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Investment scam

HIDDEN AGENDA - Mary Ann LL. Reyes (The Philippine Star) - February 2, 2020 - 12:00am

The House committee on energy will start investigations this month into what has been described as a huge investment scam in the energy business.

The scam allegedly involves the Independent Electric Market Operator of the Philippines (IEMOP) which claims to have been spun off from the Philippine Electricity Market Corp. (PEMC), a non-stock, non-profit company incorporated in November 2003 to serve as interim governance arm of the wholesale electricity spot market (WESM).

A company with only P7,000 in paid-up capital according to its incorporation papers filed with the Securities and Exchange Commission, IEMOP has taken over from PEMC as operator of WESM in September 2018, four months after it was incorporated.

WESM was created by virtue of Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001. It is where generators sell their excess capacities not covered by contracts and where customers buy additional capacities on top of their contracts.

Meanwhile, IEMOP runs the electricity market by among other things managing the registration of market participants, receiving generation offers, coming out with market prices and dispatch schedules of the generation plants, monitoring the day-to-day market trading, and handling billing, settlement and collections.

In a radio interview, party-list Rep. Jericho Nograles disclosed that IEMOP has since then been collecting around 86 centavos per kilowatt hour from what the consumers pay or more than P100 million per month.

Nograles said IEIMOP collects money without approval from the Energy Regulatory Commission (ERC) when it is a cardinal rule not to set rates or collect without ERC approval because it is a highly regulated industry.

The lawmaker also questioned why IEMOP was able to gain the management of WESM without undergoing a competitive selection process and considering its measly capitalization was able to operate the multibillion-peso market apart from taking over millions of pesos worth of government IT assets from PEMC.

Barely four months operating as a company, IEMOP became a market operator which according to Nograles violates Rule 9, Section 6 of the implementing rules of the EPIRA Law.

Nograles that said rules require three basic parameters and these are financial capability, technical capability, and minimum of two years’ experience as a market operator, all of which IEMOP does not have.

He added that IEOMP should also have IT equipment which is worth millions of pesos and which they cannot afford.

DOE, however, has claimed that the PEMC management and staff were absorbed by IEMOP, giving it experience and expertise. But Nograles countered that this does mean that the company has the experience required by the EPIRA Law.

IEMOP was formed on May 15, 2018, with seven incorporators pitching in P1,000 each based on SEC records. It described itself as non-stock, non-profit company whose purpose is to become the independent market operator of the WESM. Only four months old then, it entered into an agreement with the original WESM operator, PEMC, to run the market.

The EPIRA mandates the creation of an independent operator to supersede PEMC, which the energy secretary chaired and the state-owned National Transmission Corp. (TransCo) oversaw.

Nograles emphasized that there should have been competitive selection to determine the most competent and best equipped.

According to SEC records, one of the seven incorporators of IEMOP is Maria Rene Anne Lourdes Garcia-Matibag, wife of Melvin Matibag who is the president and CEO of the National Transmission Corp. and was manager of NAIA Terminal 3 manager when Energy Secretary Alfonso Cusi was Manila International Airport general manager.

The alleged sweetheart deal of IEMOP has been repeatedly denied by the DOE, but Nograles said that the House energy committee will still look into possible graft and plunder as some rules of the Commission on Audit rules had been disregarded.

He noted that the sweetheart deal made it possible for IEMOP to grow from having a measly P7,000 paid-up capital to one with an income of more than P100 million by the end of 2018.

In an earlier statement, the DOE explained that IEMOP did not go through a competitive selection process since the law requires such only from foreign participants as an option under the EPIRA if the independent market operator was created in 2007.

It said that department opted to create a separate entity composed of Filipinos who have acquired the necessary expertise to operate the WESM and ensure that the market will be managed by Filipinos. According to the DOE, IEMOP collects only less than one centavo.

The DOE also explained that IEMOP’s employees are people running the system that was disengaged from PEMC. WESM was transferred to IEMOP based on the operating agreement between the latter and PEMC signed in September 2018, making IEMOP a spin-off of PEMC towards independence in market operations, it added.

Noble profession

With the deadly nCoV already confirmed in the Philippines and billions of people all over the planet now living in fear of contamination, we salute those in the medical profession, especially doctors and other medical workers who continue to work and treat patients who may have already have come in contact with the dreaded virus.

Unfortunately, as in all activities and professions, there are good eggs and bad ones.

Take the case of this recent report about one of the country’s most prestigious private hospital which is facing accusations of poor hospital management and working environment.

But friends in the medical profession say that all these are mere fabrications of a well-known doctor who was a former high-ranking figure in the hospital’s management and did not get the promotion that he desperately wanted.

According to reports, this young doctor has been telling peers and colleagues that he would be chosen by the hospital’s board of directors for a higher post but the appointment never came and the position was instead given to another colleague who others believe is more deserving and competent.

They say that the bad-tempered doctor who did not get the promotion is known for yelling and swearing at his subordinates and even refusing to see people. He also is said to ban pharmaceutical companies which do not give him what he wants.

While doctors are still people and are entitled to have their bad moments, they still should try to act professionally when they go to work.

For comments, e-mail at mareyes@philstarmedia.com

HOUSE COMMITTEE INVESTMENT SCAM
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