DAVAO CITY, June 27, 2009—There is a possibility that Aboitiz will arrange a ‘sweetheart deal’ with power distributor Davao Light in order to pursue the proposed Tamugan hydroelectric generation project.

Wilson Fortaleza of the Freedom from Debt Coalition (FDC) said that with the passage of the Electric Power Industry Act (EPIRA or Republic Act No. 9136), corporate control over the whole power system has been happening and it is possible that Aboitiz will arrange a 'sweetheart deal' for its two companies Davao Light and Hedcor.

Fortaleza added that the power business became a lucrative business after EPIRA and there is a possibility that the Aboitizes will follow the privatization scheme of the Lopezes which controls both power distribution and generation in Metro Manila and other parts of Luzon because the law allows cross ownership.

“Mga negosyante ito eh. Kung ano ang kayang gawin ng mga Lopez, ay kayang gawin ng mga Aboitiz. They can justify that their interest is to promote clean source of power,” Fortaleza said during a visit to Davao City to present his analysis on power and shed light on the current debate about power over water in Tamugan River.

The Lopezes owns power distributor Meralco Company as well as First Generation (FirstGen), a corporation engaged in power generation.

He also warned against this emerging monopoly of the Aboitiz that could lead to further increases in electricity rates.

“Consumers are made to pay the full cost of installed capacities whether they are consumed or not because in the power business, there is no such thing as free lunch,” said Fortaleza, adding:

“During the power crisis in the 90s, government over-estimated the power needs and thus created an artificial surplus of power that even though not generated by the independent power producers (IPPs), taxpayers paid for it.”

“Walang power shortage, masyadong mababa pa sa Luzon ang power consumption ng mga taga-Mindanao”, referring to the Department of Energy (DOE) statistics saying that the peak demand in Mindanao in 2007 is 1,241MW, but the demand forecast for Mindanao is 1,620 MW, meaning there is still enough power supply left.

He added that even if there will be power shortage in Davao, such can be offset by supply from other NAPOCOR (National Power Corporation)-owned generation plants in other parts in Mindanao, referring to the Agus 1-7 hydropower generating plants.

Aside from that, there is also the planned 40-MW Amakan Compostela Valley geothermal project, 68-MW Tagoloan hydropower, 50-MW PNOC Mindanao Geothermal-3, refurbished 225-MW Agus 3, 200-MW Conal Holding coal-fired plant, 200-MW Sultan Kudarat coal-fired plants, and the refurbished 232-MW STEAG coal-fired power plant owned by Aboitiz in Misamis Oriental, he said.

In 2004, an independent study conducted by the World Wildlife Fund for its Powerswitch campaign showed that the DOE tools in computing power demand projections are fatally flawed. The recent global financial crisis has likewise dampened forecasts and might have reduced the need for new power sources.

Fortaleza explained that this teetering recession that also hit the country will be long and intense than the Asian financial crisis in the late 90s. And such global phenomenon will largely impact the demand for power as significant number of companies that consume electricity will shut down.

He further said that it is worth thinking why Hedcor is very interested in Tamugan among the rivers in Davao. Hedcor may also be interested in privatizing Davao’s water resource, he added.

Dominador Lopez, president of the Watershed Management Coordinating Council (WMCC) feared that if Hedcor's project pushes through, the city’s water district can no longer control Tamugan River, the only remaining potable water source of the city, thereby paving way for Aboitiz to also take control over water distribution through privatizing the Davao City Water District (DCWD).

At present, Lopez said that DCWD is annually paying Davao Light-Aboitiz P211-M for the cost of pumping ground water from the wells.

He said that the DCWD might compromise with Hedcor if the latter shoulders their operational expenses and additional building costs that they will incur in rerouting their planned water project because of the presence of a hydro power plant there.

“Davao City should rather develop other sources of water in response to the looming global water crisis,” he added. (Mark S. Ventura w/ PR)