In Philippine context, denationalization is used to mention to the policy which allows the authorities to withdraw in activities which are non portion of the authorities ‘s built-in map. This may be in many signifiers, such as the complete turnover of public corporations to the private sector and catching services to private houses who has the necessary resources to pull off it, or the authorities would merely turnover certain services to the private sector but it would still be under some authorities regulative processs and inducements. This denationalization largely occurs within the model of economic globalisation. By economic globalisation, it means that denationalization is used as a step to prosecute the globalist restructuring of the province and to further develop the market entree which largely benefits the concern elites of a province and of class, the multinational corporations ( TNCs ) ( UP and Stiftung 91-93 ) .

Denationalization, along with liberalisation and deregulating, is besides a portion of neoliberal globalisation which aims to bring forth excess merchandises within the economic system and besides immense capital for production. In the procedure, private sector continues to hold a large function over the public sector activities, made possible by direct transportation of ownership and direction and by the riddance of the Torahs that promotes the public involvement ( deregulating ) , and through the decrease of budget for the basic services, that in bend leads to the graving tool debasement on the entree on public services of the people. For illustration, in privatising public public-service corporations like the H2O and power sector of the Philippines, many damaging factors are experienced by the people, peculiarly the authorities workers under the corporation because they were displaced as private companies turned to command those sectors. The poorest sector of society besides was vastly affected since those private companies seek to acquire high net incomes which leads to really high monetary values at the people ‘s disbursal ( IBON xi-4 ) .

During the Marcos government, a edict on creative activity of authorities owned and controlled corporations ( GOCCs ) was made through Presidential Decree ( PD 2029 ) and later on through PD 2030, a policy was made which promulgates denationalization. By the clip of Cory Aquino ‘s government, this edict was foremost implemented through Presidential Proclamation 50 on the 9th of December in 1986 ( TransCo ) .

In 1990, Aquino besides signed 6957 or what we call as the Build-Operate-Transfer ( BOT ) jurisprudence which has Lashkar-e-Taiba and approved the intercession of the private sector in the funding, undertaking, operation and besides care of substructure undertakings. But in 1993, when Ramos assumed the presidential term, he signed RA 7718 amending the BOT jurisprudence and farther allowed the full engagement of private sector in important authorities development undertakings. Through this act, assorted signifiers of denationalization strategies have evolved ( TransCo ) .

Many grounds were presented by the authorities sing the denationalization of the GOCCs. To recite some, they said that through reassigning these assets to the private sector, it would give a better efficiency in its operations. Furthermore, it was besides stated that the authorities needed to roll up more grosss for authorities disbursement to better the economic system, and this can merely be done with such move. Besides stated as grounds by the authorities is that first, it would take to increase in investings which will hike up the economic system and will besides assist to develop markets for capital coevalss. Through decreasing the budget for public services in GOCCs, and selling those which are ill executing and money-wasting, the authorities expected to diminish our budget shortage and besides to retrieve its outgos ( PSALM ) .


When the National Power Corporation ( NAPOCOR ) was created in 1936, our authorities has mandated it to bring forth and convey beginnings of energy while allowing the private sector to be in charge of its distribution. But it 1980s, the authorities has started to bit by bit intrust the full power sector to private companies. From former Pres. Aquino ‘s Executive Order ( EO ) No. 215 issued in 1987, the power coevals sector of NAPOCOR was started to be deregulated. By the power of build-operate-transfer strategy, EO No. 215 besides gave manner to private houses to set up and pull off power workss in the state. This state of affairs was farther strengthened when Ramos took over the presidential term. RA 7648, the Power Crisis Act of 1993 was passed and encouraged more private companies to partake in the power coevals sector of NAPOCOR. Subsequently in 1984, Expanded BOT jurisprudence was besides passed and had given Ramos to hold “ exigency powers ” which allowed him to do contracts, most of which were foreign corporations, sing the building, fix and other proficient care of NAPOCOR without the demand to undergo it through a public command ( IBON 82-83 ) .

Due to the contracts of largely 10 to 25 old ages made with the foreign companies, NAPOCOR was obliged to pay the power contracted to them whether they had really produced or consumed power or non. This is what is referred to as the “ take or pay ” proviso.

Harmonizing to this proviso, NAPOCOR needs to purchase 75-80 per centum of a houses ‘ power capacity even though it did n’t truly produced or consumed it. This in bend made NAPOCOR to go through the duty to the local consumers even though they truly had n’t consumed even a little portion of it, which is truly a great load since it takes about 60 per centum of the entire power available at the economic system. Of class, this is clearly seen when power distributers such as Meralco acquire sweeping power from NAPOCOR and pay for it which is the Purchased Power Cost Adjustment ( PPCA ) that corresponds it ( IBON 83-84 ) .

Aside from this Purchased Power Cost Adjustment or PPCA, NAPOCOR has besides passed the Fuel Cost Adjustment ( FCA ) fees to the power distributers due to the demand to make its duty to provide adequate fuel to the houses or power workss in which it had its long-run contract with, irrespective of the fluctuations in the monetary value of oil or fuel in the planetary market or even in the domestic sphere. These two costs of NAPOCOR and sweeping costumiers further do up the Fuel and Purchased Power Costs Adjustments or FPCA ( IBON 84-85 ) .

Furthermore, the contracts made by NAPOCOR to the independent power workss ( IPPs ) are in dollar rates. This lone means that charges between the two entities are affected by the foreign exchange rates or peso-dollar rates to counterbalance the alteration in payout because of the go oning failing of peso currency as against dollars.

Due to the fact that these IPPs are owned by foreign companies, they are selling their power to NAPOCOR by about $ 20 per megawatt hr ( mWh ) higher than the power sold to them by their ain power generators. Of class, these really high rate would interpret and reflect to the extra fees charged to the end-consumers of electricity through the purchased power accommodations ( PPA ) without their power to decline against it even though in 2002, a reappraisal made by the authorities showed that most of these IPPs has either legal or fiscal issues and are disadvantageous for the authorities itself.

During the Arroyo disposal, this PPA was still non stopped in operations of NAPOCOR since it was a great beginning of income for the authorities, although we know that the local consumers are the 1s who intensely suffer from it ; and besides of class non to endanger the denationalization of NAPOCOR and to go on pulling foreign corporations to put and take part in such steps of the authorities.

Among other multinational corporations ( TNCs ) , NAPOCOR ‘s IPPs incorporate energy sector ‘s giants such as Marubeni, Kawasaki, Mitsui, Chevron, and Enron ( IBON 85 ) .

Harmonizing to Meralco, PPA is merely one cost accommodation mechanism that is passed on to the local consumers, since there is besides the CERA which is intended so that Meralco will be able to recover the alterations in operating costs and refund of chief debt chiefly brought about by the alterations in foreign exchange rates in which the contracts are bound.

Due to this, Meralco claims that merely small of the consumer charges go to them, since it chiefly goes to NAPOCOR as PPA and to the authorities as franchise revenue enhancement. But, seemingly it turns out that these might be made up narratives or complains since Meralco as a power distributer was besides allowed to hold its ain IPPs by virtuousness of former Pres. Aquino ‘s EO 215. Meralco has so three IPPs which are among the state ‘s largest companies which supply about half of its power demands. This lone means that Meralco, holding its ain IPPs really earns a batch of money from the PPA. It has besides made usage of it to do a manner out of the contention originating from the fact that it has monopoly control over power distribution. By this, it was besides able to command and pull strings the calculations sing the IPPs which are unusually its sister companies. For illustration, First Gas which is one of its IPPs and partially owned by Meralco itself, was used to do anomalous minutess in PPA since Meralco can really protect and cover the supply cost from the said IPP even though in world it does n’t even present one kW of power to Meralco ( IBON 86-89 ) .

Meanwhile, we can clearly see that the consequences of allowing private corporations participate in the power industry is contrary to the principle behind its blessing, which among others is to alleviate the authorities from its load on funding the puting up of power bring forthing workss ( UP and Stiftung 115-116 ) . Alternatively of it go oning, the contrary had taken topographic point. NAPOCOR has left in charge of paying the debt duties of the IPPs assured by province warrants which were made to further attract investors. Through those inducements, including long-run power contracts, IPPs were assured that they will hold return on investings whatever happens.

Electric Power Industry Reform Act ( EPIRA )

Through the Electric Power Industry Reform Act or EPIRA which is RA 9136, payment for isolated costs of NAPOCOR or the costs due to stranded debts and contracts, were passed on to consumers as a cosmopolitan charge along with the cost of reconstituting the power industry. This was implemented during the Arroyo disposal when she declared that the authorities must non shoulder this disbursal but must be recuperated through a cosmopolitan charge.

To further clear up some antecedently mentioned footings, stranded debts as portion of the isolated cost is the duties that will be left out by NAPOCOR once it is sold to private persons, while the other one, the stranded contract cost is the difference from the monetary value of electricity from the sweeping market to be set by EPIRA itself and the monetary value from IPPs. Due to this really big cost of NAPOCOR ‘s duties which are partially paid by the authorities through debt from foreign beginnings, really high priced bonds were sold by the authorities to finance its chief duties chiefly due to those long-run contracts. So it is obvious that it has merely made the authorities and the people suffer from paying them alternatively of acquiring off from funding big sum for power generators, while the private sector like the multinational corporations ( TNCs ) and other local elites were acquiring more and more income from it each twelvemonth doing it as its “ milking cow ” . Besides it is apparent that PPA has merely intensified the dependance of authorities to private sector to pay its foreign debts and its sedate state of affairs of national bankruptcy which clearly impacts damaging consequence to the hapless Filipino citizens ( IBON 89-91 ) .

Actually, in 2001, the Arroyo disposal had pushed EPIRA to be approved for a great loan to be released, the $ 900 M ADB Power Sector Restructuring loan which was filed since 1998. IMF had besides played a portion on its blessing, since it made it a status for it to let go of a $ 300 M rehabilitation loan for the Philippines since 1999. By this, we could clearly see that the authorities had pushed it non to better the status of accessible power service to the people, but the inauspicious that favored the private companies and farther strengthened their control over the power service.

Transmission Corporation ( TransCo )

Along EPIRA in 2001, the creative activity of a National Transmission Corporation ( TransCo ) in 2003 under NAPOCOR was besides signed into jurisprudence. In line with this, the Arroyo disposal had besides pushed for its denationalization by the authorization of the same aforesaid jurisprudence. This TransCo as a GOCC is fundamentally in charge of operating and pull offing the power transmittal system of the state which will associate power workss to the electric distribution public-service corporations throughout the Philippines ( TransCo ) . In simple footings, it will be taking control over the transmittal and sub-transmission maps, assets, every bit good as the liabilities of NAPOCOR. TransCo, in taking over the sub-transmission assets will pull off it until they are eventually disposed into their proper distribution public-service corporations which in bend will keep its planning and overall care of those assets. But, as like NAPOCOR, through EPIRA, TransCo is mandated to be privatized through either an straight-out sale or a direction grant contract enduring for about 25 old ages. The Department of Energy ( DOE ) and the Department of Finance ( DOF ) were fundamentally in charge in the planning and puting up its transportation to private companies ( Cook and Mendoza, 9 ; 68 ) .

As once more an outlook of the authorities, from privatising TransCo, it expects a high income which will be used to pay the NAPOCOR ‘s staying debt that is extensively large which will in consequence lessen or diminish the authorities ‘s public sector shortage. Aside from that expected gross from its sale, the authorities besides expects that when a technologically progress and adept private concessioner will take over the transmittal line, it will ensue to more efficient and universe category web. It says that due to the stultifying energy crisis, people are difficult to be provided with a reliable and secured supply of electricity at low rates, so denationalization of such sector will be a necessary response to it, while pulling more investings at the energy division ( Perez ) .

But, the authorities really marginalizes the interest of local power sector by making this. First, they can be exploited since through the denationalization of TransCo, it will certainly take to a monopoly of the private concern. Since in EPIRA, the cross-ownership of distribution, coevals, and transmittal under NAPOCOR is allowed, this lone means that through the profit-seeking end of the monopolies over those countries, power rates will still stay undefinable ( TransCo ) .

TransCo ‘s denationalization clearly manifest the authorities prefering TNC ‘s every bit good as local elites like the Lopez Group of Companies in their strengthened power over the Philippines ‘ power sector. Harmonizing to the president of PSALM or Public Sector Assets and Liabilities Management Edgardo del Fonso, it would look non attractive to foreign investors if the assets of TransCo will non be franchised countrywide ( PSALM ) .

Actually, based on a primer released by IBON Foundation in 2003, there were already at least eight TNCs which had expressed their involvement in the denationalization of TransCo, non to advert that these TNCs are among the universe ‘s largest. And some of those TNCs were already on clasp of some local power industries ‘ operations. But due to certain restrictions of our fundamental law, they were merely allowed to run up to 40 per centum of the power sector, but so once more PSALM had admitted that subsequently on, it is possible that there would be some restructuring to be done to let greater portion of private sector on power service. This lone means that possibilities are unfastened on the entire foreign control of our local power sector at the disbursal of the national involvement and public assistance.

As of now, this transmittal system under NAPOCOR known as the “ crown gem ” of the authorities ‘s power denationalization plan is already at the custodies of the private sector. On the 12th of December in 2007, PSALM has conducted a successful command for TransCo ‘s 25-years grant contract to be able to keep its maps on transmittal. On the twelvemonth 2008, it eventually announced that TransCo ‘s transmittal map will be transferred under the direction of the National Grid Corporation of the Philippines ( NGCP ) , the successful bidder who offered a US $ 3.950B for the said grant after the three failed efforts in the old old ages ( PSALM ) .

This was despite the resistance of assorted consumer and hawkish groups like the Peoples Opposed to Warrantless Electricity Rates ( Power ) and the Bagong Alyansang Makabayan ( Bayan ) because for them it was a important measure for the authorities to take since the load shortly will to a great extent fall at the local consumers when the winning bidder will do a manner to retrieve its loss and investings at the earliest clip possible. As Legazpi cited in her article, harmonizing to Tapang, a convener of Power, “ ( Transco ‘s ) substructure provides a main road for electricity and other utilizations. Whoever controls it can enforce a ‘toll fee ‘ on users of this main road. In the custodies of private involvements, there is ever the potency for maltreatment in the name of greater net incomes ” . Bayan has besides released their statement through their secretary general in the individual of Reynato Reyes, adding that TransCo is of strategic importance to our economic system and so it must stay as state-owned and it is fundamentally a bias on the portion of the authorities to go on to such action due to the fact that this will take to a great burden to be carried on by ordinary consumers ( Legazpi ) .

Amidst those resistances, unluckily on that same twelvemonth besides, the Congress had approved a bicameral declaration which will allow franchise of TransCo to NGCP, legalizing it as a private unit to run a public service. By December of that twelvemonth, former Pres. Arroyo signed the jurisprudence which will officially allow franchise to NGCP, RA 9511. Following that twelvemonth, in 2009, TransCo was officially turned over to PSALM in a ceremonial held at PSALM ‘s office in Makati on January 14, 2009. The event significantly indicated the NGCP ‘s authorization to get down TransCo ‘s operation under its new direction with Atty. Moslemen T. Macarambon as its first new president. Currently, it is headed by Rolando T. Bacani, president and CEO ( TransCo ) .

After the sale dealing of TransCo, NGCP has paid about US $ 1B to PSALM as provisioned by the contract as its consecutive payment for its operation. PSALM is besides confident that after TransCo ‘s denationalization and turning over of NGCP on its operation will finally ensue to an efficient operation and effectual care of our transmittal web, while numbering on the successful record and broad experience of the pool and its foreign spouses ( PSALM ) .

After TransCo ‘s successful command and private transportation of ownership, PSALM is still opening its invitation for command of other power workss such as those at Naga, Cebu, the Naga Power Plant Complex, in Tongonan, Leyte, the Unified Leyte Geothermal Power Plants, and in Pililia, Rizal, the Malaya Therman Power Plants ( PSALM ) .

In 2010, many assets under power coevals have been sold every bit good as its contracted capacities. In spite all of those, the PSALM and the authorities still pushes for farther denationalization of the power sector.


When the authorities resort to privatising province owned corporations particularly those involved in economic services, this fundamentally turn to an impact which is every bit destructive as the liberalisation of trade and investing. As a Third World state, taking this important measure marginalizes the involvement and public assistance of the people and other economic development plans and undertakings for the state. The people are more vulnerable and are easy affected by the impact of holding no occupations and the unavailability of basic societal services. After some old ages of the promise of improved effectivity and efficiency of these privatized sectors by the authorities to the people as the ground behind the denationalization of such basic populace services, the purportedly good consequences are yet unobserved but on the contrary, public threats and troubles are experienced of the people on that peculiar service ( IBON 131-134 ) .

First of wholly, the authorities did non had a fiscal alleviation on privatising public services, since like in NAPOCOR and other corporations, the authorities becomes more belly-up and indebted to private or foreign investors since privatising assets merely provide short-run or erstwhile big-time gross, but in the long tally, consequences to a great dependance on private sector due to the debts incurred after denationalization. it has besides resulted to a lesser allotment of budget for other societal services due to the automatic appropriation of budget to debt service mandated by the jurisprudence. Some privatized assets by the authorities were besides non as considerable since sometimes they are cardinal economic participants in the state ‘s economic growing. Furthermore, in the instance of denationalization of NAPOCOR, the authorities had shouldered the immense liabilities left when it was privatized, or some parts of it. This consequences to a immense public financess being used to pay for its involvements and amortisation. Through province warrants, the authorities bore the duties of the IPPs, which through long-run contracts are assured by the authorities to hold return on its investings no affair what. In short, the authorities is no more than losing in this sort of plan and bit by bit is put into a profound bankruptcy. This is one of the chief grounds behind the financial crisis experienced by national authorities in 2004 and still contributes to the declining status of the economic system.

On improved efficiency

One point that is to be remembered sing denationalization is that holding the private sector does non needfully intend that the antecedently owned and controlled corporation of the authorities would give better efficiency. In the first topographic point, they were non created to be profit-oriented but to supply accessible support and basic service to the people. This is critical to the consumer ‘s state of affairs, since if the market fails, there should the authorities to procure them against it and go on to supply them its duty. Purportedly, our authorities expect that when private corporations took control over it, they will put in its betterment, but merely like the MWSS denationalization, this is non what is really go oning but they use their grosss to spread out their belongingss around the Earth, in short they are non concerned of efficaciousness of operation of the corporation, but more concerned on how to derive more net incomes.

Peoples ‘s entree to basic services

When GOCCs are privatized, people can anticipate spikes in their rates and unavailability and unaffordability of the basic service that were antecedently provided to them by the authorities in low and accessible monetary values. Of class this is merely logical since private corporations ‘ chief aim is no other than to acquire more net income. We can anticipate this consequence to be largely worsening to the hapless and marginalized Filipino citizens who besides try their best to last with their really little income that does n’t increase in existent footings and turning joblessness throughout the state. In fact, about 20 per centum of an mean household income is spent to pay their electricity measures entirely. Because of this, some of the hapless Filipino households had chosen to cut their electricity connexion to decrease day-to-day budget costs, or even on some households their supply was cut due to being non able to pay for their high electric measure.

Up to now, many the typical Filipino consumers are non able to acquire basic services at lower or “ sensible ” rates since as like the authorities said, those privatized establishments should hold been more efficient due to improved substructure implemented by private houses. But, it merely bloated up their rates that the people could barely pay for it, merely like in the power service of NAPOCOR, cost recovery mechanisms were passed to the people ‘s duty. So through that, we can already reason that when market forces rule without any ordinance from the authorities advancing public public assistance, the consumer ‘s state of affairs is mostly at interest and worsened.

Because of this we can clearly state that where is the “ pick of power ” and “ power pick ” that the authorities said and promised to its consumers if the power industry and its maps will be privatized? Clearly, it shows that it was simply a false and deceiving statement.

Worker ‘s state of affairss

Aside from these damaging impacts, denationalization besides increases degree of unemployment particularly in developing states like the Philippines. This is due to the supplanting of workers from the old state-owned corporations or in other manner, through contractualization of those somehow lucky worker ‘s left at the privatized corporation. In this manner, workers are put in an acute state of affairs while the private corporation continues to deriving more net incomes and cutting production costs. They are besides aggrieved through cutting their rewards without their power to halt those private houses.

In the restructuring and denationalization of NAPOCOR, more than 2,000 of its employees had already lost their occupation and presently, as menaces of farther denationalization of electric co-ops are on the manner, this figure will perchance increase. Aside from the employees of NAPOCOR who lost their occupations, there are besides many workers from industrial and commercial sectors who lost their occupations due to closing of their companies which one of the factors which caused it is the really high electricity rates that they have lesser production that can non vie with other industries either around the state or outside. Factory workers besides do n’t acquire pay hiking since their employers insist that they are passing more and more on operation and care costs as industrial electricity rates besides sores up.

Actually last July 2009, more than 1,000 former workers of TransCo were non accepted by NGCP to go on their work on it after 5 months of passage period, despite holding EPIRA confidences that were non that effectual afterwwards. This was due to the high NGCP criterions in accepting new employees harmonizing to the Mindanao Transco Employees Union or Mintrea.

Before TransCo was privatized, the pool of the private companies to take over it said that they will non allow those more than 5,000 employees of TransCo to lose their occupations alternatively they will once more engage them even denationalization is already done. But harmonizing to Walder Revellar, North Luzon chapter president of Mintrea, most of the TransCo employees suffered retrenchment even before when NAPOCOR was started to be privatized when reorganisation within the sector began. Most of them were of old age but has non reached the age of retirement on the new private disposal of TransCo due to forced leave since harmonizing to them, they do n’t hold the full capacity to absorb all of the old workers of TransCo. Being excessively old to be rehired, workers like them as a consequence had troubles in happening new occupations because of their age restraint. Some of the old employees besides are at immature age, which are said to be excessively immature to be retired, that could hold done great occupation on TransCo if they were non removed from their occupations as Revellar stressed out besides. Unfortunately, despite the worker ‘s complains they could n’t anything about that concern because it has been transferred already to the private sector ( Inquirer ) .

After of all the consequences of TransCo denationalization, it merely appears to us that the authorities is merely doing a manner to worsen its societal duty to the province and most particularly to the people in supplying the basic services that it must supply in the first topographic point. Public utilities and services play an of import function in protecting the hapless and marginalized sector of society so allowing the “ free-market ” and the market forces operate on its ain on those assets would withstand the public assets ‘ original purpose like the power sector in bring forthing efficient and low-cost electricity throughout the state. It had besides meant a lesser authorities intercession to the economic and societal activities of the province, and so it consequences to people ‘s state of affairs going worse complete clip as private sector continues to work our resources and gain super-profits. This should non be tolerated since first and foremost, these are all done at the people ‘s disbursal.

Plants Cited

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Legazpi, Nenita. “ Groups want alleged anomalousnesss in TransCo denationalization probed ” . Philippines: GMA News Television, 2007. Web. 7 March 2011.

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