Saturday, March 23, 2024

BWorld 691, On a huge budget surplus and long-term privatization revenues

On a huge budget surplus and long-term privatization revenues
March 19, 2024 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/03/19/582568/on-a-huge-budget-surplus-and-long-term-privatization-revenues/

A number of good economic reports came out last week. See for instance these stories in BusinessWorld: “US firms to invest over $1B in PHL” (March 12), “PHL secures $4B in German pledges” (March 14), “Philippines’ budget surplus at $1.58B in January” (March 15), “PHL to grow 6.4% this year — Fitch” (March 15), and “GOCC subsidies down in 2023, PhilHealth top recipient” (March 17).

I checked the Bureau of the Treasury (BTr) data on the latest cash operations report (COR) of the National Government. The January 2024 data showed that the National Government (NG) experienced a budget surplus of P88 billion. That is huge. So I checked the January data of previous years — turns out that this year’s budget surplus could possibly be an all-time high and almost twice the surplus of P46 billion in January 2023.

This is largely because revenues have expanded big time, from P278 billion in January 2022 to P348 billion in January 2023 to P422 billion in January 2024. Meanwhile, government expenditures were timid at P302 billion in January 2023 to P334 billion in January 2024.

Financing or borrowing was significantly controlled, from P587 billion in January 2021 and P366 billion in January 2023, to only P118 billion in January 2024 (see Table 1).


I must extend my congratulations to Budget Secretary Amenah F. Pangandaman and Finance Secretary Ralph G. Recto. The fiscal consolidation policies are bearing fruit so far.

The rate of increase in revenues, even without a major tax hike, should stay higher than the rate of increase in expenditures. Public spending should be targeted at expanding and better infrastructure, like more provincial and barangay roads than cash subsidies. Rural infrastructure will encourage the poor to be more productive while endless subsidies will encourage more people to not work hard enough or understate their real incomes so that they can qualify for many subsidies and freebies like free tertiary education, free healthcare, free monthly cash, and so on.

One big piece of news last week was reported in the Philippine Star: “Recto revives plan to sell NAIA assets” (March 14). At the sideline of his Senate confirmation hearing last week, on March 13, Mr. Recto said that he wants to get a huge one-time revenue bump from the privatization of the assets of the Ninoy Aquino International Airport (NAIA). A brilliant and rational proposal, sir.

This column has argued in three previous articles that NAIA assets should be privatized: “NAIA privatization is good, legislated minimum wage is bad” (Feb. 20, 2024), “Financing sustained growth: NAIA privatization” (June 27, 2023), and, “NAIA closure, passenger rights, and MIAA responsibilities” (Aug. 21, 2018).

If I may add, also consider privatizing the land holdings of the Bilibid Prison in Muntinlupa City, and the Iwahig Prison in Palawan, Puerto Princesa — get the money and retire a big portion of the public debt, do not earmark it for any agency or program.

In Table 2, I attempted to quantify the potential revenue from the privatization of three government assets (NAIA, Bilibid, and Iwahig). I assumed a compounded annual growth rate (CAGR) of 10% yearly in the value of these lands. The potential revenues from the privatization of NAIA and Bilibid land would be P8.38 trillion, plus P3.81 trillion or P12.19 trillion (see Table 2).


The New Manila (Bulacan) International Airport is supposed to start initial operations by 2027 and should be fully operational by the early 2030s. So, the closure of the current NAIA is feasible and viable.

Bilibid Prison operations should be decentralized and scattered to various regions. Selling the land will help bankroll the construction of new prisons and correctional facilities in all regions of the country.

The Iwahig Penal colony is composed of four zones or districts. The central colony is made up of 14,700 hectares and there are three other zones: Sta. Lucia with 9,685 hectares, Montible with 8,000 hectares, and Inagawan with 13,000 hectares. Existing inmates of the penal colony can be moved to any of these zones.

Less public debt and lower interest payments (P429 billion in 2021, P503 billion in 2022, and P628 billion in 2023, with principal amortization not included yet) would mean that more resources can be devoted to more physical and social infrastructure for Filipinos and Philippines-based businesses and foreign investors and visitors.

Meanwhile, I want to congratulate my friends and fellow University of the Philippines School of Economics alumni, new Finance Undersecretaries Joven Balbosa and Rolly Tungpalan. Their appointments were approved by the President last week.
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See also:
BWorld 688, On the nuclear mission in Canada, the AP-MGen-SMC partnership, and electric cooperatives
BWorld 689, Nuclear energy to sustain Philippines’ high economic growth
BWorld 690, Why we need to grow by 8-9% yearly

Macroecon 25, Realistic growth and revenue target

A report today in the Inquirer, "Recto seeks ‘more realistic’ growth target",  https://business.inquirer.net/451423/recto-seeks-more-realistic-growth-target. Secretary Recto said,

“I think we should come out with something more realistic— not only this year, but for the medium term. Because if you project a very high GDP, then you’re projecting a very high revenue. And if you miss it, your deficit will increase and your debt-to-GDP [ratio] will also increase. Underpromise and overdeliver. That's what I believe."

"Underpromise and overdeliver" is a wise move. A 6.0 to 6.5% target is more realistic than 6.5 to 7.5%. Although I believe that a 7-8% growth is possible because of our huge domestic market that can provide internal econ dynamism, provided that the usual obstacles -- business bureaucracies and red tape, corruption -- can be reduced.

Notice that the fast-growing economies in 2023 -- IN, Iran, PH, CN, ID, VN, etc -- are all big population countries except Malaysia. Their big population is an asset, not liability as peddled by the population control advocates like the authors and campaigners of RH law. More people means more workers and entrepreneurs, more producers and consumers.

Iran and China high growth 2023 was mainly due to low-base in 2022 whereas India, PH, Indon, VN  were high growth 2023 on already high base 2022.
Below, the 3 columns are GDP growth for 2021, 2022 and 2023. 


See the Europeans -- save the planet, ESG, net zero, decarbonization, climate drama, plus endless war in Ukraine is beautiful no negotiations -- degrowth and deindustrialization trend is clear. PH and other Asian economies should never never follow the European path.

Again the 3 columns are GDP growth 2021, 2022, 2023.

WEF planet-saving, jet-setting corporate leaders are bullish about the PH, said PH GDP size (they should refer to PPP values) can become "a $2-trillion (around P112-trillion) economy in the coming decade" https://www.bworldonline.com/top-stories/2024/03/20/583012/wef-very-bullish-on-phl-economy/.

In 2023, PH GDP size at PPP (purchasing power parity) was around $1.279 trillion. If PH will grow at sustained 6% yearly, our GDP size PPP will reach $2.039 trillion by 2031, or just 7 years from now.

I just wonder why these jet-setting, high fossil fuel-using but fossil fuel-lambasting and net zero-campaigning corporate guys would push their failed decarbonization experiment in Europe to be applied in the PH and other emerging markets.
---------------

See also:
Macroecon 22, Econ performance of Marcos Jr administration in year one, July 30, 2023
Macroecon 23, GDP forecasting and the forecasters, February 01, 2024
Macroecon 24, Sir Gary Teves' proposals to reduce public debt, March 09, 2024

Friday, March 22, 2024

BWorld 690, Why we need to grow by 8-9% yearly

Why we need to grow by 8-9% yearly
March 14, 2024 | 12:01 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr. 
https://www.bworldonline.com/opinion/2024/03/14/581526/why-we-need-to-grow-by-8-9-yearly/

The Development Budget Coordination Committee (DBCC) is considering revising the Philippines’ annual growth target until 2024, from 6.5% to 7.5%, down to 6-7%. I think this is a practical adjustment because the global and regional economic environment is deteriorating, not improving, as shown by the generally lower growth of countries in 2023 compared to 2022, and with high inflation persisting in many countries this year.

I updated my table monitoring the GDP growth of major economies in the world, those with a GDP of at least $700 billion in purchasing power parity (PPP) values projected for 2023. Several countries were not included because there was either no GDP data or it was incomplete. These countries are Bangladesh, Pakistan, and the United Arab Emirates.

Some countries revised their quarterly growth data for 2023. Still, the Philippines remained the third fastest growing country after India and Iran. And our growth of 5.6% in 2023 is high over  a high base in 2022.

Practically all European economies except Turkey and Spain were crawling at 0.1% to 1.5% growth. Some were contracting — Germany and Ireland (see Table 1).


The good thing for us is that our economic growth rate is faster than that of many other countries in the world. The bad thing is that our economic base, our GDP size, is still “small.” Our projected GDP size of $1.28 trillion in 2023 is smaller than those of Thailand, Vietnam, and Taiwan and they have smaller populations than we do.

We actually need to grow 8-9% yearly for at least a decade to drastically expand our economy — our roads and physical infrastructure, both toll roads and rail, our power supply and electricity generation capacity, and so on.

Our frequent heavy traffic is an indicator that there are not enough roads despite the expansion of new toll roads. Our high electricity prices are an indicator that the power supply is not enough despite the favoritism in fiscal incentives and priority dispatch for intermittent renewables.

Assuming we can grow at 8.5% yearly from 2024-2034, the Philippines’ GDP size at PPP values would rise from $1.28 trillion in 2023 to $3.14 trillion in 2032, or at the level of Italy or South Korea in 2023.

I went to Hong Kong last January, then Toronto, Canada last week, and I observed their road infrastructures. I estimate that it would take us at least 40-50 years of steady infrastructure modernization to be at their level now in 2024. Traffic congestion is an engineering problem with engineering solutions, not bureaucratic solutions like hiring thousands of “traffic enforcers.”

Engineering plus the enforcement of the rule of law. The law applies equally to unequal people. No one is exempted and no one can grant an exemption. The law should apply to both governors and governed, both administrators and administered, both government officials and ordinary people.

Here’s hoping for continued growth and prosperity for our country and our people.
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See also:
BWorld 687, High budget deficit and wage subsidy
BWorld 688, On the nuclear mission in Canada, the AP-MGen-SMC partnership, and electric cooperatives
BWorld 689, Nuclear energy to sustain Philippines’ high economic growth

Transport Econ 25, Traffic congestion is an engineering problem with eng'g solutions

I find this argument from the Management Association of the Phils. (MAP) funny.

Calamity declaration needed to deal with road congestion — MAP
March 21, 2024 | 9:07 pm 
https://www.bworldonline.com/economy/2024/03/21/583524/calamity-declaration-needed-to-deal-with-road-congestion-map/

"He (Eduardo Yap, MAP) added that electric vehicles (EVs) should be encouraged through incentives and that public buses on the EDSA Busway be progressively converted to electric power.
Exempting private EVs from road congestion charges..."

Awww. These business leaders are only interested in pushing the EV business, not in "solving" heavy traffic congestion. Traffic is an engineering problem with engineering solutions, not bureaucratic or cronyism solutions.

HK should be traffic-choke. So many people and visitors/tourists (about 25 million/year pre-lockdown dictatorship) in few flat lands including reclaimed and artificial lands as HK is largely mountainous. Yet little congestion. Lots of trains, about 200 meters long each and can accommodate hundreds of passengers each trip. And the trains leave every 5-10 minutes. 

Photos below I took when I and my family were in HK last January.


And many bridges, long tall sturdy bridges connecting islands. Within the city there are many overpass, underpass, tunnels for vehicles. These are all engineering solutions. 

You hardly see a "traffic enforcer" on the roads or bridges or tunnels. In the PH we have so many "traffic enforcers", bureaucratic solutions that hardly work.

Now MAP and Eduardo Yap want to introduce another non-engineering solution -- EV cronyism, plus declaration of "traffic calamity." Ewww. Nasaan ang eng'g solution dyan?

Yes, city trains should run on electricity, whether above ground like our MRT/LRT or subway.  Not cars running on electricity. And train stations should be right in commercial centers and bus stops, not 200-300 meters away then make the public walk far. 

Underground walkways between train stations, shops.


Walkalator underground, HK Central station. Just like an airport.


By 2029, the Metro Manila subway system -- 33 kms long with 17 stations from Valenzuela to Bicutan and a spur line to Terminal 3 of NAIA -- will start operation. It will be the first modern subway system in this country. Long trains running on electricity.  And we'll be needing huge new supply of electricity, those that produce power 24/7, even if the Sun is not shining (night, cloudy, rains) and even if the wind is not blowing, zero blackout or power fluctuation even for a minute. 

Subway trains and their stations are very energy intensive. Intermittent wind solar cannot provide reliable power. Only thermal plants (coal, gas, oil, geo), big hydro, or nuclear.
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See also:
Transport Econ 22, Uber's merger with Grab, April 04, 2018
Transport Econ 23, Penalizing commuters with far away bus/LRT stops, February 12, 2020
Transport Econ 24, Trains, tricycles and government-created route monopolies, March 16, 2024

Tuesday, March 19, 2024

BWorld 689, Nuclear energy to sustain Philippines’ high economic growth

Nuclear energy to sustain Philippines’ high economic growth
March 12, 2024 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/03/12/580957/nuclear-energy-to-sustain-philippines-high-economic-growth/

TORONTO — The Philippines’ Nuclear Trade Mission to Canada ended the three-day Toronto leg last Friday, March 8. It was a very educational tour filled with meetings for me and other Philippine participants, headed by Energy Undersecretary Sharon Garin and Science Undersecretary Leah Buendia.

On those three days, we saw the McMaster University Nuclear Reactor, we went inside the research reactor that provides neutrons for medical isotopes, imaging service, and power generation (five megawatts), and many other services. The reactor is in the middle of the sprawling university and students, staff, and visitors casually walk outside it without fear or alarm.

We also visited a big CANDU (Canada Deuterium-Uranium) mock-up reactor — not a real nuclear plant but containing all the basic components and various chambers — owned by Ontario Power Generation (OPG). OPG owns and operates the Darlington nuclear generating station, four CANDU reactors that can produce up to 31 terawatt-hours (TWH). This is almost one third of the Philippines’ total power generation of 114 TWH nationwide in 2022.

The top corporate leaders of Bruce Power, the biggest operating nuclear power company in North America, met us in their office in downtown Toronto. Their eight CANDU reactors can produce up to 48 TWH of electricity yearly, or 42% of total Philippine power generation in 2022.

If our Bataan Nuclear Power Plant (BNPP) had been allowed to operate and not killed by politics and health alarmism in 1986, it could have generated about 4.6 TWH/year (assuming 85% capacity factor) for the past 38 years. This is much larger than the output of wind + solar of 2.9 TWH combined in 2022.

As a developing country, we need to overcome our perennial low power generation and low reserves margin relative to demand, which leads to high electricity prices. I checked again the power generation of several countries and compared it with their economic performance over a seven-year period, 2016-2022. I grouped the countries into three: Group A are the G7 industrial countries, Group B are the major East Asian economies, and Group C are the major South Asian countries.

The G7 is characterized by low, if not contracting, power generation and low GDP growth of between 0.2% (Japan) to 2.1% (US). The East Asian and South Asian countries are characterized by high growth in power generation and high GDP growth, except for Thailand (see the table).

The Philippines’ average yearly growth of 4.9% in power generation was equivalent to a 4 TWH/year increase, and our GDP was growing at an average of 4.3% yearly average. In 2023, we grew at 5.6%, and the increase in power generation could be at least 5 TWH. And since the government targets growth of 6-7% yearly from 2024-2028, I strongly believe that we should produce 6-7 TWH/year of power, otherwise the growth target will not be attained due to blackouts, with supply unable to meet high demand.

Meaning if we produce only 5-6 TWH/year of power, our economy will grow only at the 5-6% range. We actually need to grow 8% yearly through the next decade if we want to, a.) drastically reduce poverty, and, b.) reduce the public debt/GDP ratio from the current 62% to 50% or less. The denominator, GDP size, must grow at a high level and be sustained for a decade or more, for us to attain those two big social and economic goals.

I am flying back to Manila in several hours. Yesterday I asked Energy Undersecretary Sharon Garin about the major lessons from this nuclear trade mission. She said that, “The Canadian Embassy has graciously given us an opportunity to comprehensively understand the core competencies of Canada in nuclear power development. Canadians have completed nuclear power plants in time or ahead of schedule, these are competencies we hope to develop in the Philippines. The Philippine Nuclear Energy Program Inter-Agency Committee will likely pursue more targeted and responsive joint activities with Canada in the near future. It is one of the few countries [with whom] we already have an existing bilateral agreement on nuclear energy.”

I also talked to two fellow participants who are local energy players and have expressed explicit interest in developing nuclear power in the country soon.

Meralco’s First Vice-President and Head of Networks, Froilan “Froi” Savet, said that “the Philippines can establish a robust regulatory framework similar to that of the Canadian Nuclear Safety Commission (CNSC) to ensure safe and secure operation of its to-be nuclear facilities. [A] possible Memorandum of Understanding (MoU) with premier academic institutions like Ontario Tech and McMaster University where we could send qualified students on scholarships to study nuclear engineering.”

Aboitiz Power Corp.’s Head of Energy Transition Projects, Felino “Lino” Bernardo, seconded Mr. Savet’s observation, saying that: “In the near to medium term, the Philippine government should first enact enabling policies that would, among others, signal support to those in the power generation sector and enable a seamless but rational allocation of resources. Likewise, multi-sectoral collaboration amongst local stakeholders and extending to foreign ones — who will leverage their experience and expertise — should close the existing skills gap, the development of robust supply chains, and converging of public-private efforts towards harnessing the potential of nuclear technology. There is a need for human capital development via friendly bilateral relations that support knowledge and skills transfers of peaceful use of nuclear energy.”

All good points there. And great guidance and assistance from the Canadian embassy in Manila with the series of meetings and site visits. In particular, David Hartman, the Ambassador of Canada to the Philippines, and Guy Boileau, Senior Trade Commissioner, and Jesus Sanchez, Trade Commissioner. Mssrs. Boileau and Sanchez brought us on a post-event tour of Niagara Falls — a fantastic place. Aboitiz Power’s Mr. Bernardo estimated that the falls’ huge volume of water can possibly generate at least 1,000 MW of power and it is still winter. Expect more power to be produced during summertime when water volume is higher.

Now that new coal plants in “greenfield” investment are prohibited, with the continuing low and pathetic output from wind-solar-biomass, and with new gas plants which are still insufficient to fulfill high power demand, the government and the public must learn to appreciate the value of nuclear energy. Nuclear power will help avoid blackouts in the future, and provide clean and stable 24/7 electricity for the country’s rising demand and fast economic growth.
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See also:
BWorld 686, On electric cooperative cases at the ERC, renewables, and food inflation
BWorld 687, High budget deficit and wage subsidy
BWorld 688, On the nuclear mission in Canada, the AP-MGen-SMC partnership, and electric cooperatives

Pol Ideology 87, No more purely capitalist or socialist countries, more of modern fascism

I like this definition by econlib:

"Fscism is socialism with a capitalist veneer.... Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners."
(https://www.econlib.org/library/Enc/Fascism.html)

In modern application, it's not Big Government with weak private enterprises (socialism) or Big business with weak role of the state (capitalism). Rather it is Big Government + Big Business (including big media, big tech) marriage. 

(this photo, John Stossel, https://www.youtube.com/watch?app=desktop&v=WrTuxc4W8gs)



Regulatory capture -- a situation where government regulators are in bed with, or in the payroll of certain business conglomerates. The regulators issue regulations and restrictions that are unfavorable to existing competitors, or dissuade potential competitors from coming in, so that Big business or conglomerate can have more control of the economy or certain sectors of the economy.

I think almost all countries in the world now are mixed economies. No more purely capitalist ones (Adam Smith, John Locke definition of limited government) like the US or UK before. No more purely socialist/communist governments like China, Cuba and Vietnam before.

More of post-WW2, modern fascism tendency and trend.

Meanwhile, in 1987 I went to Europe, my first time to set foot in that continent. I went to Amsterdam to have elaborate study of Marx, Lenin and Trotsky for 3 months when I was still a Marxist. But I've abandoned Marx since the mid 90s and embraced Adam Smith and David Ricardo. A 180 degrees shift, but slow, about 4-5 years transition. See my presentation in 2009 about my transition,
https://funwithgovernment.blogspot.com/2021/12/pol-ideology-82-reflections-of-former.html

While I was still in Amsterdam in 1987 I joined my Trotskyist friends in a big rally in Brussels NATO HQ, an anti-cold war rally (NATO vs Warsaw Pact). I wondered years after, why Marxists who campaign for working class revolution vs capitalism would be against NATO war plans, I didn't understand then.

In measurement of economic growth, I would delineate countries not whether they are largely capitalist or largely socialist. But rather how ecological socialist they are, it's clearer. Europe is where ecological socialism and central planning is strongest (decarbonization, net zero, ESG, etc), next strongest would be N. America and Japan, essentially the G7.

The less ecological socialist are largely the BRICS (Brazil, Russia, India, China, S. Africa), MidEast and ASEAN countries. Although Singapore is now following the G7 path. Degrowth is now creeping in Singapore.
-------------

See also:
Pol. Ideology 84, Capitalism and prosperity, June 28, 2022
Pol. Ideology 85, Austrian Economics and marginal utility, January 06, 2023
Pol. Ideology 86, Endless crisis narratives and authoritarianism, August 27, 2023

BWorld 688, On the nuclear mission in Canada, the AP-MGen-SMC partnership, and electric cooperatives

On the nuclear mission in Canada, the AP-MGen-SMC partnership, and electric cooperatives
March 7, 2024 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/03/07/579978/on-the-nuclear-mission-in-canada-the-ap-mgen-smc-partnership-and-electric-cooperatives/

TORONTO — It is my first time to set foot in Canada. Our plane from Hong Kong landed in the evening and I saw from the air how extensive the bright lights of Toronto are — amazing and fantastic! This is clear proof of a country’s level of development and industrialization — that it has a huge supply of power that is efficiently distributed at competitive prices to wide areas of the country.

I will be discussing four energy topics in this column.

PHL NUCLEAR TRADE MISSION TO CANADA

I am participating in Canadian government-organized events in Ottawa, Toronto, and Saskatoon from March 4 to 12. The Philippine delegation is headed by Energy Undersecretary Sharon Garin, Science Undersecretary Leah Buendia, Energy Regulatory Commission (ERC) Chairperson Monalisa Dimalanta, Philippine Nuclear Research Institute Deputy Director Vallerie Samson, officials from the Philippine embassy in Ottawa, the Philippine consulate in Toronto, and officials from the Canadian embassy in Manila. There are also participants from Philippine private corporations: Aboitiz Power, Meralco, and Prime Metro BMD. And a few members from Philippines media, me included. But we will participate only in the Toronto leg, from March 6-8. The formal events will start today and I will write about them next week.

I believe that the small modular reactors (SMRs) will be viable in off-grid islands and provinces that currently have up to 99% of their energy needs provided by diesel/bunker oil gensets. They have frequent blackouts; their power cost is expensive and made “affordable” only via the subsidy that is the universal charge for missionary electrification (UC-ME) that is slapped on all on-grid consumers nationwide. Many potential investors fear blackouts and expensive energy and hence, job creation on these islands is limited.

There are many small industrialized countries which have big power supplies. They have been using nuclear power for many decades and have had no nuclear accidents (I list them in Table 1). Small countries like Slovenia, Slovakia, and Bulgaria generate 2,500+ kWh per capita from nuclear energy alone. Meanwhile, in 2022, the Philippines generated a total of only 1,000+ kWh per capita of power from all energy sources.

MGEN, AP, SMGP PARTNERSHIP

Last Friday, three of the largest power companies in the country — Meralco PowerGen Corp. (MGen), Aboitiz Power Corp. (AP) and San Miguel Global Power Holdings Corp. (SMGP) — launched the Philippines’ first and most expansive integrated liquefied natural gas (LNG) facilities in Batangas. AP and MGen will invest jointly in two of SMGP’s gas plants — the existing 1,278-megawatt (MW) Ilijan power plant and the new 1,320-MW combined cycle power plant which is expected to start operations by end-2024. See this report in BusinessWorld: “MGen, AboitizPower, and SMGP sign $3.3-B deal for Batangas LNG facility” (March 4).

I like this development as it further ensures our energy security, so I congratulate the companies. I like these quotes from the heads of the three power conglomerates from the press release that was issued.

“Apart from transforming the energy landscape of the Philippines, this symbolizes a milestone alliance among major players in the energy industry towards a more sustainable future. We are thrilled to have such reliable partners as we lay the foundation for a brighter, greener future,” said MGen Chairman Manuel V. Pangilinan.

AP Chairman Sabin M. Aboitiz noted, “Both LNG and renewables are needed to achieve a balanced energy mix and well-planned energy transition. Above all, this is a big win for the Philippines and the people. Economic development is impossible without energy security.”

SMGP Chairman and President Ramon S. Ang said, “For the first time, three leading power companies are working together to secure our country’s energy needs while transitioning towards cleaner power sources. This represents a major leap forward for our energy future, ensuring not just reliability but also cost-efficient power for many Filipinos.”

In a separate press release, AP President and CEO Emannuel Rubio was quoted as having said, “We continue to diversify our generation portfolio and increase our capability in energy security in the Philippines through a minority share in the first integrated LNG facility, to keep the lights on.”

For Table 2, I looked at the financial conditions of these three players and I included FirstGen as it is a big gas company too. I notice that the four big power companies have a combined gross revenue of about P1 trillion.

When converted to US dollars, that’s only $17.9 billion gross — “small” compared to most energy companies in the ASEAN-6 and developed East Asia.

THE VISAYAS’ TIGHT POWER SUPPLY

From the monthly operations report by the Independent Electricity Market Operator of the Philippines (IEMOP) one sees that the average power margin (supply minus demand) is about 2,500 MW in the Luzon grid, about 1,200 MW in the Mindanao grid, and only around 300 MW in the Visayas grid. Thin reserves and small margins mean the grid is courting yellow-red alerts or near-actual rotating blackouts, that prices are high, and consumers are forced to cut their electricity use — not good.

Of the roughly 1,850 MW average demand in the Visayas grid, about half of it goes to Cebu alone, and the other half is shared by the sub-grids in Negros, Panay, and Samar-Leyte. Expansion of a coal plant in Cebu is being planned, but instead of welcoming it, some blackout-friendly environmental activists are lobbying that it should be discontinued because… climate. When there are frequent blackouts, the poor use more candles while the rich use more diesel-powered gensets. More candles often lead to fires, the destruction of property and injury or death. Today, not decades from now.

The national and local governments, local businesses and consumers should prioritize 24/7 electricity and job creation, not scare people about what will happen to the climate 50 or 100 years from now.

COSTLY ELECTRIC COOPERATIVES

In my recent column “On electric cooperative cases at the ERC, renewables, and food inflation” (Feb. 29), I forgot to emphasize that many electric cooperatives (ECs) in the country are indeed abusing their consumers with expensive rates that have no regulatory approval, and that some of these ECs have already been penalized by the ERC but are still awaiting the implementation of fines and penalties. The ERC people might be over-worked since there are 120+ ECs to monitor monthly nationwide.

This is another reason why there should be mergers and consolidation of ECs nationwide. I wrote here before that in my province Negros Occidental, there are five ECs, plus another three in Negros Oriental, or eight ECs in just one island. Meaning that the ERC has to monitor and evaluate eight ECs every month in Negros Island. I believe there should be only one corporate distribution utility (DU) in Negros Island, another single DU in Panay Island, and so on. This would result in economies of scale for the DU, less work for the regulators, and lower electricity cost for consumers.
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See also:
BWorld 685, The economic impact of 2 years of war in Ukraine, and the Philippines fiscal situation
BWorld 686, On electric cooperative cases at the ERC, renewables, and food inflation
BWorld 687, High budget deficit and wage subsidy

On charter change, make the Constitution short

About charter change, I think we should have a short constitution, maximum 25 pages from the current 91 pages. Mostly general principles, no details, like minimum age for those running for Senator, Congress; foreign equity limit, etc. All details should be done by legislation, by Congress.

The purpose of the Constitution especially the Bill of Rights is to protect the people from government. Executive and Legislative branches especially. Thus, the Bill of Rights explicitly state what areas that Congress can NOT legislate, Executive can NOT issue executive orders, adminstrative orders, etc.

The longer the constitution, the more details in the constitution, the more divisive it is for the people.

There are a number of details in the charter. Examples:

Article VI, The Legislative Department

SECTION 3. No person shall be a Senator unless... at least thirty-five years of age... 

SECTION 6. No person shall be a Member of the House of Representatives unless... at least twenty-five years of age...

SECTION 7. The Members of the House of Representatives shall be elected for a term of three years...

Age limit, terms of office, etc. are details that should not be in the Constitution. The 60-40 limit in domestic-foreign equity in investment in certain sectors of the economy should not be there. If these details are not in the constitution, there would have been less divisiveness in society. 

Most if not all legislation tend to subjugate the people or groups of people. Like a tax hike for sector A but not in sector B, subsidies for sector C but not for sector D, and so on.

A new constitution should instead focus on the Bill of Rights, expand it, protect people from government. For instance,

Article III, Bill of Rights.
Section 1. 

This section should be expanded.

Right to life includes freedom from state-enforced mandatory vaccination and inoculation (otherwise a person cannot go to school, office, mall, ride public transpo, etc).

Right to liberty includes freedom of movement, no prolonged lockdown and horrible mobility restrictions. During the lockdown dictatorship of 2020, even going to the next municipality requires a travel pass. This was relaxed a bit in 2021 but mobility restrictions persisted until about end of the year. Restrictions were relaxed because the national and local elections May 2022 was approaching and politicians, their staff and supporters were moving a lot.