NBN: Back-off-the-envelop estimates?

If this DOTC presentation at the Senate hearing on the NBN-ZTE-BA-FG deal was meant to explain to and convince taxpayers that it is beneficial and aboveboard, it failed miserably. What we have here is a table which purports to compare simply specifications and costs of three proposals/proponents. Because the specifications are different, what DOTC assistant secretary Formoso did was to 'extrapolate' unit costs to estimate the equivalent total costs for both Amsterdam Holdings and Arescom using the specs offered by ZTE as the baseline. (How in hell did he do this in multiple dimensions?) Apparently, all three proposals were unsolicited. The following questions immediately arise:

1. If the project had been a priority since 2000 after the passage of the e-commerce law, why didn't government have any list of minimum requirements? Such a bill of specifications would allow us to appreciate the general and specific needs for a national broadband network, and led to a more transparent and publicized invitation for courtship?
   
2. If we grant that at some point the ZTE-PROC executive agreement/tied loan possibility became too beautiful to resist, why didn't the DOTC and NEDA-ICC give the other proponents a chance to modify their own proposals or offered costs?
3. Why did Malacanang (PGMA) and when did it "back off" from the initial desiderata (BOT without take-or-pay, no guarantees...) officially articulated by JdVIII's president?

I have an open mind about whether a fundamental service should be provided by government or the private sector, although in the past I had an ideological bias against the latter. It is a matter of incentives, after all. But what strikes me about the Formoso presentation is the lack of rigor and detail in regard to project benefits. His oral testimony referred to cost savings (and I will not get into that for lack of reliable data) but not to any valuation of benefits.

1. Why is it so important for government to have its own network? And what is the difference in value between using private and self provision? Can they quantify or monetize the value of enhanced (but still imperfect) security?
2. More importantly, do the DOTC and the NEDA have an estimate of the value of improved communication among and between government agencies at different levels?

Unfortunately, what the hearings yesterday unintentionally demonstrated was government (executive) instrumentalities was that even with low-tech methods, they don't communicate. They have no common appreciation of the relevant laws and not even prescribed executive procedures.

Information, Democracy, Communication

DOTC Secretary Leandro Mendoza adverted to his background in 'intelligence' and proceeded to contradict himself with his subsequent responses. Could he not be aware that under his watch that his very own agency is among the least communicative ( to the people) and the most corrupt?

If we have to prioritize the information and communication problems that should be addressed, there are many, unfortunately, and these don't really require much expense or commissions. It is a matter of culture. In many cases, such as in the communications and energy bureaucracy, there are debilitating turf wars. Why? Your guess is very good.

Okay, let's grant that the private providers have limitations. But these have not yet even been breached! I would have asked Formoso for evidence that a public servant from a 6th class municipality in Mindanao wrote to someone in the central government (maybe the president) to complain of inaction. I bet the bottleneck is not in the medium but in the message and the way it is formulated.

Mam, I am a lowly farmer wanting to use a plot for biofuels and I seek advise on how I may and can avail of govenrment help, if any.

Culture and communication

Just visit the websites maintained by government ( three levels) and you are very likely to agree that the problem is not hardware but software (including the processes in the brains of public servants). Government officials who have e-mail addresses don't even read much less answer electronic mail! Yes of course they have minions to do that. But these minions are not empowered and are just like the customer service staff of private providers and worse. They get paid anyway, regardless of how they deal with the public.


So why not e-mail?

Using currently available technology but under a much-improved culture of transparency and responsiveness, a lot can be accomplished to improve government services. And there would be an electronic trail, especially with commercial media. The problem with the NBN, even if it may have a few merits, is that it would only reinforce biases of a government so secretive but still so incompetent, it doesn't know how to talk to minions and other branches. But this can serve loyalists or minions, and a dictatorship and what it means is what we are all supposed to remember on Sunday.

If you ask me, the more pressing need is for government to communicate to you and me. The only reason they need a dedicated and secure network is because they want to screw us, secretly. Secretary Mendoza appeared before the Senate yesterday, but only to defend the FG. And, even if I had a colony of ants to bite his scrotum, I'm afraid they would rather go to Mars than wait for him to tell the truth.

Unimpeachable?

On the contrary, they are impeachable. In the case of George W. Bush, a strong case could have been made much earlier, and as more evidence comes to light, his term shortens and the Democrats are finding it ever harder to remember where they misplaced their balls. This new revelation Bush knew Saddam had no weapons of mass destruction only adds to the frustration.

In the case of Gloria Arroyo of the Philippines, many would support impeachment only if they were guaranteed a better result, in the short run. Pragmatism wins over principle, especially if one uses a high social discount rate (or holding the present more valuable than the future). The main argument for conservatism and economic policy continuity is the lack of credibility among the opposition, with its fair share of shady characters.

Now that the 'Hello Garci' wiretaps and election cheating investigations are being reincarnated, all the opposition can muster is a case for impeachment against the elections chief commissioner, on an entirely unrelated case. One led by an alleged human rights abuser with unexplained wealth, and the other, someone who had admitted to influence peddling for the sake of his wife's business.

The Philippine Daily Inquirer's recycling advocacy is probably garbage

“Every issue of the Inquirer is already made from 100% recycled paper. But if every reader recycled their (sic) newspapers for one year, we would all save an additional 3.4 million trees, 840 million kilowatthours of energy, and 78
million gallons of oil. Support the PDI NewPaper Drive and help save the environment ...”

The recycling advocacy of the Philippine Daily Inquirer is admirable, but the claim above is mind-boggling and incredible. In what follows I’ll just leave the claim about trees saved to stand.
I did some back-of-the envelop calculations and came out with an estimate of a combined national hardcopy daily newspaper circulation of 6.6 million, assuming the Inquirer assumed its drive would include the recovery of old editions of its rivals. Otherwise, the circulation estimate would be bloated by a factor equal to the reciprocal of its market share. I also estimated that each copy of PDI weighed 200 grams, but even if we grant that that weight is a kilogram, that would still imply a daily circulation of 1.32 million.
(Reliable newspaper circulation numbers are hard to come by because ironically, the principles of transparency and the public’s right to know are not shared by the business and advertising departments of newspapers. The Philippines is one of a few Southeast Asian countries for which newspaper circulation data are missing by the Southeast Asian Ministers of Education Organization).
The electricity savings is already about two percent of generation in the whole of Luzon, and at spot prices prevailing in the WESM, would be worth about P4 billion. So, at this point, I will not even question the claim of the volume of oil saved except to say that at prevailing world prices, that would add another P6 billion in putative savings.
The proper way to estimate energy savings from recycling is to subtract energy consumption with recycling from a base case (meaning transporting old newspapers to a landfill and production of newsprint from trees. For the curious and/or technically inclined, try following this reference.
Aggravating the exaggeration of the claims of the Inquirer, and more unforgivably at that, is the assumption that no old newspapers are being recycled. (If it did, the circulation figures above would again be bloated by another factor). In the United States, the rate of newspaper recycling is around 82% and I dare say that in a poorer country such as ours, the rate would be higher. If you don’t know the schedules of your friendly neighborhood ambulant BDP’s (Bote, Diario, Papel) entrepreneurs, you must be living in Forbes or Dasma. My best guess is that the savings from any newspaper recycling drive such as the Inquirer’s would be much less than 10% of the figures cited above. In my case, all newsprint is sold to vendors by the neighborhood diner (the owners of the diner are friends of the Inquirer’s readers’ advocate) I donate newspapers to after breakfast coffee, except for the crumpled ones I use to wipe grease off dishes and kitchen implements, as absorbent for the occasional water intrusions on my bedroom floor after storms, and to clean glass. I can also safely assume that newsprint not ending up recycled would be re-used as wrappers of choice for bulad and tapa in your friendly neighborhood talipapa. In the latter, the Bulletin trumps the Inquirer hands down. I don’t know why. A secret ingredient from the ink supplier?

But 10% of a billion pesos is still a lot, right? But to whom will these savings accrue? Is the waste collection system competitive? Three years ago I worked for a project with a paper manufacturing facility in Luzon and observed so many layers of middle men enroute to supplying the plant with scrap paper, and that’s one of the reasons I’m able to come up with the estimates above. The spouse of my masseuse was in the garbage business in Antipolo and he had to give it up because of the competitiveness of supply going against the monopsony of the buyers.
It may be that the Inquirer drive will benefit impoverished folk targetted as beneficiaries. But it can actually do better. It can radically change its business model and encourage more readership by scrapping its archaic and unenforceable links policy, and thereby reduce the use of newsprint at source. This commentator, for instance, explains resistance to the net forcefully.

And, if you happen to be like me, sentimentally retarded and insisting on reading the news while sipping coffee, find a cost-effective way to access news in cyberspace.
(I’m still trying to muster the heart to tell the old man who has delivered the Inquirer to my doorstep the past 15 years that I have finally discarded old habits).
A final note: Worthy advocacies often lose credibility by the exaggeration of the advocates. This is obviously one of those. To recycle an old economics argument, allow me to say that if it pays for them to do something, reasonable people generally do it. Except if they read Bulletin Today.

P.S. To those interested in my calculations, the spreadsheet file will be mailed on request.

update on the travails of Philippine UNDP staff

Here's an update on the 'inaction' of the UNDP on complaints lodged against UNDP country director Noble. It seems all the New York office could do is acknowledge the problem. In the meantime, the Philippine staff are in limbo.

Help! Our prayers have been answered....

Last week, a top official of the Department of Science and Technology was on TV saying that if cloud-seeding efforts did not succeed in inducing rain to help fill our dams and inducing cooler weather, we could do nothing more but pray... A science official's resort to prayer doesn't really inspire faith.

Of course not everyone agrees on the power of prayer, as a US governor found out.

Now the rains have come. Although it is too early to say whether these will continue and alleviate the water and hydropower shortages, it is clear enough that heavy rains always come with the perennial consequences: flooding, traffic jams, lost school-days...

One of these days, our top officials, failing to sell the idea of emergency powers for the executive, might consult with a Norwegian princess on talking to angels. It is unfortunate that this member of the royalty proves that royalty can be such royal... By the way, Norway has a very sensible policy in managing it's oil resources, treating these as an endowment for all it's citizens instead of squandering these in the short term.

Clouds, now, from both sides

I’ve looked at clouds and the climate for over two decades and I must say the claims of our weather, energy, and science officials are a bit befuddling.

In the early 1990’s I was investigating the remote and immediate causes of the crippling power shortages, and observed that unseasonably bad weather inflicted a double whammy on power consumers in the Philippines. The less rain there was, the less hydroelectric power availability and thus the higher were electricity production costs. At the same time, less rain entailed higher ambient temperatures and thus greater demand for airconditioning. This is true for the whole country, and to all countries similarly situated. It is a double whammy indeed, for both supply and demand factors result in lower satisfaction at a much higher price.

From Nick Nichols I learned that Cyril del Callar of NPC had been quoted as saying that the current cloud-seeding operations were meant more to lower ambient temperatures, and thus lower airconditioning demand, rather than to increase the water levels in the dams of the hydropower facilities. Yet, the pronouncements of spokespeople of the departments of agriculture and of science of technology belie this. And so does the an article in the weekly newsletter of NPC, which clearly associates the cloud-seeding with attempts to elevate dam water levels.

I had a brief exchange with Cyril first to ask him whether there was any ‘optimal’ cloud-seeding effort level. Perhaps he did not appreciate the import of my question and said no. He said that in terms of NPC cash operations, the expenses were justified.

Now, if you follow me, why don’t we spend billions instead of a few million to induce rain? I am an advocate of science and economics and would thus suggest that government spend on cloud-seeding as much as and until the incremental costs exceed the marginal benefits. And, to my knowledge, we are far from there, although I need to study both the science and economics more thoroughly.

Incidentally, government spokesmen recently admitted that cloud-seeding operations could be concentrated on specific areas when clouds were favorable. That might buttress suspicions that government can exercise weather control to lessen attendance in poitical opposition rallies. Triple whammy!

Reyes: Energy is a political commodity

It is one thing to say that it requires great political skill to manage energy policy correctly and quite another to say that energy is a special political commodity, just because price movements can bring political unrest.

Since the deregulation of the downstream oil industry in the second half of the 1990’s (after a supreme court hurdle and a decision I found ignorant), petroleum products pricing has in the main been left to market forces. This is not to say that there is no market power being exercised by the major players. There clearly is, but I do not miss the days of the Oil Price Stabilization Fund (OPSF) and the associated subsidies, when prices were regulated and such regulations were hostage to political acceptability (including by coup plotters).

Just imagine if refined productc prices were still regulated now, with the P/$ exchange rate and the world price as these are now. I’m glad consumers---most of them anyway---are adjusting without taking to the streets. I dare say that even now, petroleum prices are lower than they would be if we considered the full impact of their use on the environment. If prices were still regulated today, the government would be heavily subsidizing oil prices and it would not be beyond the current administration to subsidize prices just to remain in power. This would have been disastrous as oil price subsidies generally benefit the richer sections of the population---regardless of the protestations of the misinformed sections of the Left.

Comes now the newly designated energy secretary, who candidly admits his only qualification to the post is that he is ‘full of energy.’ It is also likely that he is full of something else. It might also be true that he is indeed a fast learner and that thus far, he has not disappointed the appointing power. But if he indeed has the management experience and the IQ to manage difficult government departments, Reyes should have been appointed chief of PIGSA (Philippine Inter-Galactic Space Agency) which needs his skills.

The truth is that Malacanang has just been using him as a convenient football and kicking him to energy conveniently leaves the DENR post vacant for the former mayor of Manila, he I cannot name because I puke because of all his sanctimoniuous and false religiosity---although I might still puke even if the religiosity were sincere. The former mayor would have been more obviously incompetent in the energy post. This does not mean he would be good as environment secretary, or that Reyes would do so badly at the energy post, though this is laden with many challenges that even Lotilla was just beginning to appreciate. But we cannot fault Popo for leaving now. Popo deserves a rest, although the timing is not good, especially with the problems of power sector reforms not really close to resolution. (Manila Standard Today yesterday said Lotilla was fired. False).

Former energy secretary Geronimo Z. Velasco passed away a few days ago and his passing was publicly announced by an acquaintance at the PNOC. It might be that the man did the nation a great service. But comparisons are difficult because he managed the energy sector under radically different circumstances. And he had economic and political resources unimaginable at this time. Our sympathies to his family and friends.

Cheap multi-billion dollar Philippine Corporations:PLDT

It bothers me that one of the multibillion-dollar Philippine corporations and that is a market bellwether doen’t respect its customers enough to maintain friendly and clear websites. Worse, those who maintain the sites murder the queen’s English with instructions to the effect that they wouldn’t process your application if you don’t give them all the required ‘informations.’ But they do assure you that the ‘informations’ you provide would be treated confidentially.

I had concluded that I was getting a very bad deal from Bayantel for landline services and Pacific for the internet, especially after reading MyDSL ads of PLDT (print ads which did not give any number to call). So I visited the PLDT DSL website and behold and lo, it was such a taxing experience. For one, it was only then I found out that you would first have to have an existing PLDT landline to avail of the promo DSL rate, when the impression you get from the ads was that the rate covered both. I was referred to another site to apply for a landline. But this site also wasn’t clear about the overall package cost! And the websites don’t provide phone numbers for those who’ve lost patience after unsuccessfully navigating around them for useful ‘informations.’ PLDT prides itself as a world-class communcations company. This really makes me puke. I wonder if Mr. Pangilinan even knows the ‘informations’ I require. I feel like putting all the ‘informations’ about my ‘frustrations’ and sticking them up his ‘informations’ highway. The truth is, the whole experience just gave me ‘indigestions.’

Energy Self Reliance: Viray vs. Velasco

It was with keen interest that I read Dr. Francisco Viray’s review/critique of Mr. Geronimo Velasco’s most recent book on the quest for ‘energy self-reliance’. I must confess I haven’t yet read this book; but I’ve read a much earlier tome by the same author and on the same theme published in the late 70’s.

Viray’s critique---for that is how it should be called---highlights the recurring theme of the proper role of the state in the energy sector, and for that matter, in ‘leading’ sectors of the economy. The quotation marks are motivated by an appreciation of the fact that people tend to think that their sector is always major or leading.

Let me say now that I think that there are major points that Viray really misses. Unfortunately. But let me say too that Velasco’s so-called insights are drivel.

(Allow me this long parenthetical note. Just recently, an analytical report emanating from the Department of Budget and Management urged an urgent review of the Department of Agriculture’s food security objective, saying it was too costly and more to the point, misdirected. It is a point I agree with generally for I have yet to see any evidence that the subsidies really benefit rice farmers and that the tariff protection did not serve only to benefit favored rice importers.

Insofaras the energy sector is concerned, I was really surprised that during a lecture I was privileged to attend, the prominent American energy economist William Hogan made the case that energy should, in the main, be treated as just another commodity for which all social costs should be reflected. He was lamenting the fact that the United States government (or more precisely all American taxpayers) was paying for a very expensive political and defense policy, especially in the Middle East, for which the cost was distributed in a way which did not actually reflect consumption. Think about the war in Iraq! In effect, a private good was being treated as a public good. If the objective were only to address temporary shocks or supply disruptions, one could rely on the Strategic Petroleum Reserve, and charge inventory costs to taxpayers, said.

In his critique, Viray expresses agreement with the objective of ‘self-reliance’ but protests ‘political intervention’ in the affairs of government corporations in the energy sector. Is he saying that the state should give the corporations and the managers the resources and then leave them to their own devices? I think not, for Viray is too intelligent not to know about general political direction and accountability. Mysteriously, Viray speaks of a political context or environment and seems to say that experts (so-called) are always constrained by democratic principles. (I protest dictatorship only if I am not the dictator).

But let us first tackle ‘self-reliance,’ an objective with which he is in agreement with Velasco. Former experts at the corporate planning department of the National Power Corporation and other Philippine energy researchers will surely tell us that this objective is not without costs. Hydro, geothermal, local coal, natural gas etc. are not really the cheapest sources of electric power in any line-up of options. In other words, the objective has imposed and still imposes a cost in addition to lower cost options. I would have no problem with that for as long as these additional costs are properly explained and decided on in the political arena.

Of course, there is a sense in which I am totally in agreement with Dr. Viray. And that is if ‘political’ exclusively meant intervention in the day-to-day management of government corporations in the energy sector and in total disregard of performance and professional management principles. Even Velasco cannot disagree with that but...

Viray quotes Velasco on the fact he (Velasco) was forced to diminish protection for the local coal industry because of the structural adjustment program impositions, mainly of the World Bank and the IMF. As a persistent socialist and qualified nationalist, I would be among the first to protest multilateral impositions; but not when these are essentially correct. I can protest the fact of the imposition but defend its essence. It is a matter of integrity. I can say the ‘enemy’ is absolutely correct in some regard.

Who am I to write all of the above? (Read on).

A year after graduating from the University of San Carlos with a degree in chemical engineering, I joined the National Power Corporation as a chemical analyst for one of the first two power (diesel) barges in the Philippines, anchored in Cebu, in 1991. At the time Secretary Velasco was considered as a god of sorts. We had had training for almost a month when his chopper landed on the premises in Naga just as a super-barge unloaded the power barge straight from Japan.

In the same year I was hailed to the Visayas regional security office of NPC for having spoken at a rally against the notorious Amendment 6, which eventually allowed the dictator to rule by decree even after he had allowed the election of a national assembly in 1978. My interrogator was menacing and a real menace.

In my very short period with the NPC, where I was also assigned to the fuels laboratory serving the first NPC coal power plants (from Romania) I was exposed to all the corruption in procurement. I and another engineer were asked to sign an acceptance report for a hypochlorination plant for the cooling water requirements of the coal plant. We both refused.

Which brings me to this point. How can we assess people like Velasco, who continue to assert virtue?


Later, I joined the Ministry of Energy with the encouragement of someone who had been with the old communist party (but who had been expelled) as still a lowly bureaucrat with the Bureau of Energy Utilization in the Visayas.

In the same year, I was invited by the National Intelligence Security Agency (NISA) for a ‘meeting’ which was actually an interrogation. The agents showed me pictures of protest demonstrations and asked me to explain. At the same time, in the same compound, my girlfriend who happened to work in the same office was also being interrogated in the same compound. Her interrogator was opposite her on a swing, ‘persuaiding’ her to inform on me.

I am sure many Filipinos have similar stories. What should make them special is the willingness and capacity to tell us these now so we will not Velasco and others who came after him escape an accounting.

What follows is Viray's review of Velasco's new book.


It is a dilemma to critique a book authored by someone I worked for and admire as a person but with whom I disagreed with in major policy decisions during my term as Secretary of Energy under the Ramos administration. I can either end up defending myself—which will be construed as a biased critique—or avoid a debate on policy decisions by simply citing the differences in governance during his time and my time. However, such simplistic review would ignore the significance of the management approach and policies that helped the accomplishments cited in the book, which I completely agree with. Not because I worked for the author for some time, but because I was very much involved in the energy industry during my academic career at the University of the Philippines during the Marcos administration.

The book is a good treatise on how to manage government corporations, most especially in the energy industry, which is critical to the life of a country’s economy and the well being of its citizens. The story on Philippine National Oil Company (PNOC), Petron, and National Power Corporation (Napocor) showed that the state has to insulate from political intervention the energy industry’s government corporations if it wants them to accomplish their mission in the interest of national security and price affordability, and if it wants corporations to act as catalyst to support policies on energy development and management. The admission of the author that he would not have done the things he had done without Martial Law attests to this statement (48, 78). He can even get away with so-called anomalous Memorandum of Agreements (141) at the time. Moreover, the success of Petron from which the author inherited personnel with a private culture of efficiency and merit-based recognition compared to the lesser success of Napocor, which was a government corporation from the start, is another testament (140-41).

While I agree that the best way to influence the behavior of players in the market is for government to play a significant role through a full ownership of Petron and Napocor, such role can only be played if it is allowed to be run professionally and freed from political intervention and removed from the rules and regulations of government hiring, salary structures, procurement procedures, and the like (17-19, 205). Note: A lot of good people at Napocor left when it was placed under the Salary Standardization Law of the government.
The mere fact that when the Department of Energy was reinstituted in 1992, Congress inserted a provision whereby the budget of PNOC and Napocor had to be approved by Congress proves that insulating energy corporations from political intervention is easier said than done. Imagine Petron’s budget passing through Congress, its crude oil procurement done through government bidding procedures (19), or Petron being asked by government to subsidize oil prices during periods of crude oil increase just like what was mandated for Napocor. Under our version of a democracy and its resultant political environment, Petron will be bankrupt by now and will thus fail in its obligation that the author stated: “It [Petron] was the most profitable government corporation and thus a valuable source of revenues for government. More important, Petron performed a unique role in stabilizing local oil prices” (177). The author recognized that he could not have insulated Petron from political intervention and government rules and regulations if it were not for Martial Law (29).

I submit that the privatization of Petron and the oil deregulation law are the right policies under the current political environment, but I agree with the author that the government must strengthen its regulatory powers and exercise it to the fullest. Deregulation does not mean no regulation but re-regulation. For starters, one advantage of deregulation would be that all service stations, not only of Petron, would have clean toilets (168).

Congress needs to pass an anti-trust law so that it can strengthen its regulatory mandate in liberalized and deregulated markets. Even if the government has only a 40 percent share in Petron, this can still be used as a policy instrument and exert influence in pricing. However, government would need political savvy in addition to management acumen.

The author admits that during his term, everybody followed Petron when it set the price (194). The same happens in a deregulated environment: Everybody follows the lowest price setter, hence the “same price” situation still prevails, but that same price is the lowest price set by the most efficient. While one is always free to accuse the foreign companies of collusion, I do not think that Petron is a party even with Saudi Aramco as a foreign partner. Otherwise, government itself, which has equal vote in the board, will be a party to a cartel, which it wants to prevent—an irony in its highest degree. The privatization model of Petron achieves the twin objectives of insulating it from political intervention and performing its role as “a potent policy instrument” vis-à-vis major oil industry players.

To be able to perform its role well, Petron had to be financially stable, efficient, and able to compete; but this is possible only if it is insulated from political intervention. Given the current political climate, its privatization, with government retaining 40 percent and the public 20 percent, is the best decision that was made by the Ramos administration.

Likewise, the Philippine Electric Power Industry Reform Act (EPIRA), for all its shortcomings, is a step in the right direction. The government has no money to put into the required expansion program of the power sector, and with political intervention Napocor cannot generate its cash counterpart requirements for the projects (136). Lower interest loans are offset by inefficiency and political interference. EPIRA is a developmental process and the issue of cross-ownership prohibition must come at the right time. For this, government must be constantly at attention to monitor developments on monopolistic behavior. National Transmission Corporation, for instance, must be privatized like the Petron model. It must not be entrusted completely in the hands of the private sector, even in a concessionaire model of privatization.

The author failed to mention that our independent power producer contracts are, in reality, not IPP contracts in the strictest sense, but are Build-Operate-Transfer contracts (a policy embodied in Republic Act [RA] 6957 and RA 7718) wherein the assets will be transferred to the Napocor after the cooperation period. As such, the payments made due to the “take-or-pay” contract, whether used or not, are payments for the capital assets and not for unused fuel or coal because Napocor supplies the fuel. Note that the author’s word is “whether or not the organization needed” (155) instead of used, to which I disagree with because at the time the take-or-pay volume were contracted out, they were based on forecast and therefore were “needed” in the future as forecasted at that time. Unlike a straightforward IPP, the facilities are not transferred to the buying party. So in the BOT projects, payments made if the plants are not used is not wasted because the assets will eventually be owned by Napocor.

Lastly, to say that the post-Marcos administration did not have a comprehensive energy development plan is a sweeping statement. I would like to take exception for the Ramos administration for which I was the Secretary of Energy from September 1994. In fact, the plans and programs of the Ramos administration were built on the achievements mentioned in the book; and the policies, objectives, and basic thrusts were basically maintained (208). Policies on the development of indigenous energy resources and renewable energy and energy conservation were continued. We pursued the implementation of the Malampaya natural gas project, which has enhanced our energy security and independence. We left behind an ocean, solar, and wind pole-vaulting program, which is geared toward developing renewable energy. We had the very successful Power Patrol Project, which involved the participation of the private sector to support the energy conservation policy.

The policy on deregulation and liberalization of the oil and power industry are policies called for in this current form of political governance. Liberalization is not an invention of post-Marcos administrations because as the author wrote, “In 1984, as the country implemented the International Monetary Fund’s structural adjustment program, we [the Marcos administration] had to allow market forces to operate in the coal industry” (65-66). Moreover, the Ramos administration left behind a thirty-five-year Energy Development Plan (1998-2035), which takes off from the accomplishments cited in the book and those done during the Ramos administration.

The Filipino people are now enjoying the fruits of the labor of the author in our quest for energy self-reliance, most especially the geothermal and hydropower development. But while he does not agree with the privatization of Petron, we must realize that Petron’s privatization was successful because it was nurtured and managed well to become a very profitable company during the Marcos administration. While we have yet to see the benefits of the EPIRA, it is too early to pass judgment on policy decisions of post-Marcos administrations on the power sector. Suffice it to say that I agree with the author that the success of deregulating a very critical industry, like oil and power, is a strengthened, responsive, and well-administered regulatory environment. The challenge that lies ahead of us is to be able to duplicate the achievements told in the book in our own version of democracy in which political intervention, not only by the politicians but also by those with self-interests from the private sector and nongovernment organizations, is a commonplace.—Francisco L. Viray, President, Trans-Asia Power Generation Corporation