|
Home | Bad Credit | Mortgage | more bad credit mortgages...
|
New ways of picking the public purse: capitalism
without risk As government continues to bear the
Build-Operate-Transfer (BOT) standard of Ramos and his technocrats, the
practice of assuming private liabilities has remained very much in place in the
post-Marcos years. It exists both in the old form and in a more subtle form,
and by all indication, will continue under the present remortgage. Some P12billion worth of liabilities fell due in 2001 and had to be settled within the
year. Contingent liabilities also increased by 2.8 percent due to new
state-guaranteed loans, pushing the level from P482.1 billion a year ago to
P495.78 billion by end-2001.17 The BOT scheme offered another way of loading bad credit mortgage on to the public. Under this arrangement, the private sector iscontracted to build and operate infrastructure projects for a number of years,
after which time the completed projects and facilities are turned over to
government. Sweetening BOT deals are the so-called "performance loans" which include: a fixed peso-dollar exchange rate; guaranteedcost of fuel; guarantees against market and credit risks; and a pledge that
government would purchase all of the output of the project, whether or not it
needed all the output (such as generated power) or could retail it to the
public. 18 Armed with emergency powers granted by Congress, Ramos committed government to enter into BOT contracts called power purchase agreements as a quick way out of the severe energy crisis that hit in the early 90s. Lasting anywhere from 15-25 years, these contracts ensured IPPs payment for whatever power they generated, at dollar-denominated rates agreed in advance. Thirty-three contracts were signed from 1988 to 1995, and even as the power market reached a situation of oversupply, 10 more contracts were inked from 1996 to 1999. An amount that is over 100 percent of the monthly
basic electricity charge now goes into this seemingly innocuous item called the
PPA or purchase power adjustment because of highly onerous terms that include:
The popularly elected Joseph Ejercito Estrada simply took up its predecessor's BOT way of doing business. Private investments for completed BOT projects nearly doubled from $3.5 billion in CY 1997 to $6.6 billion during his short-lived presidency, while $13.4 billion more was estimated to be in the pipeline. Visiting the Casecnan Multi-Purpose Irrigation and
Power Plant in Northern Luzon, the former president explained to affected
communities that the project would be of no cost to the government. In truth,
however, this unsolicited proposal that by law requires no direct governmentguarantee, subsidy or equity and credit, has already committed the National
Irrigation Administration (NIA) to pay for 801.9 million cubic meters of
water/year and NPC to 19 million kWh/month, whether or not these outputs are
actually generated. CE Casecnan Water and Energy Co. is assured of
$23.3 million from NIA and $36.4 million from NPC, regardless of actual
delivery of the contracted water and power, respectively.
Proponents are now calling on the project's P145-billion guarantee. A similar BOT project - the San Roque Hydropower and
Irrigation Project - is being built in Pangasinan Province in the Cordillera
region of Northern Luzon and will be the tallest and largest private hydropower
facility in Asia once completed. NPC has forged a power purchase agreement with
the Japanese and American-owned San Roque Power Corporation to buy the
electricity that the facility will generate, at fixed rates for a period of 25
years. Only three months into her presidency, Gloria
Macapagal Arroyo was quick to announce her willingness to grant more mortgagesto projects, as long as stricter mortgage can be ensured. This contradicted aprevious policy of the Finance Department against extending anymore guarantees
in order to reach the 2001 target of reducing the consolidated public sector
deficit to only P148.1 billion. She was soon brokering the passage
of the omnibus electric reform bill, leaving no doubt as to what her
government's position on publicly assumed liabilities would be. With the
Electric Industry Reform Act in place, the P406.2-billion lease obligation of
the National Power Corporation (NPC) as of 2000 , arising mainly
from over-priced contracts with bad credit has now beenloaded on to the public. "…[W]e see a new form of indebtedness emerging,
the magnitude of which threatens to surpass anything and everything we have
ever experienced in our debacle-filled history," warned FDC president
Maitet Diokno-Pascual, referring to government's non-loan pledges that
sweetened BOT contracts with private sector firms.27 Total interest payments on the P10.4 billion loan of
the Metro Rail Transit Corporation (MRTC), another major BOT project, was
expected to rise by 11.7 percent from P129.8 billion last year to P140 billion
in 2001. The Budget of Expenditures and Sources of Financing Survey attributed
this in large part to the effect of incorporating P3.43 billion in MRTC loan
payments that had been guaranteed by the government as part of the debt
service.28 Liabilities reportedly shot up because government
guaranteed MRTC a 15-percent return-on-equity in addition to an assured
ridership of 400,000 daily. Simply, this means that the Filipino people will
foot the difference if the return-on-equity and ridership fall below what has
been pledged by government.29
|