No ‘Pharmally’ in the energy sector

While the entire country is gripped on the investigation on the alleged corruption involving Pharmally Pharmaceutical Corporation for overpriced medical supplies, the Department of Energy (DOE) is quietly pushing for a policy that has a very similar potential for breeding corruption, manipulation, unfair competition, resulting to overpriced electricity supply that will further burden the consumers.
To help illustrate the cunningness of the Unsolicited Proposal, which is now brewing in the DOE, let us compare open bidding to what we will refer to here as “lutong macau”:

Open Bidding

In the energy sector, distribution utilities (DU), like Meralco, buy their electricity from power generators through power supply contracts. A legacy left by the Aquino administration, called the Competitive Selection Process (CSP), an expanded bidding mechanism that ensures transparent, fair, reasonable, and cost-effective energy generation for consumers, is under threat.

In 2019, Meralco successfully out-bid three power supply contracts for a 500-megawatt (MW) deal through the CSP, which was administered by a neutral Third-Party Bids and Awards Committee (TPBAC). The prices from the CSP significantly resulted in lower average generation cost of around P5.88/kWh (VAT inclusive). According to Meralco, “With the results of the first successful CSP, consumers are projected to enjoy total savings of around P13.86 billion per year or a rate reduction of P0.41/kWh.”

The Meralco story is only one among the many successes of CSP in pushing cutthroat competition and lowering generation cost. Why the DOE would want to end it through Unsolicited Proposal is baffling and reeks of selfish profiteering interest and corporate lobbying.

“Lutong Macau”

It is important to note that several corporate entities have cross ownerships – owning both generation and DU companies — DOE’s unsolicited proposal could open possibilities to tailor-fit terms in favor of their subsidiary and affiliate companies under the “original proponent status”, locally this is known as “lutong macau”, a rigged decision or pre-arranged victory. If this succeeds, prices now can be manipulated and dictated by the generation company who submitted the unsolicited proposal first.

Filipino consumers as a whole are tired and have suffered long enough with economic and political scandals happening one after the other, and it will help if DOE will spare us another ‘Pharmally’ with the Unsolicited Proposal.

CSP has already shown massive success and advantage for the consumers historically. Our country’s electricity cost is still one of the highest in Asia and Kuryente.org believes that CSP will only continue to bring the cost down in the long term. Hence, instead of pushing for its amendments, we should strengthen its implementation and reject DOE’s Unsolicited Proposal, which is mainly designed to benefit corporate greed and interests.
DOE, please hear our plea — No ‘Pharmally’ in the electricity sector.