Consumer Domain
By Ian Seruelo

Mirant, dirty as coal

“ There are three kinds of lies: lies, damned lies, and statistics. ”
— Benjamin Disraeli

I attended a presentation of Mirant last April 4 (Monday) at the Archbishop's residence. The presentation was intended for leaders of the Catholic Church led by Archbishop Angel Lagdameo and Msgr. Meliton Oso. Upon the request of Fr. Oso, the Responsible Ilonggos for Sustainable Energy (RISE) attended the presentation, JASAC ( Jaro Social Action Center ) also being a member of the same coalition.

RISE has the technical capability to engage Mirant and even the Department of Energy (DOE) in matters concerning power planning, supply and demand, types of power plants, their benefits and impacts, etc, etc. Further RISE is now acknowledged as the main opponent of Mirant in its plan to put up a potentially hazardous 100 MW coal-fired power plant here in Iloilo .

In the open forum the representatives of Mirant clearly failed to convince the audience especially the clergy. In Mirant's previous press releases and even those uttered by their backers (read: peddlers) including Gov. Tupas in the media they claim that a coal-plant will have NO hazardous emission whatsoever. But in the forum they were forced to admit that indeed their coal-plant emits mercury among other heavy metals.

Well they claim it's of very small quantity but RISE cited the fact that these metals are bio-accumulative or simply they accumulate over time, a fact that Mirant is in agreement. RISE proceeded to cite cases of the ill effects of such coal-plants which only manifest in long operation of the same plants.

So clearly, contrary to what Mirant and Tupas and even Mayor Cabangal of Concepcion want us to believe, Mirant's coal plant with all its mitigating measures and technology can never really be called a “clean coal”.

Now this column would like to reiterate some other main points that are being asserted by RISE to demolished the self-serving arguments of Mirant and its backers here in Iloilo .

Is there really a looming power crisis?

There is no power crisis as can be seen in numerous data and which has been shown and presented by RISE in different presentations. But surely there is a need to look at the future electricity needs of the region for indeed the need for additional power sources is a requisite in economic planning.

Now, this has been looked into by the Regional Development Council of Western Visayas. In fact, the RDC has come up with a plan and has adequately responded to these. Why Mirant and its promoters are floating a power crises scenario in the event it is not allowed to put up its coal-plant is suspicious.

DOE, expert in forecasting?

Last year no other than the President of the Republic of the Philippines declared that the country is in a fiscal crisis. But as early as 2002, debt, budget and other economic figures show that the country is already in a very deep pit. In 2002 national government debt stood at PhP3.2 trillion, equivalent to 80% of the country's GDP for the year. Total public sector debt was already at P5.1 trillion and that is more than 125% of GDP.

Debt servicing for the same year was equivalent to 76% of tax revenues and ate up 41% of the government's budget including principal amortization. Further, despite heavy borrowings under Pres. Arroyo, the government ended the year 2002 with more than PhP200 billion in budget deficit.

All of these figures went bad to worse in 2003 and even worsened in 2004. This year 2005, these figures will surely swell as debt service will amount to PhP 645.8 billion pesos (PhP 344.1 billion pesos for maturing principal and PhP 301.7 billion for interest payments).

Central to the country's current fiscal quagmire is the payment of assumed liabilities brought about by onerous and unreasonable guarantees granted to BOT projects and a classic example are the onerous provisions of Napocor's contract with IPPs.

Napocor's financial situation is one big contributor that led to this sad and sorry state of the Philippine economy. Napocor's debt now stood at more than P1.3 Trillion, P500 Billion are long-term obligations and P800 Billion are obligations to IPPs.

And yes, this is mainly because the Napocor and Department of Energy (DOE), which are supposed to be the EXPERTS in planning for the energy needs of the country, bungled the job of properly forecasting the future electricity demand.

The more than 4,000 MW surplus in power capacity in the country is a product of flawed forecasting that resulted in unutilized (not generated and not dispatched) energy that we all still end up paying as consumers and taxpayers.

Now, the most concrete evidence to disprove the assertion that the DOE or the government is the “EXPERT” in forecasting is the current state of the power industry.

Mirant, a socially responsible company?

In its press releases and public relations activities, Mirant has always maintained that it is a socially responsible company and that it has an untainted track record. Now let us take a closer look…

Looking at the track record of Mirant in the Philippines and in the US , we will see that contrary to how it wants to package itself, Mirant has been involved in different anomalous transactions and practices. These transactions and practices show how Mirant has placed it greed for profit way above the needs and interests of the society at large (public health, environment and affordable rates).

The US energy giant Mirant Corporation has declared bankruptcy last year and this was caused by its inefficient operations, heavy indebtedness and anomalous accounting practice. As shown in different documents and articles RISE has gathered, clearly Mirant's US experience shows a different picture than what it wants to project. In fact it was even involved in manipulation of data and prices that led to the California power crisis four years ago.

Meanwhile, its Philippine subsidiary raked in a P12-billion profit last year. We are not surprised that the US Mirant has not included its Philippine subsidiary in its bankruptcy filing. Mirant Philippines ' IPP contracts contain “take-or-pay” arrangements and guarantees that allow it to operate its business virtually risk-free.

Mirant is in fact the main beneficiary of parasitic operations where consumers absorb all risks while Mirant Philippines rakes in huge profits. Now, the country is experiencing a deep fiscal crisis partly caused by the same IPP contracts that made Mirant Philippines the most profitable risk-free business in the country.

Mirant Philippines ' power plants in Sual (Pangasinan), Pagbilao ( Quezon Province ), and Navotas account for a big share in the Luzon power supply, totaling 2,000 megawatts (17 percent of the 12,000-MW Luzon grid capacity). The contracts are among the most unfair and grossly disadvantageous to consumers. Even the government's own Inter-Agency IPP Review Committee (IAC) has declared Sual as one of the five most onerous contracts and Pagbilao as having serious “financial” issues.

Indeed, Mirant is as dirty as coal…

(For comments and suggestions please email ianseruelo@yahoo.com or send text message to 0919-3486337.)