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‘Government blunders taking toll on oil consumers’ PDF Print E-mail
BUSINESS MIRROR
By Jonathan L. Mayuga
Correspondent
THREE ‘”major blunders” by the government in energy policy are now taking their toll on Filipino oil consumers. These are the dismantling of the state energy complex, the subsequent deregulation of oil during the administration of former President Aquino and the sale of a controlling bloc of Petron shares to foreign interests during the administration of former President Ramos.

This is the view put forward by civil-society activists Maitet Diokno and Walden Bello, who spoke on Tuesday at a forum on oil and price issues, where the Freedom from Debt Coalition (FDC) also assailed Malacañang’s P500 cash subsidy to poor families, saying this is not the solution to the skyrocketing cost of oil and electricity.

The government, Bello said, should undo the last and the biggest blunder by regaining controlling interest and management control of Petron, citing the significance of state influence on some 35 percent to 40 percent of the market.

At the forum, entitled, “Consumer Crisis: The Case of Oil and Electric Power,” in Quezon City, the FDC presented its proposals on ways to reduce electricity rates.

Diokno, former president of the FDC and currently an honorary member of the FDC board of trustees working group on power under the National Advocacy against Privatization of Essential Services and Commons, said the six government measures that could bring down rates by as much as 64 centavos are not enough to make electricity rates decline.

The government measures include asking the distribution utilities to absorb the value-added tax (VAT) on system loss starting July, and mandating the local government units to use 30 percent of their share of the national wealth tax.

Instead of these, she batted for removing “taxes on taxes,” such as VAT and royalty on renewable energy, and enforcing least-cost provision—measures that her group calculates could reduce power rates by as much as P3.30.

“The Philippines is a Third World country with the electricity rates of the First World. Having to pay a large amount even for electricity that has not been generated nor consumed, or charged for the highest cost of power purchased from the postmarket that does not work, are vivid examples of how power rates in the country have gone wayward, imposing undue burden on the life of poor Filipinos,” Diokno said.

She said the power play between the majority Lopez bloc in the Manila Electric Co. (Meralco) and government representatives led by Government Service Insurance System president Winston Garcia is not about rates but the strategic control of the country’s largest distribution utility. She added that whoever controls Meralco controls the power industry, with Meralco accounting for 70 percent of Luzon’s electric distribution service.

Bello, currently FDC’s president and a senior researcher of the Focus on the Global South, sees the price of fuel continuing to hit sky high with the global dependency on oil.

He said the demand for oil is rising much faster than its supply, because old oil fields, on which the world relies for most of its oil, are being depleted; and no new fields have been discovered that can match their production reserves. He said the removal of VAT should be accompanied by a measure of deregulation.

“The companies must obtain the government’s permission to raise prices. To determine whether the proposed price increase is fair and reasonable, the government must have access to the oil companies’ costing data,” he added.

This, Bello said, is not meant simply to control prices but to correct the current situation of “windfall profits” and make the major oil companies share the burden of the rise in the price of crude with the consumer, rather than passing this all to the latter.

He also proposed the need to start a radical shift from oil to electric power in transportation.

Priority, he added, must be placed on expanding the electricity-run train and bus transportation system, with the necessary investments coming from resources that would not go to debt-service payments. 

“This expansion could be coordinated with the popularization of the use of bicycles for relatively short distances from stations to residences or the offices,” Bello said.

While the shift from oil to electric power is not yet feasible, he said, “we must convert a significant part of the bus and jeepney fleet from gasoline and diesel to cheaper gas, such as liquefied petroleum gas, with incentives to convert private vehicles for such purpose.”
 
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