Teachers' wages deteriorate as tuition fees soar

While Filipino families are still coping from escalating prices of basic commodities like rice, bread and meat products and the never-ending rise of oil prices, they are once again faced by enrollment woes this month: tuition fee hikes.

The Department of Education has already announced that the tuition fee increase in private elementary and high schools this school year may range from 2% to 10%. Such can only be expected from a deregulated and commercialized education system, with the government allowing schools to increase their fees at will, the Educators' Forum for Development (EFD) said.

But while tuition fees in years past went up by as much as 20%, teachers' compensation has been declining by as much based on the government's own survey.

According to the latest Occupational Wages Survey of the Bureau of Labor and Employment Statistics, the average monthly wage rates of teaching professionals in private elementary and high schools range from P12,039 to P13,906 as of 2006. What is shocking is that these wages shrank by as much as 20% compared to what teachers received in 2004. (See Table)

Average Monthly Wage Rates of Full-Time Teachers in Private Education Services, June 2004 and August 2006 (in peso)

                                                                    2004    2006    % Change

General Secondary Education Teachers        14,991    12,039    (19.7)
Science and Mathematics Teachers               14,626    13,034    (10.9)
Vocational Education Teachers                     13,219    13,324    0.8
General Elementary Education Teachers        14,486    13,800   (4.7)
Science and Math Elem. Educ Teachers        15,434    13,906    (9.9)
Pre-Elementary Education Teachers              12,842    12,389    (3.5)

Source: Occupational Wages Survey, Bureau of Labor and Employment Statistics


According to online job services company Jobstreet.com, the lowest salary a fresh grad teacher actually receives from private schools is a measly P7,000. Even teachers with one to four years experience are paid as low as P8,500 a month. Based on this, the lowest paid public school teacher with a basic pay of P10,933 appears to be better off.

The DepEd justifies the approval of petitions for tuition fee hikes with its so-called 70-20-10 requirements – 70% of the increase should go to the upgrading of school equipment, 20% for the acquisition of textbooks, and 10% for teachers' salary upgrade. Yet even this paltry 10% for the faculty does not reach their hands. It is clear that teachers continue to be underpaid and their supposed share in the yearly tuition increases is only a figment of government officials' imagination.

The EFD, an association of teachers and educators committed to social transformation, deplores the government's abandonment of its responsibility to ensure the people's access to education.

The EFD also takes issue with the government and private school owners' use of teachers' pay hike as an excuse to raise tuition fees. Teachers indeed deserve higher compensation for decent living, but school owners should provide this without charging the students exorbitant tuition and other fees. (end)


The Educators' Forum for Development (EFD) is an association of educators committed to social transformation. It was established in 2002 by the IBON Partnership in Education for Development and other progressive educators, including founding chairperson Bienvenido Lumbrera.

Rep. Crispin Beltran 75

"If helping the poor is a crime, and fighting for freedom is rebellion, then I plead guilty as charged." - Ka Bel

News reports Anakpawis Rep. Crispin Beltran has been diagnosed as "brain dead" at the Far Eastern University hospital in Quezon City after falling from
the roof of his home in Barangay Muzon Tuesday morning.Family decided to transfer him to another hospital but sufferred cardiac arrest along the way.

Congress Profile

Beltran, Crispin B.

Sectoral Representative
PL - ANAKPAWIS
Term: 3
Age: 75
Date of Birth: 07 January 1933
Place of Birth: Bacacay, Albay
Religion: Catholic
Civil Status: M
Spouse: Rosario Soto Beltran
Other Profession: Labor Leader
Rm. S-602, House of Representatives, Quezon City
Phone: 931-5001 local 7300, 9316615

On power play and consumer empowerment

What became clearer in Monday's hearing of the Joint Congressional Power Commission (JCPC) is not the immediate reduction in power rates but the electrifying power play between the Lopezes and the government for control of Meralco.

 

Designed purposely to address the high cost of power in the country, the JCPC hearing was supposed to look for ways to reduce the cost of power in the country, which is among the highest in the world.

 

Though many issues contributing to the high electricity rates such as the imposition of VAT, system loss charge and other pass-on rates were discussed, it was obviously the raging power play between the Lopezes and the Arroyo government for control of Meralco that occupied center stage.

 

Hearing GSIS President Winston Garcia himself accused of mismanaging the government employees' pension fund, talk about inefficiency in the management of Meralco is already mind boggling.  And for a Meralco director like him, who represents 33 percent of the country's biggest utility to be denied access to corporate records, is even more baffling.  These are corporate matters easily resolved, not in public debate, but within the company's walls or in the courts.  There must be a bigger purpose behind Garcia's moves. And there must be something the Lopezes don't want the public—Garcia's bosses most especially—to know.

 

It is our position that Meralco must be made to answer for all the burdens it has been unjustly imposing onto its customers, including the deals it has made with Mrs. Arroyo at the expense of the unknowing public.  This it must do, in the interest of justice—and justice has long been overdue. 

 

But the company should not be made a convenient excuse by the Arroyo government to save its own skin and evade its culpability over this complex problem of high electricity rates.  From the signing of the EPIRA into law, to the non-renegotiation of the contracts with IPPs, to the deals with the Lopezes at the expense of the public, to the higher rates and higher returns to Napocor and Transco, to the privatization deals and bids—these involve billions of pesos and it is quite impossible to imagine the Arroyo administration not dipping its fingers into these magnificent pies.

 

The Freedom from Debt Coalition would like to issue a stern warning to Mrs. Arroyo, her family and allies in Malacañang: Stop the power grab. Do not use a legitimate and burning popular issue of high electricity rates to serve your own selfish interests. With feeling, we say in one emphatic voice: Back off!

 

Rather than allow itself to be used as a pawn in this power play, the PowerCom can seriously consider another option: consumer ownership. We at the Freedom from Debt Coalition have been pushing for this since 2005, when the issue of the P30-B Meralco refund first surfaced.

 

It is high time we departed from the old school that treated consumers simply as captive markets rather than as rightful owners of a public utility.  These public utilities were built by peoples' money.  It is time to give the power back to where it rightfully belongs.  Privatization, however, has made this option next to impossible.  But we'll keep pursuing this option, not only because it is more democratic. In the final analysis making a utility accountable to its owners who are also its consumers will render electricity prices more reasonable and fair. And render power grabs and power deals by power-hungry elites a thing of the past.

 

Likewise, members of the JCPC should consider the immediate overhauling of EPIRA if they want to convert their words into action.  This policy framework failed, and will not usher in a brighter energy future for the country. Lawmakers should stop pointing their fingers at others as if they themselves had no hand in creating the monster of failed privatization policy and flawed electricity reforms under EPIRA. 

 

Why is Meralco involved in 'sweetheart deals' with other Lopez-owned IPPs?  Because EPIRA allows cross-ownership.  Why is Meralco buying more than 50 percent of its total supply from its own IPPs?  Because EPIRA allows it to do so.  Why are Meralco rates higher that other distribution utilities? Because EPIRA and the ERC allowed the use of different rate methodologies.  Why is it that whoever controls Meralco controls the power sector? Because EPIRA renders it so.

 

How about the IPP contracts that made us pay P7.71/kWh from Casecnan rather than at NPC's P3.89 generation charge?  Again, EPIRA requires us to pay for them until the end of the contract.  Imagine half of the price cut if this contract were rescinded.

 

When asked yesterday if NPC can supply the needed requirement of Meralco to avail of its cheaper price, the answer is predictably no.  Why?  Because with almost 50 percent of its generating capacity already privatized and the remaining to be finished this year, how can a dying NPC enter into a long-term supply contract with Meralco. 

 

Now if lawmakers only see the devil in the Lopezes and ignore the bigger power play being hatched and the failed policies behind these high electricity rates, they had better switch off the lights in both houses of Congress. Or pay our electric bills. Or failing that, shoot their own feet.

 

10 Reasons Why Electricity Bills Are High

By the Freedom from Debt Coalition A position paper submitted to the: Joint Congressional Power Committee (JCPC)         After MERALCO, the country's largest electricity distributor and supplier, announced last April an increase in its generation charges by 51.88 centavos per kilowatt hour (kWh), rumors of a brewing government takeover began spreading like wildfire. Signals are there, experts say, as shares of both the government and the Lopezes each jumped to more than 30%, with the Lopezes having a slight fractional advantage. The recent government actions to pin down MERALCO and target the Lopezes, however, only serve to narrow the discourse to a simplistic formula: Electricity rates are high; for which MERALCO and the Lopezes are to blame. Meralco is no doubt an easy and guilty target. But there are more reasons for electricity rates in the Philippines being among the highest in Asia. And the Arroyo government is equally to blame, if not more. The Freedom from Debt Coalition (FDC) believes that the issue of high electricity prices is a result of a confluence of factors, from bad governance to corruption to mismanagement to rent-seeking to framework concerns. It is also more complex than what media portrays or what some politicians would want us to believe.  We attempt to identify these factors as our contribution to gaining a fuller understanding of the problem of unabated expensive electricity. FDC argues that the skyrocketing price of electricity emanates from structural, management, policy, governance and paradigmatic causes. FDC believes that these problems cannot be resolved fully without transforming the electricity industry into one that is more responsive and accountable to the people, and more environmentally sustainable. Meanwhile, it would greatly help the consumer for the government to target specific rate-hiking factors and introduce immediate reforms, with the end-in-view of course, of more comprehensive changes sooner rather than later. We believe electricity is expensive because of the following: 1. The Energy Regulatory Commission (ERC) allows MERALCO, other distribution utilities (DUs) and the National Transmission Commission (Transco) to earn over and above what used to be the statutory return on rate base of 8-12%. The Electric Power Industry Reform Act (EPIRA) allowed ERC to change the system of tariff setting, and it did. But the systems it now follows allows both transmission and distribution companies to earn far more than what they were allowed to earn in the past. And as far as generation and supply companies are concerned, the ERC has little if any say in the prices they charge because generation and supply are deregulated under EPIRA. 2. The Arroyo government wants to attract private investors to purchase NPC's assets, and for the assets to become attractive, electricity rates have to be high. The higher the winning bidder bids, the higher the electricity price we have to pay in the future so the winning bidder can recover its investment. This can be observed with the nature of recent electricity rate hikes. Following the suggestion of the Asian Development Bank (ADB), the National Power Corporation (NPC) petitioned rate hikes in order to attract investors since no investor would invest without proof of financial viability. Out of the PhP1.98/kWh NPC petitioned in 2004, PhP1.03/kWh was approved by ERC in 2005 – the highest rate hike in the history of the ERC. Transmission charges also increased from PhP0.7716/kWh in May 2006 to PhP0.9163/kWh in July 2006 (which is contrasted with almost flat prices from November 2005 up to May 2006) as the privatization and the bidding process is about to start. 3. The Arroyo government did not renegotiate the contracts with NPC's independent power producers or IPPs. These contracts require NPC to purchase electricity whether or not these are actually generated or dispatched, and to supply fuel to IPPs that are in operation. The price NPC agreed to pay for this electricity was overstated to begin with, and many of these contracts have clauses that allow the IPP to raise rates over time. NPC also bears the risk of peso devaluation and the risk of the cost of fuel, such as oil and coal, going up. We have been paying for these contracts in our electric bills for over a decade, and we continue to pay for these today, although this is less transparent, thanks to unbundling. With world oil and coal prices hitting all time highs, with the peso now at PhP40 to the dollar compared with PhP26:$1 when these contracts were signed, the cost of these contracts are an excessive burden on ordinary Filipino electricity consumers. Even consumers that do not have electricity at home are also made to pay for these contracts because the government guarantees all of NPC's obligations to the IPPs. 4. EPIRA allows MERALCO to purchase at most half of its electricity requirements from its sister companies or IPPs. Besides the problem of NPC with the IPPs, we have the problem of MERALCO's contracts directly with its own IPPs. EPIRA also allows cross ownership between generation and distribution. A closer look at the ownership of most of MERALCO's IPPs will show that they are owned by the Lopezes. Examples include the Santa Rita, the San Lorenzo Natural Gas, and the Quezon Coal-fired Power Plants. Whatever guarantees the government gives to its IPPs, MERALCO also gives to its IPPs. MERALCO has always claimed that it doesn't earn from the high generation charges of its IPPs, and that it is merely passing on to its IPPs whatever it charges its customers for generation. MERALCO is telling the truth. But that is not the entire picture. For while MERALCO doesn't itself earn from the high generation charges of its IPPs, the Lopezes do. A simple review of the financial statements of the Lopez holding company and its generation companies will show this. This results to a clear case of double-whammy for the consumers. At one end, NPC must still pay for the unsold electricity it gets from IPPs because of the take-or-pay provision – an undue costs which will later be part of NPC's stranded cost to be passed on later to the consumers. At the other end, MERALCO pays its IPPs more than what it would have paid NPC, if it bought the electricity from NPC during the same hours that MERALCO was buying from its IPPs. As NPC rates vary from hour to hour, becoming more expensive when demand for electricity peaks, we must compare on an hourly basis what MERALCO pays its IPPs with what it would have paid NPC if it bought electricity from NPC instead of its IPPs. Fortunately during the May 6, 2008 dialogue at the ERC, members of FDC and EmPower Consumers were able to obtain a copy of Meralco's electricity suppliers and their respective cost and share for the months of March and April. Data shows that the cost of power from Meralco's IPPs is higher than that of NPC's.   Supplier March 2008 April 2008 Increase / Decrease Feb '08 cost Energy Share Mar '08 cost Energy Share Cost Energy Share NPC and WESM 4.8673 42.13% 5.3692 45.11% 0.5020 2.98%   NPC 4.5231 31.87% 4.0173 35.96% (0.5058) 4.09%   WESM 5.9356 10.27% 10.6822 9.15% 4.7466 -1.12% Major IPPs 4.0588 57.84% 4.5496 54.87 % 0.4908 2.98%   QPPL 3.7253 12.28% 6.4340 6.87% 2.7088 -5.41%   Sta. Rita 4.1659 29.69% 4.2749 31.31% 0.1090 1.62%   San Lorenzo 4.1165 15.87% 4.2888 16.68% 0.1723 0.81%   Philpodeco 5.7245 0.02% 3.9352 0.02% (1.7893) 0.00% Total 4.3998 100.00% 4.9192 100.00% 0.5194                                                 NPC generated electricity is cheaper, also because there is a PhP0.30/kWh mandated reduction required by EPIRA for electricity generated by NPC or its IPPs. The electricity MERALCO buys from its IPPs are not subjected to this 30 centavo mandated reduction. 5. High electricity prices breed inefficiencies, which further raise the cost of electricity. The power sector is inherently inefficient.. Average capacity utilization of Transco's transmission lines, according to an ADB report, is only at 12%. We are paying for the investment and loans incurred to set up a transmission grid and on the average, only 12% of the capacity is being utilized. With regard to generation, dependable capacity in the Philippines amounted to 13,639MW at the end of 2006, but that same year, peak demand for electricity was only 8,760MW. We pay for capacity we don't use, and this is such a heavy burden on consumers that we economize on our use of electricity even further. However, the less we consume of electricity, the more we have to pay of unused capacity. This is a vicious cycle similar to a debt trap. Industries cannot survive such a set-up. Poor consumers, even less so. This is manifested in electricity consumption data obtained from the Department of Energy: Electricity consumption grew by 10.6% in 2003, then by a lower 3.2% in 2004, then by an even lower 2.5% in 2005. In 2006 electricity consumption grew by only 1.1%. Today it is residential and commercial users who hold a bigger share of total consumption. The thing is, residential and commercial consumers have peak hours when their demand for electricity is strong. Beyond that, demand is very low. This leaves the power sector with a huge inefficient setup: Base load demand is weak but you have to have extra capacity for use during the peak hours. This also means that you have to spend on additional capacity that will most likely get used only during peak hours. This is clearly wasteful and inefficient. 6. Other ERC decisions have rendered the cost of electricity high. One such decision is the ERC's dismissal of the Power Sector Assets and Liabilities Management Corporation (PSALM) market abuse case alleged by the Philippine Electricity Market Corporation (PEMC), the operator of the Wholesale Electricity Spot Market (WESM). The ERC dismissed this for lack of sufficient evidence, despite the detailed market data submitted by PEMC clearly showing that PSALM exercised its market power to raise the WESM spot price. The dismissal by ERC will cost consumers an additional PhP14B. 7. EPIRA-mandated removal of subsidies. Following the logic of privatization and market-reforms, EPIRA states that instruments such as cross-subsidies which distort the "real" price of electricity should be removed. This is in keeping with the transformation of electricity industry from a public service industry to a commodity market. The prices should be subjected to market rules alone – and considerations such as equity and justice in the provision of electricity should be abolished. Households no longer enjoy subsidies from the industrial and commercial sectors, and households in Mindanao and Visayas are no longer being subsidized by households in Luzon. These households that no longer enjoy the subsidies of the pre-EPIRA days have experienced a hike in rates as a result of the removal of these subsidies. Even the lifeline rate today is not what it used to be. In the logic of subsidy, better off consumers subsidize the more disadvantaged ones. This may work in cities like Manila but in areas that are by and large poor, the lifeline rate is symbolic more than real and it is actually the less poor who are subsidizing the poorer. 8. Unfair and unjust practices of industry players that the ERC is ineffectual to regulate, or may even condone. ERC is known to have been powerless in providing more substantial solutions to recurrent abuse (overcharging and corporate malpractice) of DUs such as MERALCO. There had already been a number of times when MERALCO was proven to have engaged in such unscrupulous practice, yet MERALCO can and will probably engage in such practice because of the lack of fundamental action on the part of the ERC. For example: • In 2002, ERC discovered PhP0.50/kWh unjustified over-recoveries of MERALCO from the PPA. It reached PhP12.3 billion as based in December 2001 computations. MERALCO was asked to refund it to the consumers. • In 2003, the Commission on Audit discovered that MERALCO overcharged its customers by PhP0.017/kWh through inclusion of income tax as operation expense which it passed on to consumers from 1994 to 2002. The Supreme Court subsequently ordered MERALCO to stop this practice and to refund the consumers by as much as PhP30 billion. • Also in 2003, FDC questioned ERC's giving of provisional authority to MERALCO to raise their rates by as much as PhP0.12/kWh. Fortunately for the consumers, the Supreme Court junked the ERC decision in January 2004 because it violated certain rules during its own hearings. • In June 2004, MERALCO again applied for PhP0.1327/kWh increase through Generation Rate Adjustment Mechanism (GRAM). The Supreme Court again junked the petition in February 2006 as MERALCO did not follow the prescribed process (lack of hearing and publication). But MERALCO is not the only one engaged in abusing and deceiving the consumers. The Panay Electric Company (PECO), also known to be owned by the Lopez family, had also been asked by the ERC to refund the consumers PhP2/kWh it earned due to overcharging. 9. Value Added Tax (VAT). Because of the ballooning fiscal deficit of the government, which is in part caused by guaranteed obligations of Government-Owned and -Controlled Corporations (GOCCs) like NPC, the 12% VAT now includes oil and electricity which was exempted before (zero-rated) in the previous consumption tax regime because it was categorized as "socially-sensitive" – raising its prices will translate to rising prices of other commodities. According to some studies, VAT raises electricity prices by PhP0.60/kWh to PhP0.90/kWh. It is estimated that the government earned at least PhP7..668 billion from VAT in the electricity industry in 2005. One of the more controversial applications of VAT in electricity is the imposition of VAT to system loss, electricity which had been generated but not used. It is unjust to impose consumption tax on goods and services not actually consumed. 10. Corruption and Mismanagement • In NPC. Corruption in National Power Corporation (NPC) artificially inflates generation charges. This includes allegations of "overpricing" in the process of buying coal and oil supply for NPC-owned power plants and NPC-IPP's. • In PSALM. The privatization of NPC plants is anomaly-ridden, the most outstanding proof of which is the halted sale of the Masinloc Power Plant to the winning bidder – the YNN. Aside from the fact that YNN capacity is questionable (it failed to pay down payment despite three extensions), sale of Masinloc to YNN will only raise electricity prices form PhP2.80 to PhP4.80/kWh. What is more revolting is this case is that, according to a COA report, PSALM officials gave themselves PhP10-million bonus because of the "successful" closing of the failed transaction with YNN.

Workers join Lakbayan against poverty

Thousands of worker members of the BUKLURAN NG MANGGAGAWANG PILIPINO (BMP), together with allied organizations—Kongreso ng Pagkakaisa ng Maralitang Lungsod (KPML), Aniban ng Manggagawa sa Agrikultura (AMA), Makabayan-Pilipinas, and joined by SANLAKAS and Kalayaan! launched their own version of Lakbayan (people's march) which kicked off from Crossing, Calamba  in Laguna on April 29 and marched onward to Muntinlupa, Parañaque and Bicutan today, and finally, a protest rally in Mendiola on May 1 after staying overnight at Brgy. Pio in Makati City.  Dubbed "Martsa Laban sa Kagutuman, Kahirapan, at Katiwalian", the three-day Lakbayan, organizers say, has one destination — Malacañang,  because the responsibility for the rice and food crisis and the grinding poverty now suffered by the toiling masses lies nowhere else but at the doorstep of the Arroyo government.

 

BMP President Leody de Guzman pointed out, "A few weeks after the rice and food crisis erupted, the problem of rice shortage and increasing prices of basic food commodities is still very real.  It is real because, despite Arroyo's recent moves to allocate a P44 billion package to solve the rice crisis, address food security and improve agricultural productivity – the ordinary Filipino is yet to be relieved that the crisis will be over soon. The people are even asking why this government insists on 'short-cut' solutions such as the food rationing and discount coupon system of the NFA and DSWD instead of implementing strategic government policies and programs which prioritize food security, protect labor and the livelihoods of workers and farmers, and provide sufficient subsidy to our agricultural sector to improve productivity."

 

Meanwhile, Pedring Fadrigon of KPML slammed the Arroyo government's hunger mitigation program in response to recent surveys saying that Filipinos are becoming hungrier and poorer.  Ka Pedring explains, "The Ahon Pamilyang Pilipino is a palliative and media opportunity for Malacanang to mitigate, not hunger but the continuing rise in prices of rice and food!  Arroyo is allocating a hefty amount, but this will not in any way mitigate the poverty and hunger situation of poor families. The amount to be given to the 300,000 beneficiaries of this program will simply not be enough for them to relieve from hunger and poverty if prices continue to soar.  Government would do better if it imposed price controls on rice and other basic commodities if it seeks to intervene significantly in mitigating the current crisis."

 

Sanlakas spokesperson Rasti Delizo exclaims, "Arroyo's effort to address the rice and food crisis is too little, too late.  The problem of rice cartel is long standing and should have been dismantled a long time ago.  Fund allocations for agriculture and mitigation programs may help, but the question is will the funds actually redound to the the beneficiaries?  Even now the Jocjoc Bolante case and Swinegate scam remain unresolved.  What we need to do is to prioritize the country's food security in our government plans and program, stop liberalizing agriculture, and reverse policies akin to neo-liberal strategies that render our economy, and thus our people, helpless and defenseless against market volatilities, especially under prevailing global conditions.  Unfortunately, these are the very precepts of Arroyo's enchanted kingdom ambitions."

 

BMP's Leody de Guzman adds, "Efforts of the Arroyo government to mitigate hunger and poverty in the face of the food crisis will not alter the squalor and misery that the toiling masses are already being made to suffer.  Further, Arroyo's insistence to convene regional wage boards to work out wage hikes for labor is obviously her way of compromising with the business sector, as these wage boards have long proven to be mechanisms for pinning down rather than providing adequate relief through just increase in wage.  Thus, we assert that a legislated wage increase may cover the difference between the current market prices of basic commodities vs. the purchasing power (capacity to pay) of our average minimum wage workers, but of course, this is surely not enough.  Thus, we believe that it is the right time to start the discussions and implementation of a law on the family living wage (FLW)."

 

De Guzman concludes, "As measures taken up by the Arroyo government to mitigate the effects of the rice and food crisis fails to alter the poverty and misery of the masses, neither has it succeeded in altering our course to oust Gloria and to take action for decisive change.  The ZTE broadband investigations may have been stalled by Gloria's moves to force her will through new appointees in the Supreme Court, but the movement to oust Gloria and pursue basic reforms continues.  The food crisis and the fact that no significant and decisive resolution is forthcoming from Arroyo's government only stokes the fire that blazes even more intensely to pursue this course." 

 

BMP, Sanlakas, Kalayaan!, KPML, AMA, Makabayan-Pilipinas and other affiliate organizations held a press conference at the BMP Office in Calamba, Laguna on April 29 to announce the line-up of activities for the three-day Lakbayan and this year's May 1 celebration.  The activity's focal theme was "Kagutuman, Kahirapan, Katiwalian: Sobra Na! Oust Gloria! Reject Noli! Itayo Democratic Transitional Council, Pagbabago Ngayon Na!"

 

Civil society to ADB: Stop pushing privatization program and profiteering from it

The Asian Development Bank should stop pushing for and profiteering from the privatization of the energy and grain sectors in the country amid the skyrocketing prices of rice and electricity, according to civil society groups.

The Philippine Working Group on the ADB issued this call days before the Bank's 41st Annual Meeting of the Board of Governors in Madrid, Spain, on 3-6 May 2008.

Milo Tanchuling, secretary general of the Freedom from Debt Coalition, said ADB should seriously reconsider its strategy of pushing for the participation of the private sector in the power sector.

"Clearly, today's problems come from yesterday's solutions. Our problem on the rising electricity rates today is a result of the ADB's private sector participation strategy," said Tanchuling, adding that the Masinloc coal-fired power plant is a case in point.

Masinloc case

"First, they funded the construction of Masinloc in the mid 1990's. The total cost of the dirty power plant amounted to $687 million which the government owed mostly to the ADB. Then in 2001, the Bank pushed for reforms in the energy sector and funded the passage of the Electric Power Industry Restructuring Act (EPIRA) which pushed for the privatization of the state-owned power plants. The government, in pursuing this goal, attempted to sell Masinloc. But the sale of the 'country's gem' failed at first due to lack of Power Purchase Agreements (PPAs) with distribution utilities and big end-users. The sale only consummated recently  after the AES Corp. acquired the 660-MW plant in Masinloc, Zambales, at $930 million, with the help of the National Power Corporation securing 265-MW PPAs for the new owner and with the $200-million loan from ADB," explained Tanchuling.

The Bank announced earlier that AES Corp. also raised $400 million from equity investments and subordinated loans, $35 million from a loan from the International Finance Corp. (IFC) and $295 million from loans from the IFC and four commercial banks. The AES Corp. has already paid the government in full last April 16.

"Where do you think this new Masinloc owner will get its return of investment? Obviously, from us, the consumers," said Tanchuling. "And the ADB is allowing that because it is acting like a commercial bank, a great profiteer. It has profited a lot, in terms of repayments, from construction of the power plant to restructuring of the industry to privatization of Masinloc."

Maris dela Cruz of EmPOWER Consumers said that in reality, the so-called power sector reforms or privatization program being peddled by the ADB is not about providing access to all, especially the poor nor it is about making power rates more affordable for the poor.

"In fact, the recent increase in electricity charges is because of the more expensive power bought through the wholesale electricity spot market (WESM) which is the heart of the privatization and restructuring program financed by the ADB. A separate funding for this was provided by the ADB which profits again from this in the process. With so much investments on this, the consumers still end up paying high electricity rates, now among the highest in the world," dela Cruz said.

Further, FDC's Tanchuling said that the power sector receives the largest sector loan in ADB's portfolio, from financing the energy sources development in the 1970's to early 1980's, power crisis management in 1980's to early 1990's, up to electric power sector restructuring from mid-1990's to present.  

Private sector participation was first introduced in the 80's and intensified in the 90's, primarily to address the lack of capital of the government to finance the rehabilitation and construction of new power plants in the country to address the power crisis.

In the 21st century, the Bank wants full private sector participation – not just in management, operation, but full ownership of the utilities to free up government resources for this sector and use it instead for other services. This was the aim of the EPIRA whose passage in 2001 was facilitated by the $300-million loan from ADB.

Grain sector

Meanwhile, Alice Raymundo of the Task Force Food Sovereignty (TFFS) said the ADB is "guilty of compromising food security" not only in the Philippines, but also in some parts of Asia.

TFFS criticized the bank for its loan conditionalities that forced governments to deregulate and turn over agriculture to the profiteering private sector, citing the case of the Philippines and many other Asian member countries that are now threatened by the rice shortage.

The Philippines is among the world's top rice producers (rank = 8) yet it remains a net importer of the staple. It was rice sufficient up to the early 80s but lost control and relied on importation since the early 90s. Current RP rice production can only cover for 80 per cent of the country's needs.

"The ADB must be held accountable to the growing food insecurity in developing countries. Since its founding in 1967, the Bank had financed countless agricultural projects, but weakened farmers and communities instead of strengthening them. ADB supported the commodification of rice, application of market mechanisms and the price system in agriculture, liberalization and opening of trade," Raymundo said.

"ADB projects like the Grain Sector Development Program (GSDP) in the Philippines and the Khulna-Jessore Drainage Rehabilitation Project in Bangladesh have been given with many policy conditionalities, including the removal of quantitative restrictions and lowering of tariffs of agricultural products. ADB conditionalities force countries to adopt policies that are harmful, especially those in the margins, farmers and fishers included," Raymundo said.

"Many of the Bank's projects are controversial and are considered "onerous" because other than its anti-poor conditionalities, the projects have destroyed lives. The Khulna-Jessore Drainage in Bangladesh now caused prolonged flooding in surrounding communities, causing families to lose livelihoods and wallow in poverty. The Philippines' Grain Sector Development Program barely took off, and was cancelled after $100 million had been taken by government. In both instances, the supposed benefits are non-existent, and beneficiaries continue to suffer. The absurdity of it all is that the ADB will collect on these debts, no matter what," explained Raymundo.

Group asks GMA, allies to pass twin pillars of food security before SONA

Echoing concerns that granting GMA emergency powers to solve the rice crisis would be counter-productive, Deputy Minority Leader and AKBAYAN Rep. Risa Hontiveros said that the long-term solutions to the rice shortage are actually right under the administration's nose.
 
"The long-term solutions do not take the exercise of emergency powers, just political will," AKBAYAN Rep. Risa Hontiveros said. "If the government has the political will to seriously address the crisis, all President GMA has to do is certify two bills, the CARP extension and reform bill and the land use bill, as urgent measures. We challenge her to rally administration solons in Congress to pass these bills before her State of the Nation Address (SONA) this year.
Rep. Hontiveros said that booth bills would boost rice and agricultural production in the country. "This global crisis is expected to worsen, and we have no choice but to respond to this food security crisis with strategic solutions. Reliance on imported rice is not strategic for the Philippines," Rep. Hontiveros said.
 
The solon added that GMA's pursuit of rice hoarders would  give the government pogi points but would not significantly contribute to the country's rice stocks to prevent the price of rice from increasing.
 
"The rice hoarders and smugglers are small fries. The question is whether the GMA administration has the political resolve to go after the bigger culprits why our food security is in such a dire condition – the big land owners that, by blocking agrarian reform and by evading CARP through land conversion, have compromised our food security," Rep. Hontiveros said.
 
"Real solutions to the food crisis – such as the passage of the land use bill and the CARP extension and reform bill – would require the government to step on the toes of its allies in Congress. Is she ready and willing to do that?" Rep. Hontiveros asked.
 
She said that the land use bill has been languishing in Congress due to strong opposition from landlords in Congress that resort to land conversion to evade CARP. The CARP extension and reform bill, on the other hand, face the same resistance from landlords and their allies in Congress. "Without these two pillars of food security, the country would face tremendous hardship because of the rice shortage," Rep. Hontiveros warned.
 
She said that the government has no choice but push for genuine solutions to the crisis. "It cannot scale up importation because of declining rice stocks worldwide and the government's revenue shortfalls. An unpopular and inefficient government plus a hungry populace is a sure recipe for a political disaster bigger than Jun Lozada," the opposition solon said.
 
AKBAYAN Rep. Risa Hontiveros is the principal author of HB 1257, which extends and reforms CARP, and HB 3637, a bill that creates a national land use policy and which prohibits land conversion, among others.