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Home News Nation Joker opposes sale of cash-rich Transco

Joker opposes sale of cash-rich Transco

 

SEN. Joker Arroyo on Sunday warned the government against privatizing “crown jewels” such as the National Transmission Co. (Transco), which contributes not less than P15 billion to the govern­ment’s coffers annually, and debt-free.

“Transco has made lots of money. It is the envy and the crown jewel not only of Napocor but the whole GOCCs [government-owned and -controlled corporations],” Arroyo said. “It is reminiscent of the injudicious sale of Petron some 10 years ago.”

Arroyo, chair of the Senate blue-ribbon committee, labeled the sale of the government’s 60-percent stake in another crown jewel, the Petron Corp., to Saudi Aramco as a “big mistake.”


“Both  [are] without debts, both [are] highly profitable, and both with strategic and security importance. We have this nasty habit of favoring the disposition of the big and good ones and being indifferent to selling the small and bad ones,” he said.

Transco, which is 100-percent owned by National Power Corp., is a monopoly “it cannot and does not lose money in its operations,” while other erstwhile units of Napocor have lost lots of money.

Transco receives the electricity from generating companies (gencos) owned by Napocor and independent power producers (IPPs), which are privately and largely foreign-owned, and feeds the high-voltage nationwide transmission grid. It then distributes this electric power to electric companies and cooperatives, which then distribute it further to the consuming public.

In short, Transco controls the nationwide flow of electricity from producers to consumers of electricity.

“If we cede Transco, the strategic government control and monopoly will inevitably be transferred to the assignee, whatever the safeguards. Have we thought of that?” Arroyo said.

He said he never argued the point of power experts that the disposition of Transco, like the gencos of Napocor, is cited in the Electric Power Industry Reform Act (Epira) Law.

Arroyo recalled that when Epira, one of the first laws enacted under the present administration, was being deliberated upon in June 2001 before the bicameral conference committee, then Energy Secretary Lito Camacho assured the Senate-House panel that Transco could be sold for $2 billion or P100 billion.

“The thought of P100 billion in up-front money, the biggest Philippine transaction ever, which could be used to partly pay off Napocor debts, was a decisive factor that influenced the conferees to include Transco for privatization. Section 32 of Epira provides that the national government should directly assume a portion of the financial obligation of Napocor in an amount not to exceed P200 billion,” Arroyo explained.

He said the Power Sector Assets and Liabilities Management Corp. (Psalm) recently deferred the bidding for the concession agreement of Transco as it could “open a can of worms, which would have unfairly embarrassed the President.”

It turned out that under the bidding terms of the concession agreement of Psalm, the P100 billion for the Transco disposition will not be in cash. Only 28 percent, or P25 billion, will be the down payment.

“The balance of P75 billion will be paid for in installments over a period of 24 years. This is for a company that nets P15 billion a year. A commercial travesty,” Arroyo said.

Losses incurred by the Napocor have been calculated to exceed P500 billion, not the original amount of P200 billion mentioned under the Epira Law since 2001, when it was enacted.

He said the P25-billion down payment could hardly create a pinprick in the current P500-billion financial exposure of the government.

Senator Arroyo said the government should reassess its position to assign and cede control of Transco in fairness to the people who own it. “Are we to follow the disastrous sale of the first crown jewel, Petron, by disposing of the second-crown jewel, Transco?”

The Philippine National Oil Co., a government-owned and -controlled corporation that owns Petron, was the brainchild of President Marcos in the early years of martial law. It was used by Marcos as a shield against the price increases of the two oil giants, Caltex and Shell, that could destabilize his regime.

By Sammy Martin

 

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