Petilla’s real problems just starting

I have no doubt Energy Secretary Jericho Petilla meant it when he said he will resign if he failed to reconnect the towns in Leyte and Eastern Samar to the power grid by Christmas Eve. But only three towns remain to be connected and that is definitely substantial compliance. ABS-CBN reports the three towns were connected by Friday last week. PNoy was right to reject his resignation.

Indeed, P-Noy should hang on to Petilla. It is rare to have someone like him who is ready to put his job on the line towards the accomplishment of a goal. I have not personally met Petilla and initially dismissed him as just another politician. But he is showing himself to be a breed apart from many in P-Noy’s cabinet and key officials.

How I wish this retired General Honrado would do a Petilla and put his job on the line on the issue of providing functioning air conditioners, working CCTVs and clean washrooms in all the NAIA terminals. Because he knows he is a bosom buddy of P-Noy (relative pa daw), all he has offered these past three years are excuses, a mountain of excuses. Kung hindi kaya ang trabaho, resign! But he seems to be kapalmuks to the core.

Having worked at the Ministry of Energy, I understand the challenges that Petilla faces. We did well enough then because we had an exceptionally results oriented boss in Ronnie Velasco who took no excuses for failure. It was also martial law. Now, Petilla and the energy bosses after Velasco must have a lot of persuasive powers to get all the stakeholders looking towards the same national interest.

It is really mission impossible in more ways than one. The Secretary of Energy has very grave responsibilities — assure uninterrupted energy supply. But the powers to get the job done are limited.

The powers of the secretary of energy were further curtailed with EPIRA. Petilla may know in advance that we are going to have massive power failure due to inadequate capacity but he can only try to persuade the private sector to invest in power plants and he can also pray those thin reserves hold out.

I am certain that at the back of his mind, Petilla wished that P-Noy allowed him to go. The problems of his office are just starting to get serious. Reconnecting Leyte and Eastern Samar is the easy part. It is merely a physical thing where one can throw resources to get it done. What happens next, as in next week, is something else.

There is this explosive powder keg of a Meralco power rate increase issue. The Supreme Court issued a TRO but that only postpones the day of reckoning.

Now Petilla must worry about Meralco running out of cash for its operations unless the power generators allow Meralco to cut payments. But if Meralco stops paying them, the generators may not have the money to buy fuel and power blackouts will happen.

The problem runs deep. You almost need to proclaim martial law to force a solution on everyone involved. Years of failing to do what is right is at the bottom of this problem. Strangely enough, a foreign blogger, Richard Javad Heydarian, writing for Huffington Post took the effort to summarize one view of the problem:

 â€œWhat we see today in the Philippines is more a country that has come to confront its internal demons than an emerging market firmly placed on an inexorable tiger road. Nothing underscores this complex picture more than the latest uproar over an alleged collusion among power-generating companies to introduce a further hike in electricity prices.

“To put things into perspective, the Philippines already has Asia’s most expensive electricity rates, even higher than post-Fukushima Japan. Such prohibitive rates have not only hurt ordinary consumers, but have also served as among the strongest disincentives against manufacturing investments in the country.

“But there is a deeper lesson to draw from the Philippines’ power-generation predicament. Contrary to the conventional analysis forwarded by most analysts… what the Philippines needs the most is not more privatization and economic liberalization per se -- which have actually exacerbated rather than ameliorated the country’s structural economic weaknesses since the 1990s -- but instead a stronger state that (a) can bust oligarchic collusion, and (b) protect the interest of the consumers and productive sectors of the economy.

“And we won’t have a dramatic turnabout in the Philippines’ economic fortunes unless the Aquino administration and its successors fully internalize the indispensable role of the state, which ranges from ensuring the rule of law to protecting strategic sectors of the economy against special interest, even in an era of economic globalization.

“Ironically, the power crisis in the Philippines, which promises to retard the country’s growth trajectory and its aspirations for industrial development… is a classic example of how economic liberalization -- under the auspices of a corrupt political system and in the absence of a competitive private sector -- has handed the key sectors of the economy to a handful of oligarchs, which have prioritized profits over capacity-building and accessibility.

“And yet, we are still waiting for a commensurate response by the Aquino administration to such brazen strangulation of Philippines’ manufacturing potentials, which ultimately rely on, among other things, the affordable availability of power and energy resources.”

Secretary Petilla himself raised the possibility of collusion among the power generators. Then there is EPIRA itself, the law that supposedly reformed our power industry with the promise of lower electricity rates through the use of a competitive market system. A decade after its passage, nothing of the sort happened.

Former Ambassador Bobi Tiglao cited some Meralco numbers that I have confirmed to be accurate. This strikes at the heart of the power rate crisis:

“Based on Meralco’s data, it bought in November from these firms — through the Wholesale Electricity Spot Market (WESM), 9.5 percent of the electricity it distributed, or 286 gigawatts, at an astonishing cost of P9.5 billion, or P33.2 per kilowatt-hour (kwh).

“That’s 184 percent the average monthly price electricity sold at the WESM of P11.7/kwh from January to September this year, or 326 percent the average P7.8/kwh price since that market started in 2007.”

Tiglao goes on to compute that “these firms though spent only P1.5 billion (P5.3/kwh) to P1.9 billion (at P6.4/kwH) at most to produce that power, which means super-profits for them of P7.7 billion to P8 billion.”

UP economist Solita Monsod asked the same question: Who is responsible for power price spikes? She analyzed WESM or the market system put in place by EPIRA. She concluded that “the DOE and ERC and PEMC fell down on their jobs. They should primarily be held responsible. After them, the generators who may have ‘gamed’ what appears to be a flawed system.”

So that’s something right in Petilla’s playground. The Senate hearing on the issue showed a pathetic DOE being informed only on the day itself that so many power plants are going off line. They are being taken for granted by the power generators and they have not raised a fuss about it.

What happens next will certainly test the mettle of Petilla. He has to assert himself and not let the powerful interests run the show for him. I see a point when he will have to once again put his job on the line and let P-Noy choose between him and the power industry oligopoly. This time, an offer of resignation can no longer be for show.

What gives me confidence with Petilla is that he seems to have a good head on his shoulders which is more than I can say for other cabinet members like Mar Roxas who proudly ban the sale of hammers to prevent jewelry store heists. He also has political savvy which is essential for this powerless job with immense responsibility.

Petilla is being given the chance to finally fix an industry that refuses to be fixed. He must meet his greatest challenge and hope to more than just survive it.

NAIA

My friend Jesus S. Matubis Jr posted this on Facebook.

The horror story at NAIA 2 continues: When my elder sister, Judy, arrived at NAIA 2 from Macau last Friday to an airport that was sweltering hot because there was no AC, and no trolley which she could use in the long walk from the tube to the baggage carousel, and with the restroom she used smelly, that was only half of the story.

Because it turned out that my younger brother, Joel, who met Judy at the airport, also used the restroom at the waiting area. And this is what he found: six urinals, three of them out of order and the remaining three overflowing with urine because they were stuck up!!!!

WHAT’S HAPPENING TO THE NAIA ADMINISTRATION? DO WE REALLY REVEL IN OUR REPUTATION OF HAVING THE WORST AIRPORT IN THE WORLD?????

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco