like the RE Act of 2008 (RA 9513) are already distortionary, let us not add any more.

97% climate consensus in Sicily

The UN, Al Gore, WWF, etc. repeatedly use the “97% consensus” by scientists of man-made warming. They should refer to themselves, 97-100% of folks like Al Gore, Obama, di Caprio, Prince Harry, Katy Perry, have a consensus, and ALL of them are “scientists.”

These news reports were published mostly on July 31, 2019.



The UN climacrats would be unhappy. That distinction of gathering self-styled planet saviors arriving on private jets, choppers, SUVs and big limos guzzling on fossil fuels then lambast fossil fuels should be reserved for them.

These planet saviors should have traveled there via solar planes, giant kites, Uber brooms, witch-choppers, anything and everything huge that fly and have zero use of fossil fuels, zero CO2 emission.

https://www.foxnews.com/entertainment/google-summit-celebrities-climate-change

https://www.msn.com/en-us/news/us/stars-attend-google-summit-on-climate-change-in-private-jets-mega-yachts/vi-AAF7L1F

https://pjmedia.com/trending/obama-katy-perry-other-celebs-take-jets-and-yachts-to-sicily-for-google-climate-change-summit/

https://www.theblaze.com/news/world-famous-celebrities-take-more-than-100-private-jets-to-google-hosted-climate-change-summit

https://www.washingtonexaminer.com/news/climate-activist-celebrities-arrive-at-google-camp-by-yachts-helicopters-and-private-jets

….

Lots of wastes — taxpayers’ funded global climate junkets, climate bureaucracies like CCC, carbon tax like oil tax hike under TRAIN law, subsidies to renewables like feed-in-tariff (FIT), mandatory use of bioethanol, climate loans with WB-ADB, etc. Because there is “97% consensus” by Obama et al.

The Commission on Human Rights (CHR) of the Philippines also joins the fossil fuel junkets. Upon the prodding of Greenpeace, they investigate the “carbon majors” by flying to Paris, NY, London, The Hague, etc. Plus provincial investigations. Fossil fuel is so “evil”, even its haters and investigators use it a lot,
https://www.bworldonline.com/chr-investigates-carbon-majors-by-using-more-fossil-fuels/.

No climate crisis

* This is my article in BusinessWorld last Tuesday, July 30, 2019.

WASHINGTON, DC — The various presentations at the Heartland Institute’s 13th International Conference on Climate Change (ICCC-13) on July 25 in this city reiterated what many scientific papers from the fields of meteorology, geology, climatology, physics, chemistry, biology, mathematics, etc. have found — there is no climate crisis or climate emergency.

Global warming is true, climate change is true, but they are largely natural, nature-made and not man-made (or anthropogenic), and cyclical. What is termed and called by others as “extreme weather” has no baseline period as basis of comparison. So when asked, “extreme weather compared to when, 200 or 800 or 10,000 or 10 million years ago?” the answer is often the sound of silence.

The fact is that there was “extreme weather” during the Roman warm period, Medieval warm period, until the current modern warm period, and in the next hundreds and thousands of years into the future.

Dr. Roy Spencer, a climatologist at University of Alabama in Huntsville (UAH) observed that the Coupled Model Intercomparison Project (CMIP) of the World Climate Research Program (WCRP) models are “warming about twice as fast as both UAH satellite temperatures and the average of four global reanalysis datasets. And even if observed warming is due to increasing CO2, it is too weak to notice in our lifetime.”

Dr. Nir Shavi, a physicists at the Hebrew University of Jerusalem, argued that “actual evidence points to a strong solar climate link and a low climate sensitivity, future warming will be benign, and that solar activity should be taken but it is ignored by the UN IPCC (United Nations Intergovernmental Panel on Climate Change).”

Dr. Jay Lehr, a hydrologist and famous author of a thousand-plus scientific articles, noted that there are at least 12 climate variables — changes in seasonal solar irration, energy flows between the air and land, etc. — that people should look into and study before declaring with certainty that there is indeed a climate emergency.

Governments, upon the prodding of the UN, make policies bases on wrong “climate crisis” scenario of “unprecedented, unequivocal global warming.”

Thus in the Philippines, we enacted the Renewables Energy (RE) Act of 2008 (RA 9513) which gives plenty of special privileges to solar/wind/biomass/hydro power producers, like the feed in tariff (FIT) or guaranteed price for 20 years, to “help save the planet.” The higher oil, diesel, coal taxes under the TRAIN law (RA 10963) is also done along this goal.

There were two reports in BusinessWorld in July 29 related to this:

1. “NGOs call for more aggressive moves to adopt renewable energy”;

2. “Deputy Speaker vows ‘big push’ on department bills, pay hikes.”

Pushing for more intermittents like solar/wind power will further raise electricity prices. Expanding some existing bureaus into full Departments will further require more taxes to finance more Departments and bureaus.

Many East Asian economies hardly pay attention to injecting more solar/wind into their national electricity grid. In particular, Indonesia, Malaysia, South Korea, Singapore, Vietnam, Taiwan, and Hong Kong have a solar and wind share of only 2% or lower of their total electricity generation. And these economies generally have high per capita income (see table).

To create more climate-related agencies — the Department of Disaster Reduction and Department of Water Resources — on top of having the Department of Environment and Natural Resources and the Climate Change Commission, etc. and they will create more regulations to “fight” less rain and more rain, less flood and more flood, less cold and more cold.

We should not further expand bureaucracies but instead, expand conventional energy sources to significantly expand our electricity production, which will help bring down energy prices and make electricity supply become more stable.

Heartland’s ICCC-13 photos

Washington DC — The Heartland Institute’s 13th International Conference on Climate Change (ICCC-13) was very successful yesterday. Huge audience, high caliber speakers and moderators, schedules generally followed, good venue, ballroom of Trump International Hotel. I am posting some photos here.

First Keynote and breakfast speaker, Dauntless Purveyor of Climate Truth Awardee given by Heartland, Dr. Jay Lehr. Jay is a hydrologist but became famous with dozens of Congressional testimonies on climate and environment, author of 1,000+ magazine and journal articles, 36 books, etc.

Three of Jay’s slides.

I came late at the first panel discussion, I missed the main presentation by Dr. Roy Spencer, a famous climatologist at UAH. Here’s his concluding slide.

Next speaker was Dr. Nir Shaviv of Physics Department, Hebrew University of Jerusalem.

Solar cycle (11 years), solar max, solar minimum.

Morning break, from left: Nir, Wolfgang Muller, and Benoit Rittaud. Wolfgang is a friend since 2005, he was working at FNF then, now he is the Sec. Gen. of the European Institute for Climate And Energy (EIKE). Benoit is the President of Association des Climato-Realistes in France.

With Anthony Watts, founder and owner of the world’s #1 climate blog with hundreds of thousands of pageviews daily, https://wattsupwiththat.com/. Anthony was one of the speakers in the afternoon session.

With Dr. Richard Lindzen and Dr. Benny Peiser. Dr. Lindzen is Prof. Emeritus of meteorology at MIT, a famous atmospheric physicist. He was awarded last night, Frederick Seitz Memorial Award, given by the Science and Environment Policy Project (SEPP) headed by Ken Happala. Benny is the Director of the Global Warming Policy Forum (GWPF) in London. The International Astronomical Union (IAU) has named a 10-km wide asteroid, Minor Planet (7107) was named after him.

Not a single climate alarmist would be able to withstand the hard data and concepts discussed at the  annual ICCCs. The role of the Sun and GCRs, role of clouds and water vapor (which is 95% of all GHGs vs CO2’s 0.04%), role of oceans (PDO, AMO), etc. All that the climate alarmists concern themselves is CO2 — the gas that we humans and our animals exhale, the gas that plants and trees use to produce their own food — because they want to regulate, tax, centrally-plan the emission of CO2 and conventional energy, salivate at $100 B a year of climate money starting next year, salivate at endless global junkets.

More photos later.

 

SONA and ICCC-13

* This is my column in BusinessWorld on July 23, 2019.

Climate change is natural, nature-made and not man-made. It is cyclical — the warming-cooling-warming-cooling over the past 4.6 billion years of the Earth — and there is no such thing as “unprecedented” global warming.

Climate alarmism relies on endless hype by politicians, multilateral institutions, NGOs, and media. Luckily, President Rodrigo Roa Duterte is among the very few country leaders who does not join the hype. I checked his past three State of the Nation Addresses (SONA), the number of words, including ad libs and jokes, and compared mentions of “climate change” (CC) or “global warming” (GW) (See Table 1).

This should be among the few instances where I say, “Thank you, President Duterte” for not adding to and fanning the climate alarmism.

Which leads me to a related topic, the 13th International Conference on Climate Change (ICCC-13) this coming Thursday, July 25, in Washington, DC, USA. The annual ICCC is sponsored by the free market think tank Heartland Institute.

I attended ICCC-2 in New York City in 2009 and ICCC-4 in Chicago in 2010. It was those very technical lectures from known scientists in the fields of geology, meteorology, climatology, physics, astronomy, chemistry, biology, that further convinced me that CC is natural and cyclical. That natural factors like the Sun, galactic cosmic rays (GCRs), clouds, water vapor, the oceans (PDO and AMO), etc., are the bigger drivers of planet Earth’s climate, and not a quantitatively insignificant gas, carbon dioxide (CO2), that comprises only 400 parts per million (i.e., 0.04%) of total greenhouse gas molecules in the atmosphere.

The ICCC-13 will feature some big names in climate science. Among them: Dr. Richard Lindzen, professor emeritus of meteorology at the Massachusetts Institute of Technology; Dr. Patrick Michaels, past president of the American Association of State Climatologists; Dr. Tim Ball, former climatology professor at the University of Winnipeg, Manitoba, Canada; Dr. Jay Lehr, a hydrologist and Senior Policy Analyst at the International Climate Science Coalition; Dr. Roy Spencer, Principal Research Scientist at the University of Alabama in Huntsville (UAH) and former Senior Scientist for Climate Studies at NASA’s Marshall Space Flight Center; Dr. David Legates, professor of climatology at the University of Delaware; Anthony Watts, a meteorologist who operates the world’s most viewed website on climate, wattsupwiththat.com; and Lord Christopher Moncton, a British mathematician and former Special Advisor to Prime Minister Margaret Thatcher from 1982 to 1986.

The 27 speakers will cover topics on Climate modeling vs. observed temperature data, the Sun and climate, the latest volume of the Non-governmental International Panel on Climate Change (NIPCC), Green New Deal, CO2 taxes, societal benefits of fossil fuels, etc.

The world’s four biggest economies in terms of GDP size are also the world’s biggest coal users, and many previously undeveloped/poor countries are now among the world’s major economies and they are major coal users (see Table 2).

To demonize fossil fuels while at the same time using lots of fossil fuels (for cars and buses, boats and airplanes, power and electricity) is double talk. To demonize CO2 as a bad “pollutant” gas is anti-science because the gas that we humans exhale is CO2, we do not exhale pollution. The gas that our plants and crops use to produce their own food via photosynthesis is CO2, so more CO2 means more plant food, more trees and more food production.

Solar para sa Politika, Part 3

* My article in BusinessWorld on July 16, 2019.


Among the promises of the Solar Para sa Bayan Corp. (SPBC) franchise bill now awaiting President Rodrigo Duterte’s signature are 24/7 electricity in far away villages, and cheaper electricity because the sun’s rays are free.

True, the sun’s rays are free, but the solar panels, the power conditioning unit, main panel, AC and DC disconnect, other components are not free. Transportation and installation in far away areas and connection to the grid are not.

Add to that the cost of a battery to extend the power for few hours at night, plus the cost of backup diesel gensets since solar does not generate power at night and hardly produces power on days with thick clouds and rain. Solar components plus battery plus gensets cannot be cheap and power stability is not assured.

In a site inspection by the Philippine and Rural Electric Cooperatives Association Inc. of some barangays in Occidental Mindoro served by SPBC in November 2018, they found that residents experienced an average of two- to three-hour brownouts plus frequent on-and-off power outages every day, resulting in damaged appliances, and that the rate charged started at a low P2.34/kilowatt hour (kWh) which later rose to around P11/kWh.

Instead of favoring one particular energy firm, we need more big conventional power plants. Compared to more stable economies in Asia, the Philippines has among the lowest installed power capacity and, by extension, among the lowest electricity generation. Our capacity in 2016 was just one-half of that in Thailand, Vietnam, and Taiwan (see table).

People who want “green energy” and do not want to use electricity from fossil fuels without putting up a rooftop solar system (and cut or murder nearby tall trees that provide shade and reduce solar output) can actually get their wish via the retail competition and open access (RCOA) provision of the EPIRA (Electric Power Industry Reform Act) of 2001 (RA 9136). Contestable customers can choose their own licensed retail electricity suppliers (RES) and specify that they should be provided only renewable energy like hydro, geothermal, biomass, solar, or wind. The price might be higher but they get what they want. This will also send a signal to power investors to develop more renewables because customers are willing to pay the higher price without the need for subsidies from all electricity consumers nationwide, without need for new legislation.

We need more market competition in power generation and retail supply. We need more big power plants, conventional and renewables, more gencos and let them compete for customers.

We should not have enacted a law that gives a guaranteed price for renewables for 20 years via feed in tariff (FIT) as this violates market competition and disempowers consumers — they cannot say “No” to additional charges like the FIT-Allowance slapped into their monthly electricity bill for 20 or 25 years.

The law is there — RE Act of 2008 (RA 9513) — and it resulted in the upward price distortion in energy prices.

We should not add more energy distortions by having that “Solar para sa Politika” franchise bill become a law. President Duterte should veto it.

Finally, the Supreme Court should lift its TRO on the Energy Regulatory Commission resolutions on RCOA’s implementation. The threshold for contestable customers should have been down to 500 kilowatts or lower by now. The number of competing RES should be plentier by now. And the choices of consumers for their power generators and suppliers should be many, not few and restricted.

Oil production and ENSO

If people want expensive oil and energy, they can embrace Putin/Russia and Saudi, they cut their output to force high oil prices. Embrace also the Democrats, other planet saviors.

If people want cheaper oil and energy (esp. those who frequently jet set), they must recognize the efforts of Trump and the US, keep raising oil (and gas) output to have lower prices.

https://tradingeconomics.com/country-list/crude-oil-production

When it comes to energy policy, Trump-hating “free marketers” are actually Putin-loving, Saudi/despots-loving people. Expensive energy is wrong and evil, that’s why those carbon taxes, high oil taxes, etc are bad, anti-market, pro-state policies.

Sharing two related stories:

1. The U.S. Accounted For 98% Of Global Oil Production Growth In 2018
Robert Rapier Contributor   Jun 23, 2019, 06:00pm
https://www.forbes.com/sites/rrapier/2019/06/23/the-u-s-accounted-for-98-of-global-oil-production-growth-in-2018/#be77a1f51251

2. U.S. Oil Rig Count Falls Amid Rising Production
By Julianne Geiger – Jul 05, 2019, 12:19 PM CDT
https://oilprice.com/Energy/Crude-Oil/US-Oil-Rig-Count-Falls-Amid-Rising-Production.html 
————

Meanwhile, on the El Nino Southern Oscillation (ENSO):
(1) No such thing as “worsening El Nino” due to Gorebal warming, only endless El Nino-La Nina cycle.

(2) Current El Nino expected to end this week (based on NOAA models as of today, July 8).

(3) We’re heading to another phase of La Nina; how strong or weak, we don’t know yet.

https://wattsupwiththat.com/enso/

The modern meteorological models today — they cannot even accurately predict the weather 12 or 2 hours away. Yet the UN, Al Gore, etc are so sure that their models can predict with certainty the weather and climate (2 C hotter, 3 C hotter…) 100 years from now. And we make environment, energy, transpo, construction, agri, etc. policies based on those phony climate predictions. Huge racket by climate alarmism and global ecological central planning movement.

Sharing four related stories, note the eco-lunatics in the last report:

1. Record High Temperatures in France: 3 Facts the Media Don’t Tell You
July 2nd, 2019   by Roy W. Spencer, Ph. D.
http://www.drroyspencer.com/2019/07/record-high-temperatures-in-france-3-facts-the-media-dont-tell-you/

2. Medieval Climate Anomaly Now Confirmed In Southern Hemisphere On All Four Continents
By P Gosselin on 6. July 2019
https://notrickszone.com/2019/07/06/medieval-climate-anomaly-now-confirmed-in-southern-hemisphere-on-all-four-continents/

3. MATT RIDLEY: REJOICE IN THE LUSH GLOBAL GREENING
Date: 04/07/19 Matt Ridley, Die Weltwoche
https://www.thegwpf.com/matt-ridley-rejoice-in-the-lush-global-greening/ 

4. Climate Extremists Plan to Attack Airport with Small Drones
Eric Worrall / July 6, 2019
https://wattsupwiththat.com/2019/07/06/climate-extremists-plan-to-attack-airport-with-small-drones/

Solar para sa politika, Part 2

* My column in BusinessWorld last Friday, July 5th 2019.

Two weeks ago, this column argued for the President’s veto of HB 8179 or the Solar Para sa Bayan Corp. (SPSBC) franchise bill. I quoted the objection speech of Senator Sherwin Gatchalian, Chairman of the Committee on Energy, on why the bicameral report should not have been ratified.

Then these two reports in BusinessWorld came out last week:

1. “Power group seeks veto of solar firm’s franchise” (June 28),

2. “Review of Solar Para sa Bayan franchise sought” (June 28).

The first is about the statement of Philippine Independent Power Producers Association, Inc. (PIPPA) asking President Rodrigo R. Duterte to veto the bill because the SPSBC franchise “only serves to create chaos in regulation, act as a disincentive to investors, and show the public that undue advantages can be granted to people in power.”

The second is about the joint statement of six groups — the American Chamber of Commerce of the Philippines (AmCham), the Financial Executives Institute of the Philippines (FINEX), the Makati Business Club (MBC), the Management Association of the Philippines (MAP), the Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI), and the Women’s Business Council Philippines (WBCP) — calling for the “Economic Cluster of the Cabinet [to] review this franchise bill prior to any executive action.”

Amen. Good, direct and frank positions.

The Philippines is until today still a laggard in energy infrastructure and capacity compared to its neighbors. Our primary energy use, including oil consumption for transportation (land, sea, air), is even lower than Singapore which has just 5.7 million people but attracts some 15 million foreign visitors and investors (see table). It is not wise to give a special privilege to just one company simply because it projects itself as a greenie solar firm.

Solar para sa Bayan Corp. is a Solar Para sa Politika project. President Duterte should veto it in its entirety. If he signs it into a law, it will be a precedent for many other cronyist bills to be filed in the next three years. Goodbye further to rule of law in the country.

Reason over populism in infrastructure development

* This is my column in BusinessWorld last June 27, 2019.

Populism, or the appeal to pacify the masses and demonize the corporations and “elites,” seems to be getting louder under the Duterte administration than under its predecessors. I will briefly discuss three sectors — water supply, power development, and mining in this light.

See these reports in BusinessWorld this month:

1. “New Congress to look into power shortage” (June 20).

2. “Palace studying return of water services to government control” (June 26).

3. “Multiple agencies regulating mining foster corruption — PIDS” (June 17).

Report No. 1 is about the Supreme Court ruling requiring distribution utilities (DUs) to implement a competitive selection process for their power supply agreements (PSA), and plans to amend the EPIRA law of 2001 (RA 9136), with some activists suggesting that government should lead again in power generation and supply.

Not good. When government, via Napocor, was the monopoly power generator until the early 1990s, it was good at expanding public debt while power supply was limited. Some 17 years after the EPIRA law, the Philippines’ power generation has more than doubled from 47 terawatt-hours (TWH) in 2001 to nearly 100 TWH in 2018 (see Table 1). Genco competition and the EPIRA law are working.

Report No. 2 is about Presidential Spokesperson Salvador Panelo’s implicit agreement with proposals by leftist activists that “handling of water services in Metro Manila… should be returned to the government.”

Wrong. When government, via MWSS, was managing water until 1996, only about 26% of Metro Manila residents had 24/7 water service and the system loss via water pilferage was around 63% of total water production. After water privatization in 1997, system losses went down to 12% and most metro residents had access to 24/7 water.

Besides, the “problem” of the Philippines and other tropical countries is that we have so much rain water yearly, not less; so more floods, not less. What we lack are dams and lakes, man-made and nature-made water impounding areas to store the huge volume of flood water.

Data from the Food and Agriculture Organization (FAO) showed that in 2014, the Philippines had natural water production of some 479 billion cubic meters, higher than in South Korea, Thailand, Vietnam, and Japan, yet we do not hear of these countries experiencing a “water crisis” (see Table 2).

 

Report No. 3 is about the multiple clearances and permits needed from agencies, from the local to the national like the National Commission on Indigenous Peoples, that result in overlapping functions and opportunities for corruption and extortion.

This is related to No. 2 above. We need more open pit mining, not less. Mined out areas are deep wide areas that can become natural water catchments and dams, suitable for fishery, tourism, hydro power, and as potable water sources someday.

Populist sentiments are based on emotion, not reason. Based on nationalist and socialist nirvana, not hard data. Government should proceed with more privatization and more competition in power generation, water development, and mining.