Restored

Order has been restored in our bureaucratic universe.

Earlier this week, President Duterte signed Executive Order 62 that returned the National Food Authority, the Philippine Coconut Authority and the Fertilizer and Pesticides Authority to the supervision of the Department of Agriculture (DA). That is as it should be.

The three agencies were detached from the DA during the Noynoy Aquino administration. It was done to carve out a small bureaucratic fiefdom for Francis Pangilinan during that interregnum when he had to sit out three years because of term limits before seeking a third term as senator.

Apart from political expediency, there was neither rhyme nor reason in detaching the three agencies from the DA. This is another one of the many whimsical decisions made by Noynoy Aquino.

For a while, two chiefs lorded it over our agriculture policy. Neither left any particularly distinctive mark after they eventually left their Cabinet posts for other pursuits. Our agriculture remains shot, vulnerable to food supply shocks that drive inflation rates higher. Stagnant productivity in agriculture drags down our growth.

After Pangilinan returned to the Senate for another unremarkable term, the three agriculture-related agencies were left pretty much like rouge planets wandering through our bureaucratic universe beyond the orbit of any department. They just defied the laws of bureaucratic rationality, drawing powerbrokers at the Palace to play the influence game that adds incoherence to our agricultural policies.

The neglect produced tragic results.

A squabble between two factions at the Palace over the timing and volume of our rice importation produced the rice shortage that fed into the elevated inflation rate we now endure. Neither of the factions coordinated with the DA to receive projections of our domestic harvest that should have been the principal guide to rice importation.

The factions quarreled over whether rice imports ought to be undertaken on a government-to-government basis or on the basis of private business importing on their own. In the end, the point of the disagreement was null. The real solution lies in shifting from the current minimum access volume regime to one based on tariffs.

Meanwhile, poverty grips our coconut-dependent communities even more. Demand for coconut oil dwindles. Without more domestic downstream processing, more and more of the crop will simply be wasted. No government program has been devised that will bring hope the trend will be reversed.

The real wonder about Executive Order 62 is that it was not issued earlier. It should have been among President Duterte’s first acts.

Black Magic

This is how we screw up our power sector and damage our economy.

For the past 98 years, Panay Electric Company (PECO) served the City of Iloilo and surrounding areas reliably. The distribution utility ranks among the top 20 of 146 electric distribution utilities in the country in terms of power reliability. It ably supported the spectacular economic growth of this area. The Private Electric Power Operators Association wrote a glowing endorsement for PECO earlier this month.

PECO has one vulnerability, however. Its franchise expires January 2019, making it a target for powerbrokers.

Over a year ago, Camiguin Rep. Xavier Jesus Romualdo filed HB 6023 seeking to renew the franchise of PECO. That seemed a matter of course. PECO, after all, owned the physical assets for distributing electricity in Iloilo and the trained personnel to man it. Power distribution is a natural monopoly.

The House committee on legislative franchises, however, sat on that bill for a year. There are millions of reasons why a seat in this committee is considered a plum post.

Very recently, Paranaque Rep. Gus Tambunting filed HB 8132 that contested PECO’s application for renewal of its franchise and proposed the franchise be awarded to More Minerals Corp. (MMC). As its corporate name indicates, MMC is a mining company with no experience in distributing electricity throughout the franchise area. It does not own a single meter of transmission wire or a single electric post.

Suddenly, the committee of legislative franchises sprung to life. With hardly anything that might be called a thorough public hearing, the committee decided to award the Iloilo power distribution franchise to MMC early this week.

The committee has a lot of explaining to do to an anxious public and a disconcerted investment community about why they disenfranchised PECO and awarded the franchise to a mining company.

There are only a little more than three months between now and the day PECO’s franchise expires. MMC does not have the material time or any showing of sufficient capital to take over the power distribution business in bustling Iloilo.

What happens when PECO’s franchise expires next January and MMC fails to install a parallel power distribution system that will cost many billions of pesos? The greater likelihood is that Iloilo and the surrounding areas will be thrown into darkness. This center of strong economic growth will be thrown into chaos.

In the best of all possible scenarios, the new power distribution company, with its gift of franchise, will charge customers through the nose for whatever power it might be able to deliver. Investments in this vigorous city will be thrown into deep uncertainty.

PECO, for nearly a century, served the city well. It complied with every term and condition in its franchise. By legislative whim, it will be forced shut down and all its workers will be displaced.

A lot of magic happens in the awarding of franchises in this country. In the case of Iloilo, a black magic curse has been cast.