Philippine Star article 19-August-2010 [DOE backtracks on plan to privatize Agus-Pulangi complex]

MANILA, Philippines - Energy Secretary Jose Rene Almendras said the sale of
the 982.1 megawatt Agus-Pulangi complex in Mindanao would likely be
scrapped.

He said they have decided not to put on the auction block the hydropower
plants to ensure the stability of power supply in Mindanao.

"I have already informed PSALM (Power Sector Assets and Liabilities
Management Corp.) that we would not sell Agus and Pulangi," he said.

He said they are currently seeking ways to arrest the sale of the power
facilities without having to amend the law.

"I know that we have to go back to JCPC (Joint Congressional Power
Commission). I will explain to Congress why we don't want to do it," he
said.

The DOE chief argued that keeping these hydropower facilities in
government's hands would be more beneficial. He said the right timing for
the sale should also be taken into consideration.

"The correct statement is, it's not yet for sale. We do not want to sell it
yet. How long it would be would depend on how soon we would achieve true
pricing and make appropriate adjustment to encourage investment," he said.

Almendras' predecessor, Jose Ibazeta, earlier said they would be pushing
through with the sale of Agus and Pulangi as this has been spelled out under
Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001.

Under the EPIRA, these two big hydropower complexes should be privatized 10
years after the passage of the law.

The Trade Union Congress Party (TUCP), the largest workers party in the
country, had called on all Mindanaons to oppose the proposed sale of the six
Agus-Pulangi hydro complexes to private corporations.

TUCP noted that PSALM so far sold 12 hydro power plants to private investors
and a total of 86 percent of its generating plants, and the Agus-Pulangi
hydro complex in Mindanao is next to be sold in 2011, 10 years after the
signing of EPIRA. The Agus-Pulangi hydro complex is composed of six power
plants and supplies 55 percent of the power needs of Mindanao.

The group said the government made the privatization of utilities like power
a national policy in order to foster competition among energy players,
improve operational efficiencies of power companies, ensure the constant
supply of electricity and reduce power rates. EPIRA also projected lower
electricity tariffs because of competition among the new power players.

"All the promises of privatization remain empty promises. What we have now
is the emergence of private and powerful monopolies and cartels and
increasing electricity tariffs which further bleed our workers and
consumers" lamented TUCP Rep. Raymond D. C. Mendoza.

"Ten years after the passage of EPIRA, rates have gone up because instead of
competition, we see rent-seeking behavior among the new owners. After years
of power privatization, we are still reeling with brownouts and even higher
electricity costs" added Mendoza.

The Agus-Pulangui hydro complex is the source of cheaper electricity in
Mindanao. Power rates in Mindanao are lower compared to Luzon and Visayas
because of Agus-Pulangi.

"The privatization of Agus-Pulangi hydro complex will increase, rather than
reduce the power rates in Mindanao" Mendoza explained.