[asia-apec 1245] Philippines: No to San Roque Dam

[COURAGE]

SAN ROQUE DAM CORPORATION 
IS ANOTHER INDEPENDENT POWER PRODUCER TO BLEED US!

A debt-ridden and deficit-spending government.

The San Roque Dam is a US$ 1.9 Billion project and will be the 12th highest
dam in the world. It will tap the Agno river that flows along several towns
in Benguet and Pangasinan provinces and will affect tens of thousands of
families including submerging their ancestral lands and aggravating the
flooding is other areas.

The power generation component of the Dam is worth US$619 million while the
non-power component is composed of US$453 million for irrigation, US$410
million for water quality improvement, and US$11.67 million for flood
control. For the non-power component, the Department of Environment &
Natural Resources (DENR) will carry a total of US$62.19M and the National
Irrigation Administration (NIA) the amount of US$11.27M in their budget.
The allocation from the Department of Public Works & Highways (DPWH) is not
yet certain. Provided that the government commits on its local counterpart,
the
Japan Export-Import Bank (Eximbank) is willing to finance the remaining cost
as a loan.

The power generation component is under the build, operate and transfer
(BOT) scheme. Foreign investment will access loans that will be guaranteed by
the government -- meaning the government is effectively financing the project.

Already, US$700 million worth of contracts have been awarded to the
US-based Raytheon Ebasco Overseas Ltd. to design and build the dam. The San
Roque Dam Corporation had obtained a US$400-million loan from Japan$B(Bs
Miyazawa Fund, which was approved in June 1999.

The financing of the San Roque Dam will be divided into direct funding by
the government, foreign loans and foreign investment that will also be
guaranteed by the government. Therefore, the US$1.9 billion cost of the San
Roque Dam are public funds diverted to finance foreign investments, the
profits of which will also redound to private corporation. This same amount
will be added to the public debt putting the nation deeper into debt, thus
further bleeding the national coffers.

Another IPP to Bleed Us.

The Aquino government$B(Bs Executive Order No. 215 in 1987 paved the way for
the power sector$B(Bs privatization. In 1992, the passage of the Energy Crisis
Act due to the failure of some National Power Corporation (NPC) plants which
were caused by the government$B(Bs neglect became a convenient excuse for
independent power producers (IPPs) to proliferate.

There are 45 controversial IPP contracts with the NPC providing 5,000 MW.
They account for about 50% of NPC$B(Bs power supply. Yearly, the NPC pays PhP45
billion for the IPP-supplied power which are used less than 50% of the
time.

The onerous term of the contracts revolved around their "take-or-pay " and
"minimum off-take" provisions. The NPC has to pay for 70 to 75% of IPPs
capacity even if the actual usage is only between 30 to 40%. The world
financial crisis which caused the closure of many industrial and
manufacturing establishments in the country caused the NPC market to dip
to 80%, yet the NPC has to abide by the IPP contracts.

In the NPC 1999 operating expenses, revenues for IPPs have been assured with
the allocation of 49% to purchase power from them. This is the single
biggest chunk in the NPC budget, while a meager 3% is allocated for national
and regional administrative costs which include the almost 14,000 employees
of the NPC.

The NPC operating cost per KWH is higher in areas where IPP cost is also
high. In Souther Luzon Regional Center (SLRC) where the IPP purchased power
is 61%, the cost per KWH is PhP2.74, while in Mindanao Regional Center
(MRC), the cost per KWH is lower at PhP1.57 also with lower IPP purchase
power of 28%. The national average cost per KWH is PhP2.24.

The San Roque Dam which will host a 345 MW hydroelectric power plant, under
the BOT Scheme is a genuine Independent Power Producer (IPP). Its contract
obligates the government to turn over the power facilities to the San Roque
Dam Corporation, a private corporation.

The IPP scheme which partially privatized the NPC has been bleeding the NPC
financially and causing the series of power rate increases, aside from
sudden ballooning of NPC foreign debts due to the Philippine peso
devaluation. Despite the fact that it is privatization that caused the
problems of NPC, the Estrada government is further justifying the full
privatization of this biggest government owned and controlled corporation.
Majority are being sacrificed for the elite few.

Forcing the thousands of families to leave their homes, livelihood and
ancestral domain to give way for the San Roque Dam which will "benefit the
majority" is a balatant lie by the government. To convince us that the IPPs
and privatized power generation is for the good of the people is another
hypocritical hype of the government.

Only the few foreign corporations, their local counterparts and their
cohorts in government are the only beneficiaries of both the construction
of the Dam
and the IPP. As a matter of fact, the foreign investors rake so much profits
without any risk. They bring in their investments in the form of loans that
are guaranteed to be paid from public funds. As a counterpart, the
government allocates billions in annual budget for the use of the investors.

Meanwhile, the politicians and high bureaucrats are in a hurry to conclude
every possible contract with the private sector. Not only because they are
required by their foreign masters to do so, but also because they get their
own share of the loot. Estrada$B(Bs anger that led to the closure of the "The
Manila Times" was caused by a news item that exposed his alleged involvement
with one of the NPC contracts worth PhP18 billion. ###

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COURAGE
Confederation for Unity, Recognition & Advancement of Government Employees
"Advancing the Struggle Towards Genuine Public Sector Unionism"
P.O. Box AC 84, Araneta Center,
1135 Cubao, Quezon City, PHILIPPINES
Tel/fax: (63-2) 363-4675
emails: <courage at skyinet.net><courage12 at hotmail.com>
web: <www.skyinet.net/~courage/>