FEMOCRACY AND HOME ECONOMICS 5

A PLACE IN THE GLOBAL WORLD

The fact that women now choose to vigorously compete with men for high- paying jobs has serious consequences in western societies. Birth rates are well below replacement level which means that not enough workers are being born to replace the ageing population, causing a massive labour shortage - another harsh reality of the downside of femocracy.

More and more developed countries have no choice but re-evaluate their immigration policies to address the issues mentioned above.  Added to that is the constant realisation that they have to compete in today’s global market. While it is true that a lot of businesses move overseas to countries like China for their cheap labour; resourceful countries find ways to take advantage of the new economic landscape by creating new markets and opening up to new opportunities.

In a country like Australia for example,  the steel mining industry was abandoned a decade ago. Due to the lack of demand, the industry suffered and most mining towns were deserted. But now it’s different; the mining industry is in boom again due to increased demand from China. More than half of the materials used in building China’s Auditorium for the 2008 Olympics are made from mineral- rich “dirt” from Australia. China’s construction industry will continue to grow till the next decade, maybe more,  and Australia is cashing in on that. With the increased interest and growing debate on nuclear energy, the mining industry (uranium) can foresee big opportunities. There is now a big demand for labour in the rebuilding of mining towns. The housing, hospitality and entertainment industries are benefiting from it too.

Another case is the wool industry. Wool producing towns suffered due to lack of demand for wool. Again, China’s cheap labour and the use of cheaper synthetic materials decreased the demand for Australian wool from lucrative fashion industry. Sheep farming towns resembled ghost towns as young people moved somewhere else for better employment. But now there are some dramatic changes. Researchers found that there is a big market for goat meat in the U.S. for the Mexican communities there. The wool producing towns are open for business again although now they are part of Australia’s lucrative meat industry, their sheep paddocks are now being used to raise goats. And it doesn’t end there, with the health risk surrounding pork and sheep consumption, i.e. high cholesterol content causing obesity, diabetes, and heart problems, the industry can see bright lights in promoting beef, goat  and kangaroo meat in Europe, Asia and Arab countries.

In cases like these where it is not possible to move the industry overseas, the only resort for them is to bring the labour force into the country.

There are so much rhetoric in the west about the plight of illegal immigrants and what to do with them, but unbeknown to ordinary folks, these immigrants are being used ( and abused) to help their economies. The United States for example have access to cheap labour from Mexico and other nationalities who risk their lives just to set foot in that country; illegal migrants’ labour is a billion dollar industry in the U.S. Rich European countries have access to cheap labour through the decendants of colonial Africa and Asia. They also have waves of illegal migrants from poorer southern European countries, Asia and africa. But Australia has none of that and does not have to resort to cheap labour to move on. 

Being an island continent, Australia successfully controlled the number of people entering the country. They can pick and choose whom they want to allow in, which is understandable as they want to maintain their high standard of living. But, in the 21st century, Australia realised that to be successfully favoured in the growing Asian market, they have to change their tune. Australia welcomed professional and skilled people, investors , brides, sponsored relatives to legally migrate but never opened its doors to contract workers until only very recently, just last year! Filipino workers were one of the nationalities they chose to come! That was just a trial and as far as I gathered through a reputable current affairs shows on television- “Sixty Minutes” and “A Current Affair”- their employers are very happy. “They are very hardworking, you can see the desire in their eyes; they just want the work;  I will have them anytime,” one of the employer enthused. I suspect that more and more job opportunities will be offered to Filipinos.

Already, there are calls in the media complaining that local labour will be disadvantaged as business owners given a choice will prefer cheap labour from other countries.  Politicians were quick to guarantee that contract workers will be given Australian minimum wages and they will not be subject to abuse. There are heated debates going on today whether opening the country to more contract workers is the way to go. The local labour movement are dead against it but big corporations like Mcdonalds expressed their desire to hire contract workers from the Philippines as opposed to hiring Australian teenagers who are supposed to be in college learning a trade or at universities.

There is no doubt that skills migration and opening the country to contract workers is the solution but to satisfy nationalistic concerns and queries both of the leading political parties came with a criteria as to what kind of people they should let in. The preferred factors are: skills and educational qualification, English language proficiency, ability to assimilate and acceptance of the Australian culture and values. Since Filipinos are known to have this desirable qualities, they should have no problem entering the country legally.   

This is a reflection of what is happening in the rest of the western world and  Non-English speaking developed countries. There is a labour shortage and they require skilled workers to keep going and compete. Labour exporting southern European countries like Italy, Greece and Spain hired Filipinas as domestic helpers decades ago while there where restrictive policies in western European destinations like Germany and France. Today, more and more Filipinos are hired in these countries with jobs not limited to domestic duties and with better workplace conditions. Thanks to the pioneers, Filipino nurses are in great demand in the US, and now Britain and Ireland too. I heard Filipinos are needed in Scandinavian countries too.

Filipinos, without a doubt, has a place in the global world. While people from poor countries have no choice but risk their lives in entering developed countries illegally, Filipinos are being offered jobs and are invited to enter countries legally. They have more choices of countries to go to and have access to different jobs. The only thing needed is for the Philippine government to do more in choosing the right countries, negotiate a fairer and secure deals for the overseas foreign workers (OFW) and actually do something to improve the process of training and hiring. The Philippine government should not send Filipinas to countries were women are treated like second class citizens, have no respect for individual rights and freedoms, or societies whose culture is very limiting.

Petropolitik, Sapian and China - Thirteenth and Final Part

Phew! Final part. Sapian is part of the Visayas Grid, powered by the combined generation capacities of Tongonan, Kanlaon and Palinpinon geothermal plants. On its own, the Capiz Electric Cooperative (CAPELCO) is solely dependent on bunker fuel. Other power plants in the region are predominantly bunker fuel, fuel oil and coal-fired. National Power Corporation (NAPOCOR) augments shortages around the Visayas islands with bunker fuel-run power plant barge. Bunker fuel is generally used to run factories, and Chinese power plants and factories consume increasing volumes of that fuel distillate. Recently, China has been consuming nearly half a million barrels of bunker fuel everyday, and more than three times more fuel oil. See China’s Petroleum Consumption, by Economic Sector, 2002

As such, CAPELCO competes against China for scarcer bunker fuel. Increased demand for electricity in Sapian was due to expanded electrification. But power is essential to spur growth and development. With electric power, people would enjoy improved quality of life and have access to better opportunities. Families would converge around energized areas to enjoy the amenities of modern technology, like the wider world-view TV offers, and food-preserving refrigerators, and better study hours for students. They could operate capital equipment like rice mills and welding machines, and would have a longer productive day. Senator Juan Flavier once joked in a meeting that electrification also reduces birth rate because people could follow soap operas instead of going to bed early. In short, electric power also empowers people in many ways.

Over 15 years after Poblacion was energized, a large chunk of Sapian, from Crossing Bilao onward to Lonoy and Guibongan did not have electric power. I recall Igsoons Toti and Bodong having to come to Poblacion to charge car batteries to power their TV. I do not know if they are served today, but in any event, a lot of households should be served by now. Energizing that part of Sapian can be traced to Cory Aquino’s visit to Iloilo.

Cory’s regional visits and inspection trips have been the domain of former Cabinet Secretary Jose P. de Jesus (later, DPWH Secretary). But it was turned over to Chito Sobrepena when Malacanang was reorganized under the flamboyant Executive Secretary Oscar Orbos. Government programs and projects are usually developed through long bureaucratic processes, but Cory also wanted to go directly to the people to know about their needs and to address local problems. Secretary de Jesus was designated to coordinate during the early part of the Aquino Administration. At the latter half, Sobreprena was appointed under the Office of Special Concerns. I was part of Sobreprena’s core-group for regional visits. That unit coordinated all presidential visits across OP and line departments. During visits, we collected hundreds of letters and resolutions from local governments and individuals. We make sure that visits run smoothly. One time, I earned the ire of the Bishop of Nueva Caceres in Naga City when I asked what would he say in his prayers at a program the next day.  He snapped, “It’s between me and God!” Advance party had to be quizzical because one priest prayed to God to fix a bridge in a program. Cory was put on the spot and could not respond right away.

Cory’s visit to Iloilo was announced to the media far ahead in advance. But in case they did not hear about it in Sapian, I told the late Uncle Alber Gallardo, Sr., former ABC President. When I called him at Movietone Studio, he said he heard about the visit and had been planning to write a request letter. At that time, he said he was torn between a farm-to-market road in Poblacion and electrification from Bilao to Guibongan. Two weeks later, when we collected his letter during Cory’s dialogue with the local officials in Iloilo, his letter requested Cory for a power connection to Bilao-Lonoy-Guibongan. As a closing statement in that dialogue, Cory promised her very special commitment to all the requests submitted, verbal and written. Hence, in compliance to the President, all letters gathered and oral requests raised at that specific event bore a collatilla, “the President’s very special commitment.”

When request letters have been sorted in Malacanang, Uncle Alber’s request was grouped together with a similar request for Dacoton, Dumarao. Office of the President’s Office Special Concerns Director Nick Torres promptly conveyed this very special commitment of the President in a memorandum to the National Electrification Administration (NEA). NEA, soon thereafter, had informed CAPELCO that a special loan with Land Bank of the Philippines was being offered under the rural electrification program. CAPELCO initially expressed disinterest, stating that the proposed connection would be fiscally infeasible given the density of prospective users and the long stretch of power lines that would be required. Director Torres again issued a memorandum reminding NEA that the very special commitment of the President had to be delivered to the people of Sapian. NEA replied two weeks later that a barge carrying electric posts from Leyte are en route to Roxas City. Uncle Alber Gallardo, as the requestor, and Uncle Nicoy Odrunia, as a Sapian delegate to CAPELCO Board of Directors, have been continuously apprised of the status, as are any requestor for President’s assistance from anywhere else. As FVR said, fire on top and fire at the bottom get things done.

Uncle Alber had been very happy about the completed electrification project. I also heard about the ceremonial switching. I remembered about this project recently when Nang Luz Obligar talked about a power outage during their visit to a church in Lonoy that her daughter, Inday Reynalda Firmalino, helped build. Hopefully, the project had been financially feasible for CAPELCO as it is empowering for the Sapianons it now served.

Petropolitik, Sapian and China - Eleventh in a Continuing Series

Let’s talk about a commodity not related to gas prices, but suddenly related to it just because President Bush said that America is addicted to gas. Bush the Elder once said that catsup is a vegetable. So, what the heck. My story today is about addiction to tobacco. I’m reminded of this topic as I started reading Christopher Buckley’s book entitled, Thank You For Smoking. That book is a satirical comedy on the machinations of Big Tobacco’s chief spokesman, Nick Naylor, who spins on behalf of cigarettes while trying hard to remain as a role model for his son. It also detailed high-level lobby in US politics, an Iron Triangle of lobbyists, members of US Congress and officials Federal agencies, as tobacco lobby fought head-on against the health establishment.

On FVR’s first day in office, the Palace Household, an office that’s, well, exactly managing the Palace household, had been taken over by the new administration. At its helm was Ambassador Lolita Haney, FVR’s aunt. Her gunner was Mrs. Paynor, wife of incoming protocol officer, and later Ambassador of Palace Protocol, Marciano Paynor. That morning, we have been disappointedly surprised. Mrs. Paynor had told us point blank that no cigarette would ever be lit inside the palace. The smoke deteriorates national treasures by Amorsolo, Juan Luna and other great Filipino masters that were hanging all over the palace walls. She added that even camera flashes ruin them. That’s ironic because FVR is aptly known as Tabako. Later on, we would equally be disappointed that our favorite caterers, Jade Vine, Ria’s Cuisine and Makati Skyline, would, from that day forward, be replaced by an endless fare of tuna sandwich and, oh well, tuna sandwich. We would later regularly see Century Tuna delivery trucks. FVR had a problem with cholesterol and his carotid would later be operated on. After a few months serving the FVR Administration, I never ate another tuna sandwich for years, until I got tired of pink salmon and discovered white albacore.

We had a smoking club under the Cory Administration. Our president was Ruben D. Torres, former Secretary of Labor and later, Executive Secretary. The membership spanned through different levels of the hierarchy. At that time, there were lead crystal ash trays all over, and as long as it does not get into the eyes of non-smokers, you’re fine. Just sit in the corner and light up, the high velocity air flow and filtration system will take care of it. Our club shared cigarettes and lighters, exchanged palace news, and bartered favors.

But it had been different under FVR since the only ash trays inside the palace are the ones for FVR’s chewed up tobacco. We would now have to go out through very heavy bullet- proof French doors, you have to lean your weight forward, into the patio or a terrace. Getting in would be more cumbersome because some doors lock you out. You have to either hope somebody inside would look outside and beg you way in, or go back to the entrance and through guards and a maze of hallways and stairs to be back to where you started. But life went on.

Through two administrations, smoking time for VIPs and staff alike took its unspoken toll on many occasions. Sometimes, the convoy’s itinerary had to be planned to have a smoking whistle stop. Venues of programs, locations of stage, riders in a particular vehicle of the convoy, and VIP holding rooms are often influenced by staff and VIPs’ smoking habits. Central Bank’s Falcon jet had to wait in Mactan International Airport because we could not find a cigarette vendor. We had to get a smoking holding room in Sarabia Manor (Iloilo) for Mrs. Ramos who was stressed about the number of people who showed up in a supposedly very private lunch with her family in La Paz. Lai Torres explained to her, “You are the First Lady now, so they are all your relatives suddenly.”

The arrival of Estrada Administration did not change the FVR “no smoking” policy even if the incoming Administration itself had its smoking club. On the morning of Estrada Inauguration, as I parked my tora-tora alongside the gleaming rides of national elites, I saw Triple V and more than half a dozen aluminum-clad catering trucks! Goodbye to one century of Century Tuna. On that day of Estrada Inauguration, like I did for the Ramos Inauguration, I would be the conductor of the bus shuttling incoming Cabinet members from the landing area to Palace luncheon, to Quirino Granstand for the Inaugural Address, to a Grandstand mini-reception, and back to the Palace for the first Cabinet Meeting, and the Inaugural Ball. Upon arrival from the Presidential oath taking in Barasoain Church, Erap went straight to the Drawing Room to try the President’s Desk. Then lunch was served. As he was walking out from the President’s Office for lunch, a giant chandelier, wires shorted out and cut the chains, fell down, missing him and his wife by a few feet. We were outside the office door waiting to hail to the new chief when we heard a big thud. Thud! No one will ever know whether it was a premonition of what will be a failed presidency, or the revolting spirits of the presidents past, or both.

But lunch was super, all the king’s best caterers and finest china for the first day of the newest presidency. It was exclusive for 300 people composed of the Estrada Family, very close friends and political allies, and yes, acolytes like us. Mostly, they were familiar faces of the silver screen, business and politics.

After lunch, we congregated to our usual smoking time. New smoking faces have been directed to the only and the best smoking spot by by the Pasig River. Then there was this short, balding, dark man who did not look familiar; he stood next to me asking about palace life. He was generally nice but curt sometimes. He told me he is an incoming Undersecretary of Tourism. So I politely asked why I never saw him in company of the elites, or at least, the power circles of Tourism Department. He said that he is from Jamindan, Capiz but he lived in the States for decades; has two houses there, in fact. But Erap, a close friend, had asked him to come home and help. So, you are from Jamindan, I’m from Sapian. Yes, he said his Dad was a mayor, and yes, he knows some Orilloses and Hondrados. Well, the only person I know from Jamindan is the late Nong Boy Advincula, husband of Nang Venus. He said he knows the Advinculas but he is not in a hurry to go home as yet because he had lots of work waiting for him. I did not ask for his name, but at the Cabinet meeting that day, I surmised from the list that his name was Orestes Ricaforte. I never saw him again. Never heard anything until two years later. After the downfall of Erap, I saw on the news that his wife, Yolanda Ricaforte, was the auditor of Erap’s jueteng money. Deng! His work waiting for him was counting Erap’s money. Had I known then, I should have volunteered to work under him and would have already paid up all my debts to Gee Ann Ballie Tupaz and NN Alvarez!

Anyway, at the second Erap Cabinet Meeting, our smoking club continued to expand. A new member was Undersecretary Fely Villareal, known to Mambusaonons as “the Madre,” daughter of former Speaker Cornerlio Villareal, Sr., who even ran for mayor in Mambusao. At that time, she was GMA’s deputy in Department of Social Services and Development. We shared cigarettes and lights, and assigned someone as a look out in case GMA suddenly calls her. GMA kept Undersecretary Villareal very busy and she had to put out halfway-lit cigarettes. What a waste.

I hoped to see them both again at the next meetings. But Erap did not convene the Cabinet for many months. On that second meeting, he said that since he was the President, he would not use the scripts we prepared. Neither would the agenda be as long as FVR’s. Whoever had issues among Cabinet would have to resolve it themselves and he would sign anything. He just asked us to enjoy the Manila Hotel catered lunch, which of course, was a pleasant surprise for us to be free from tedious minutes and the scourge of Century Tuna. The third Erap meeting and the last Cabinet meeting I will ever attend will be a Manila Bay cruise aboard the newly refitted BRP “Ang Pangulo.”

Petropolitik, Sapian and China - Sixth in a Continuing Series

Another way to revisit the saga of Sapian, China and oil crisis is tracing the thread of Philippine petroleum deregulation. Fidel V. Ramos (FVR) pushed for the enactment of Republic Act 8180, the Downstream Oil Industry Deregulation Act of 1996, to promote a more competitive market and prices by allowing the entry of “small” oil players to the market monopolized by the so-called Big Three, namely, Pilipinas Shell Petroleum, Caltex Philippines Inc. and Petron Inc. This involves the removal of the government subsidy to oil prices, called the Oil Price Stabilization Fund, which provided a cushion to oil price increases. In 1999, a new oil deregulation law (RA 8479) was enacted to pave the way for the full deregulation of the oil industry.

During World War II, many countries heavily regulated industries and nationalized critical industries (e.g., petroleum, coal mines, steel mills etc.) to provide maximum support and efficient use of resources for war efforts. After the war, many countries continued or expanded controls on industries to rebuild their war-ravaged economies, and well into the 70s. By the 80s, U.K. Prime Minister Margaret Thatcher - plagued by paralyzing strikes, mismanagement, and bankruptcy - started to privatize government companies. In economic circles, it was called Thatcherism. In the U.S., President Ronald Reagan tried to relax government control on businesses, called Reaganomics. Both trends lean toward Keynesian economics. A very influential 20th Century economist, John Maynard Keynes theorized that government should use its power sparingly at the macro-economic level to regulate (e.g., interest rates, use of reserves etc.) but let the private sector and market forces try to equalize itself. http://en.wikipedia.org/wiki/Keynesian_economics

Along these lines U.S. President Bill Clinton, FVR and other leaders promoted a book by David Osborne and Ted Gaebler, entitled, Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector. The authors looked into model governments efficiently run like corporations, with performance-based budget, partnership with the private sector, and people empowerment themes. It called for leveling of the playing field, deregulation, decentralization, devolution, and liberalization, in all aspects of government, politics and the economy. From Washington, to Europe, to Tokyo, a chorus of international organizations told Cory and FVR to pursue these goals. Hence, it was institutionalized in FVR’s Philippines 2000. http://govinfo.library.unt.edu/npr/index.htm

Under this philosophy, started by Cory but staunchly implemented by FVR, the bureaucracy worked double time to deregulate, decentralize, and devolve powers of governance. Among the first tangible result of these is the Local Government Code
- to the perpetual chagrin of my mother and Nono Varon’s parents (it’s a relief they are all in the United States now!) - that included the devolution of the Department of Health’s Rural Health Units (RHUs) to local government units. There were persistent rumors that RHUs will be renationalized, but early on I asked former Health Secretary Juan Flavier (now, Senator) and he told me to tell my mother to change career because it’s not going to happen. In theory, local governments should have more control over their local affairs and would be able to prioritize their policies and fine-tune their programs according to local needs.

Another example is today’s proliferation of cell phones. PLDT monopoly was broken by giving away franchises to any company able to install 5,000 lines, can apply for telephone franchise anywhere in the Philippines. Many leapfrogged with infinite cell lines, so you now have a galaxy of cell service providers. This also was true with Cable TV providers and a host of other telecommunications sub-sectors. Philippine Airlines franchise monopoly was also broken. Now, passengers are no longer at the mercy of PAL. Anyone who has a plane, compliant with all BOT regulations, could apply for an air franchise anywhere in the Philippines. Then you have BOT (Build-Operate-Transfer, Build-Transfer-Operate, Build-Own-Operate etc.) alphabet schemes, which allowed building of dozens of giga-wattage power plants by Hopewell Holdings, Enron, etc. worth billions of dollars. The caveat, contracts for 50 years for guaranteed power purchase by the National Power Corporation. This wiped out the brown outs overnight, particularly when power grids throughout the country have been interconnected. Then, you have your Skyway, North Luzon Expressway, MRT and many others. Under the general theme, base lands, like the Fort Bonifacio area, have been opened to joint ventures with the private sector.

For a moment, the Philippines was referred to as one of the Tiger Cubs of Asia.

Petropolitik, Sapian and China - Ninth in a Continuing Series

Since it might prove hopeless for us to compete against China for limited petroleum supply, we should rather focus our energy to develop our agriculture. It was believed that we could not industrialize without modernizing our agriculture; now that we might never industrialize, it is the more reason to modernize our agriculture and small and medium enterprises (SMEs).

Projects in Negros and Bulacan deserve notice because they transcended limitations of land sizes. Size of lands has always been a perennial obstacle in economies-of-scale rice farming, especially since parcel sizes continue to be reduced as properties are passed down from generation to generation. In two barrios of Silay, Negros Occidental, farmers surveyed their properties, measured each parcel and valued them into commensurate share of ownership in a cooperative. Then, using their combined lands as collateral, they applied for multi-million Land Bank loan, bought tractors, seeders, and built post-harvest facilities. Then, they destroyed the pilapils, flattened their farmlands, installed irrigation system, and hired an agriculturist. They themselves have rotated turns in Board of Directors, as company officials, and as drivers and manual laborers. A similar project in Santa Maria, Bulacan, involves hundreds of farmers who established a self-sufficient, chicken production plant. They planted corn, manufactured feeds, raised chicken, produced eggs, processed meat, and hired sales and delivery staff to market their products. Their conveyor-based processing plant, which looks more like a Magnolia plant, was worth nearly P25 million. In Leyte, instead of selling copra, a cooperative built a coconut oil mill worth about P1.25 million. Because of profitability, they expanded to two more plants. Later, Japanese businessmen imported their coconut oil to be processed into special lubricant for high precision instruments. Now, they are reaping the benefits of their entrepreneurship.

FVR’s trip to Samar-Leyte was memorable. I was the point-person on the visit’s leg to Calbayog, Western Samar. So, I contacted the province, made all the arrangements and prepared the itinerary. On the morning of our ocular inspection, my alarm did not go off and woke up at 7:00 a.m., which was our take off time. I jumped up and sped to Villamor Air Base’s 205 Presidential Airlift Wing. When I arrived 45 minutes later, everyone, including Colonel Hermogenes Ebdane, then Deputy Commander of the Presidential Security Group (now DPWH Secretary), was already aboard the plane. People did not talk much to me until we arrived at Romualdez International Airport in Tacloban. Our aircraft stopped at the regional composite force helipads and we quickly boarded two waiting Hueys. After a brief warm up, we took off and I was relieved that my tardiness no longer matters. After about 15 minutes airborne through the coastline, the Huey in front turned back, then we followed. Soon we were back in Tacloban airport. The pilot of our Huey said that since we left too late that morning, return flight from Calbayog could be impossible because of thickened cloud cover that day. Now I had cold-chills again. Stranded after 10:00 a.m., everyone’s blaming me now. Colonel Ebdane was cool. That cool brought him to top. With no prior arrangement made on land transport, we boarded and transferred into a succession of government vehicles, practically from town to town.

We arrived in Calbayog by almost 3:00 p.m. The late Governor Jose Rono (former Deputy Prime Minister and Minister of Local Government under Marcos) patiently waited for us. Governor Rono was cool too. We ate (and cherished) a lunch that was ready since that morning and ready to spoil at that time. After an abbreviated meeting and a quick look into FVR’s venues we quickly headed back to Tacloban, non-stop this time. We arrived in Tacloban airport at around 8:30 p.m. and luckily, it is one of few domestic airports with fully operational night navigation system to support our type of aircraft. An Air Force officer joked that airport’s night instrumentation has been installed because Imelda usually flew home anytime she and Marcos had fights.   

That next day, our ocular trip was the worst in the history, I was ready to volunteer to swap with a co-worker for another visit. However, in an afternoon that next day, PSG operations staff called me that we were probably been saved by my tardiness. One of the two Huey choppers we briefly flew in exploded at sea. Everyone died, including General Orina, father of ABS-CBN anchorwoman Ces Orina-Drilon. If I remind Secretary Ebdane now, I may get a free meal in DPWH cafeteria.

Petropolitik, Sapian and China - Eighth in a Continuing Series

First, there were faults in the assumptions. Proponents say downstream deregulation will make the economy stronger and better because it will, as it should, be left upon a free market to operate. Market is said to be a self-equalizing force; that all things being equal, profit interests and buyer interest will synthesize into general welfare.  So the theory goes. But opponents argue that since there is no upstream industry to guarantee a free play of supply and prices for downstream industries, deregulation has no net positive effect because downstream entrepreneurs are still dependent on Big Three for supply. Hence, there is no real competition. Proponents believed that as soon as deregulation is announced, oil companies around the world would race to our doorsteps. But our announcements, repeated announcements, have been met by a stony silence. The reason, some say, is that giant oil companies, with their rules of engagement and protocol, would not go after each other’s throat because, as traditional economics always say, genuine competition lowers prices; and lowered mark-up prices reduces profitability. By and large, they share not only the same security and political concerns, but also the same oil wells, pipelines, refineries, transshipment facilities, tankers, borrow each others’ jets, etc. Early on, critics warned that if there would be no new players the size of the Big Three, deregulation is doomed to fail. And there were none.

Another result of deregulation is the removal of Oil Price Stabilization Fund (OPSF). OPSF is an import levy instituted by Marcos and was approximately P1.25/liter in 1997. It was placed on reserve as safety net to fend ill effects of escalating gas prices. When there was sudden jolt in gas prices to soften impact to consumers, government either totally covered (subsidized) the difference in cost, or spread costs over a period of time (credit). Even at the months before deregulation, OPSF mechanism had been working very hard to stabilize unpredictable gas prices. OPSF was typically used for Forward Cost Cover (FCC) that absorbed for consumers the fluctuating price difference three months in advance. Former Energy Secretary Francisco Viray would always complain to the Cabinet how hard it was for OPSF to keep up with increasing world prices. For over three years, I was the energy “expert” on FVR Cabinet minutes. My supervisor, Director Jess Albar from a prominent Roxas City family, knowing my interests, invariably gave me all Cabinet items on energy, until the Cabinet no longer talked any OPSF or FCC.

On top of deregulation, privatization was another scourge to Philippine petroleum industry. Petron, a government petroleum company, was sold to Aramco. At that point, government had fully abdicated its last measure of influence on domestic oil prices.  Ownership of Petron had been good oil price leverage; profitability had been shoved aside in favor of national welfare. Petron saturated market with lower priced gas to upset upward pressure on gas prices. So, losing Petron ownership and having no OPSF safety net, and none of expected downstream competition, government is now left with the last front-end control. To tax or not to tax.

If we are already selling tax-free oil, and China would pay even more money for even more gas supply, we would be in big trouble. How many of us would be willing to pay P90/liter even if it’s tax-free?

Petropolitik, Sapian and China - Seventh in a Continuing Series

Then, an important aspect of this series on Sapian, China, and petropolitik is oil deregulation. In theory, it allowed any company to operate in the downstream oil industry. Of course, we do not have upstream oil industry to speak of. But this paved the way for the organization of 14 new players (e.g., Eastern, Shale Oil, Flying V, etc.) and arrival of French Elf Aquitaine and Total, and American company known as Coastal Petroleum. http://www.tsha.utexas.edu/handbook/online…es/CC/doc5.html

In addition to being a staff support to regular Cabinet Meetings, I also supported Cabinet Cluster on Energy (Cluster D). Policies on energy, including oil deregulation, price increases, etc., are regularly discussed, before directions are issued to the Energy Regulator Board. My brush with small time oil interests started when our cousin won as mayor of Tangalan, Aklan and came to Manila to explore for projects. We had a small network in the FVR Malacanang partly because former Presidential Counsel Antonio Tirol Carpio’s (now, a Supreme Court Justice) mother is from Tangalan and Boracay, and relative of Nong Liling Tirol of Majanlud and Bilao. FVR’s biographer Jojo Terencio is from Makato, plus the network of retired General Federico Ruiz. In any case, Mayor Francisco, whom I later brought to Toto Wally and Shirley Martinez house in Angkin on one New Year’s Eve on our way home from a rock crusher intended to supply quarry rocks to PhilEstate in Boracay, introduced me to Shell oil barge contractors. He used to work in Shell and had contacts with Shell tanker barge contractors. These contractors are also connected to the late Senator Robert Barbers in many ways. With that group, I saw Nong Richard Jamora, son of Auntie Titay, who is a Manager in Shell Tank Farm in Pandacan. Later, I would draft letters to Nong Richard on behalf of these interests pleading leniency for the petroleum safety violations or delivery shortfalls.

Coastal Petroleum, a Houston, Texas based company, contracted the use of underground petroleum storage in Subic Naval Base. The storage facility has a capacity of 2.4 million barrels, or worth over one week of total national consumption. My friends would later have transport services and distribution/trading contract with Subic Coastal.