Biddings

This is urgent.

After over two decades waiting for a law creating a national ID system, the project is scheduled for bidding in a little more than two weeks from now. Whether out of sheer incompetence or nefarious intent, this bidding process will result in procurement of an ID system that is technically inferior and grossly overpriced.

Worse, this project will distribute a physical ID card that has no chip. Therefore, it cannot be used, among other things, for on-the-spot confirmation of the bearer’s identity. This is not state of the art for ID systems now being used elsewhere.

There is a benchmark we can use to assess the adequacy of the ID system we want to institute.

Recently, Indonesia completed the issuance of a national ID for its 210 million population. The entire project, using state of the art technology and cards that feature electronic chips, cost Jakarta $62 million. The project was completed in just two years.

By contrast, the project we are undertaking, with the Philippine Statistics Authority (PSA) as the lead agency, will take five years to complete and cost at least twice as much. It will take us more than twice the amount of time to execute this project for a population that is less than half of Indonesia’s. The longer period of execution means added costs in the form of salaries for those undertaking the project.

If we had undertaken the national ID project in 1994, when it was first seriously proposed, we might have had a much more efficient social security system and more reliable electoral processes. The fraud that marred the PhilHealth system, where living persons used the accounts of the deceased, might have been completely averted. We could have built the database for an electronic passport system. Those are just some of the costs we bore because the leftist groups got their way in opposing the institution of a national ID system supposedly because it violates privacy rights.

The officials in charge of executing the national ID system seemed to have tried to exclude potential bidders who might have offered a technically superior system for our use. They required the bidders to have assets matching 50% of project cost and experience in two continents (on the strange theory that biometrics systems that work for, say Europeans, might not work for Orientals). Then they required bidders to have a corporate existence of 10 years, even as biometric technologies using irises were perfected only five years ago.

As a result of the unreasonable requirements, the list of prequalified bidders includes companies that have long corporate existence but little experience in new biometric technologies. Among those prequalified is the company that caused the vehicle license plate mess that took us years to clean up.

Last August, the World Bank announced it was making available its MOSIP software for national ID systems for free. We could save billions if we wait for details of this offer and adjust the other components of the system to it.

We certainly need fresh eyes to take a second look at how the bidding process was set up before taking the plunge with a technically inferior system.

Low emission

The other bidding exercise that has been the source of debate involves Meralco’s forthcoming bidding for 1,200 MW of energy supplies from new energy producers.

In this new round of bidding, Meralco requires bidders to use high efficiency, low emission (HELE) technology. Although this looks like an environmentally sound preference, only one supplier can meet the standard set by the power distributor: Atimonan One, owned by sister company Meralco Power Generation Corp.

Because only Atimonan One met the HELE standard, the first round of bidding was declared to have failed. After another round of bidding, Meralco may proceed to have a negotiated supply agreement with its own subsidiary.

The Competitive Selection Process (CSP) mandated for power supply agreements is supposed to favor consumers with lower generation costs. These costs are passed through the distributor to the consumers.

The other potential suppliers point out that while HELE technology is indeed more efficient and produces lower emissions, its energy output is more expensive than the more widely used “clean coal” plants that feature a circulating fluidized bed (CFD). These other suppliers are asking the power distributor to relax its HELE requirements to enable other producers to participate in the power supply bidding.

The Department of Energy has recently asked Meralco to relax the conditions set out in its Terms of Reference for the next round of bidding. Since the CSP is intended to benefit consumers through lower power costs, it is argued that the power distributor should have no other interest than supply agreements with the lowest cost supplier.

There is a critical policy issue that needs to be settled here.

Environment advocates insist on technologies with the lowest emissions. Consumer advocates, on the other hand, insist on the lowest possible cost for power. In this particular case, it will have to be one or the other.

The DOE appears to have taken the position that standards may be relaxed to make the bidding process more inclusive and ensure consumers cheaper electricity. That could, however, become a disincentive for firms considering investing in more expensive HELE technologies in our energy market.

This policy debate is not easy to settle. Because of the sheer size of Meralco’s franchise area, the manner the debate is settled will have far-ranging implications on the profile of our energy industry.