Hounded by foreign ownership restriction
MANILA, Philippines — Korea Water Resources Corporation (K-Water), which won the bidding for the 218-megawatt Angat hydropower plant component, may have been waiting for nothing with hints from the economic cluster of the Aquino Cabinet that the divestment of the asset will likely be “halted” as a naturally occurring consequence of recent developments.
There is a pending case at the Supreme Court filed by advocacy groups raising Constitutionality issues on ownership restriction of foreign firms – taking into account the nature of the asset’s divestment. It must be recalled that the Korean firm joined the auction without a local partner.
Whatever ruling the high court may render, the final decision on the asset’s divestment may still be tossed back to the Power Sector Assets and Liabilities Management Corporation (PSALM), the asset-seller firm which is chaired by Finance Secretary Cesar Purisima.
A highly placed source noted that the mandate of President Aquino on a comprehensive water study “will effectively halt the privatization of the Angat facility.” That will be until the government comes up with a clearer and definitive stance as to what policy it will have for the hydropower asset – if it would be best left in government hands or it will re-offer it to private sector takers.
When asked, Energy Secretary Rene D. Almendras affirmed that there is indeed “a discussion at the economic cluster relative to the water study;” yet he noted that there is no direct pronouncement yet as to the fate of the Angat hydropower plant’s divestment.
Water czar and Department of Public Works and Highways Rogelio Singson, who during his term as president of Maynilad Water Services Inc. also sternly opposed the Angat facility’s privatization, is leading the study.
Almendras, nevertheless, indicated that while the water study is ongoing “we have to wait for his (Singson’s) recommendation.”
PSALM is still counting on the sustained interest of K-Water on the asset, with company president Emmanuel R. Ledesma Jr. asserting that “they are still very much interested despite the fact that they may have to wait for a few years,” considering the lengthy process on when decisions are rendered on cases at the Philippine courts. The Korean firm already renewed its performance bond deposit.
K-Water won the bidding for the Angat plant with a relatively high offer of $440.88 million. The asset-seller firm intended to proceed with the issuance of notice of award to the winning bidder which should have served as the reckoning period to the 270 days count to closing date as is the general rule being employed in PSALM’s sale of power assets.
That, however, was foiled by a status quo ante order issued by the Supreme Court in May 2010.
The nationality restriction issue thrown against K-Water has been anchored on the provisions of the Water Code of the Philippines (Presidential Decree 1067) on the use and appropriations of water; and Section 2, Article XII of the 1987 Philippine Constitution, stipulating that the act of exploration, development or utilization of natural resources shall be under the full control and supervision of the State.
It was further prescribed that “the State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least 60 per centum of whose capital is owned by such citizens.”
The petitioners said PSALM has abused its authority when it allowed foreign-owned K-Water to join the auction and declare it a winning bidder following the privatization process.
“PSALM is not exempted from the encompassing authority of the Constitution. Neither does PSALM have the prerogative to disregard the provisions of laws governing its conduct,” the petitioners have raised, adding that “PSALM overstepped, nay, deliberately violated the Constitution, the Philippine Water Code and the EPIRA (Electric Power Industry Reform Act), with the necessary consequence that its acts relating to the Angat HEPP must be struck down as unlawful, void and producing no legal effect.”
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By: Myrna M. Velasco
Source: Manila Bulletin, Nov. 21, 2011
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