Stop letting go: Electricity, oil and telecoms

For a long time now, the government has let go of its important role in the electricity, oil, and telecommunications sectors. The dominant view is that these sectors work and serve everyone better with only little or no state role in them.

When the Arroyo government and the power industry were campaigning for the so-called Electric Power Industry Reform Act, they promised Filipinos the moon and stars — along with cheap and adequate electricity.

They claimed that taking away the state out of the power industry would magically propel the private sector as well as encourage foreign investments in power ventures. They also claimed that cutting up and selling Napocor was the next best thing after loaf bread. They also dazzled the public with the idea of a “spot market” where power retailers could find the cheapest sources of electricity at any one time, so consumers could get the lowest price per kilowatt-hour.

Today, households in Metro Manila and many other areas around the country face rotating brownouts and escalating power rates.

Years back, the court compelled Meralco to refund customers for the illegal Purchased Power Adjustment fees, which went to pay for electricity we never used.

The Aquino administration is no different from its predecessor, as we have seen when Meralco announced the rotating brownouts. The glacial reaction from Malacañang and the energy department was astounding – as if the six-hour brownout fiasco is not a big problem for Metro Manila. When Meralco announced the biggest power rate hike in history, Malacañang was quick to defend it.

Even Aquino himself acted like a bill collector for power firms. He once sternly told the brownout-weary people of Mindanao that the solution is supposedly nothing more than power rate increases.

There are similarities with what’s happening petroleum sector: After the passage of the Downstream Oil Industry Deregulation Law, the state quickly abdicated its role and does not do anything with movements in the price of oil products.

“We cannot do anything because domestic oil prices are based on world market prices”: This has been the standard refrain from both the government and oil companies.

We must reconsider this argument. There is much to rediscover and investigate based on how oil companies have operated and continue to operate, the unchecked pricing, the history of overpricing and transfer-pricing, the rapid and big price increases and the slow and tiny price reductions.

The sale of Petron looks and feels bad in the long run – we no longer have a foil to the foreign oil companies and we lost the potential core of our own petroleum industry, both downstream and upstream.

And there’s telecommunications – a sector dominated by a powerful duopoly widely perceived as competing only insofar as keeping prices and quality of service at around the same awful levels. Prices, billing and contracts are merciless, yet service is poor and said to be the worst in Southeast Asia.

The telecommunications deregulation law passed in 1995 was once credited for breaking the stranglehold of PLDT. But aside from rolling out the red carpet for new industry players and giving them a license to freely determine their rates and prices, we know of no other benefits from this law.

In fact, the telcos have been misusing it. For one, they use it to say that the internet is a “value-added service” and thus covered by their privilege of solely determining its price and quality under the deregulation regime.

The spread of spam messaging is partly due to telcos’ mistaken notion that text messaging is a value-added service. If you think that P1 is already too expensive today for one text message, how could you imagine businesses to go to telcos to “get legal”? Why will they avail themselves of the telcos’ massively overpriced four-digit access numbers and mass messaging services?

Much as we would like the National Telecommunications Commission, an agency directly under the Office of the President, to take action to protect consumers, it can only do so much under this deregulated regime. We have seen this in the way the telcos reacted to an NTC directive ordering them to lower the nominal price for text messages. The government seems just content that the NTC generates growing revenues from permits and licenses.

Electricity, oil, and telecommunications are important to any country because of reasons too obvious to enumerate. They are too strategic to be left solely to profit-oriented companies for them to almost exclusively plan and profit from.

The government policy of “letting go” has proven to be a failed framework insofar as promoting better prices, better quality, better supply and better services. People are likewise left defenseless from abuses. Sans state involvement as well as national plans for developing these sectors, the rest of the people won’t be able to fully tap them for national development, and only the big companies would continue to prosper.

Letting go would mean saying goodbye to progress.

(First published in my Hotspot column on 26 July 2014 in the Manila Bulletin)

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