• A mid-September potpourri of failures

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    Ben D. Kritz

    Ben D. Kritz

    AS a rule, I prefer to focus on one topic of interest per installment of this column, but this week – if I may share a little personal note – I am wrestling with two challenging factors.

    The first is a bout with that common, and intensely annoying, ailment called “sore eyes,” which makes it uncomfortable to stare at a computer screen for a long period of time.

    Being somewhat adventurous (most would probably say reckless) when it comes to self-medication, I have discovered a treatment that seems to help, but I am not entirely over it, and consequently still limited to short bursts of work for the time being.

    The second and obviously more relevant challenge is topical, in that the embarrassing failures of the Aquino Administration are piling up in the news this week faster than I can properly keep track of. So in an effort not to overlook anything (and operating under conditions that oblige me to take a break every few minutes), here are a few quick insights on the latest government lint-headedness:

    On taxes: Aquino gives the entire country the finger
    Counterpart measures to revamp the Philippines’ tax structure—parts of which have not been amended since the mid-1930s—are currently being discussed in both houses of Congress, where they have wide support, primarily among President BS Aquino 3rd’s own backers. Every business and labor organization in the country has offered their endorsement of the proposed tax reform, and even the International Monetary Fund (IMF), while cautioning that adjustments should be done carefully, has also opined that tax reform would be beneficial to the public and the overall economy.

    PNoy, however, is having none of it. To his fevered mind, any alteration of the hopelessly convoluted tax regime that already features the highest tax rate in Asia and habitually fails to meet its collection targets will cost the government revenue and threaten the country’s credit rating. That simply won’t do, and he knows it; after all, he has an economics degree, and you don’t.

    ERC still fumbling over power supply agreement rules
    Back in June, the Department of Energy (DOE) issued a circular instructing that a competitive selection process employing a third-party assessor be used in developing power supply agreements between generators and distributors. The idea, however, was first introduced much earlier, with the Energy Regulatory Commission (ERC) holding hearings about it as far back as January 2014.

    The concept is an attempt to prevent underhanded supply deals such as those that partly contributed to the obnoxious attempt by Meralco to increase generation charges by more than 70 percent in November and December 2013, and not surprisingly, Meralco has aggressively fought implementation of the new scheme. And not surprisingly, the ERC—an acronym that could just as well mean “evident regulatory capture”—has let them, continually stalling with hearing after hearing, and having neglected so far to produce the terms of reference for the refereeing third parties. As of now, the ERC is “hoping” to meet an October 27 deadline, not necessarily for implementation of the scheme, but rather to make a decision whether to proceed or scrap it (in spite of the existence of a DOE order making it mandatory).

    The bottom line: Don’t hold your breath for a noticeable improvement in Asia’s highest electricity bills anytime soon.

    Buses confuse the Administration’s bench warmer
    Odd-job Secretary Rene Almendras, whose appointment by President Aquino as “traffic czar” was inexplicable for any reason that was not “because he wasn’t doing anything else at the time,” can’t understand why crowds of commuters waiting for buses are seen in the afternoon/evening rush hour and not in the morning.

    “I have that question,” Almendras said in a Senate hearing on the traffic mess. “Why do I see a lot of people on the streets waiting to go home in the afternoon than in the morning?” He then went on to relate how someone told him that because bus crews meet their daily quota in the morning, they do not bother to make trips in the afternoon.

    Hey, genius: The companies who operate buses are aware that people commute in the afternoon as well, and set their quotas accordingly. The difference in the number of people you see waiting for buses along EDSA stems from the fact those people don’t live along EDSA. They wait for buses in the morning, too—they just do their waiting somewhere else.

    I’d hate to see how bad our traffic would be if we didn’t have that sort of deep expertise on our side.

    Aquino’s mining EO has killed the mining industry
    And finally, at the Mining Philippine 2015 expo (happening this week), Chamber of Mines of the Philippines (COMP) president Benjamin Philip Romualdez opened the show with a keynote speech excoriating President Aquino for virtually wiping out the mining industry in the country with Executive Order 79, which in 2011 unilaterally rescinded the Mining Act of 1995 and halted any new mining activity until a new law is produced by Congress. That of course, has not happened yet, and most likely will not happen before Aquino moves back into Mom’s house on Times Street.

    As a result, an estimated $20 billion in mining investment has disappeared; total investment in 2014 amounted to a paltry $693 million, less than a quarter of the projected $3 billion. And while, to be fair, not all of the provisions of the proposed new law are bad – it does make some improvements in environmental protections, and sets an advantageous, yet reasonable, royalty rate for the government—not getting it done in a timely fashion means that a window of opportunity has been missed; the bottom has since fallen out of metals prices, and they are not expected to recover until at least 2019. Even if the new mining law is completed in the next year or two, it is likely to attract little investment attention until the latter half of Aquino’s successor’s term, if at all.

    ben.kritz@manilatimes.net.

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    3 Comments

    1. ERC Power Supply Agreement – The problem with ERC is transparency and team is not run by competent technical people?

      Electricity generation costs are a fundamental part of energy market analysis, and a good understanding of these costs is important when analyzing and designing policy.
      ERC should regularly update calculate the cost of power generation for different generation technologies used i.e. geothermal, hydro, coal power plant, gas power plant etc.. Cost data is broken down into detailed expenditure per MW or MWh for the lifetime of a plant, from planning costs right through construction and operating costs to eventual decommissioning costs. This data has to be presented and transparent to the public. With this information the public will not question the power cost and at the same our policy makers will have better basis for their decisions.

    2. Justaskingseriously on

      It is hard to make heads or tails of the militarization of the Lumads’ hinterland abodes. With Lumads demonstrating in front of the Chamber of Mines of the Philippines highlighting mining as the source of their woes, and the COMP president Benjamin Philip Romualdez “excoriating” the lint-brained author of Executive order 79, is there a mining monopoly by some mining company deserving the undivided protection of the military? What is worth using alleged Lumad allegiance to the NPA as cover for military atrocities? Money indubitably? Mining monopoly’s pipeline to Mala canan? The varied sources of funds for 2016 must be protected at all costs? Let’s hope this cover-all strategy does not let BOC Lina off the plunder hook.
      Wishing your sore eyes turn soon to sure eyes. We all depend on your observation and insights. An physician’s clinical expertise may be needed just to make sure there is no bacterial infection superimposed on the viral.

    3. Maybe BS Aquino was sleeping when GMA was teaching Economics or there is something wrong with Economics program of Ateneo. Maybe he doesn’t wan’t to tax the rich too much that is why he doesn’t want the bills to pass.