PolEco: SC Urged to Reverse Ruling on Angat Dam - An article from the Freedom from Debt Coalition website

SC urged to reverse ruling on Angat Dam
Wednesday, 07 November 2012 00:00

Various cause-oriented groups, led by the Freedom from Debt Coalition, urged the Supreme Court to reverse its 09 October 2012 ruling on the sale of 246-megawatt Angat hydroelectric power plant (HEPP) by the Power Sector Assets and Liabilities Management Corp. (PSALM) to Korea Water Resources Corporation (K-Water).

In a 10-page Motion for Partial Reconsideration, FDC, together with the Initiatives for Dialogue and Empowerment through Alternative Legal Services (IDEALS) Inc., Akbayan Citizen’s Action Party and Alliance of Progressive Labor said the sale of the facility violates the Philippine Constitution, particularly Article XII, Section 2.

Article XII, Section 2 of the Constitution provides that “the exploration, development, and utilization of natural resources shall be under the full control and supervision of the State.” Petitioners fear that, if traversed to its logical conclusion, the decision effectively allows wholly foreign-owned corporations to engage in the exploration, development and utilization of State-owned water and other natural resources notwithstanding the clear nationality restrictions prescribed in the Constitution. “Thus, no ‘charter change’ would be necessary to allow foreigners and foreign-owned corporations to explore, develop, utilize – and even exploit – the State’s natural resources, including water. All they have to do is follow the decision this Honorable Court in the case at bar,” the petition says.

The petitioners likewise say that the SC’s reliance on the amended build-operate-transfer (BOT) Law is misplaced. “While it is true that under the Amended BOT Law, wholly-owned foreign corporations are allowed to undertake construction, rehabilitation and development of hydropower plants, the glaring fact ignored by the decision that the instant case had nothing to do with the Amended BOT Law,” the petition says. The privatization of Angat HEPP was made pursuant to the Electric Power Industry Reform Act (EPIRA) and not under the Amended BOT Law, the groups stressed.

The petitioners also say that the High Court “erred in its finding that the process of power generation does not amount to utilization of natural resources.” Petitioners claim that “power generation cannot operate without water. Hence, in the power generation process, water – a natural resource specifically mentioned in Sec. 2, Art. 12 – is indispensable. The operation of the AHEPP cannot be separated from the Dam Complex from which it draws its source of power.” “Very clearly, to maximize the use of the water from Angat Dam, the complex – the Reservoir, Dam, and HEPP - must be operated as an indivisible whole,” the petition says.

The petitioners likewise argue that the SC should have declared null and void the bidding process and the issuance of notice of award (NOA) to K-Water by PSALM, in consideration of the petitioners’ right to information. According to the petitioners, the High Court, instead of invalidating the bidding process and the eventual issuance of NOA to K-Water merely directed PSALM to allow petitioners access to the requested documents and records pertaining to K-Water. In its October 9 decision penned by Associate Justice Martin Villarama Jr, the Supreme Court, although allowing the sale, still partially granted the petitioners' request and ruled that the National Power Corporation should keep its controlling power over the dam’s hydropower generation, subject to the rules and regulations of the National Water Resources Board. All 14 magistrates concurred with Villarama, except for Associate Justice Presbitero Velasco Jr., who wrote a dissenting opinion. Velasco argued that the agreements “violate the Constitution,” stressing that “the use of natural resources in the operation of a power by foreign corporation is contrary to the words and spirit of the Constitution.”

“The O&M (Operation and Maintenance) is more straightforward, in that it expressly authorizes the operator, K-Water, to administer and manage non-power components, which it defines as ‘the Angat Dam, no-power equipment, facilities and installations, and appurtenance devices and structures which are particularly described in Annex 1’. While it is true, as PSALM argues, that Angat Dam itself is not being sold, the operation and management of the same is being handed to a wholly foreign corporation. This cannot be countenanced under the express limitations in Constitution and the Water Code.”

Respondents to the case are the Power Sector Assets and Liabilities Management Corp. (PSALM), Metropolitan Waterworks and Sewerage System (MWSS), National Irrigation Administration (NIA), Korea Water Resources Corporation (K-Water), First Gen Northern Energy Corporation, San Miguel Corporation (SMC), SN Aboitiz Power-Pangasinan, Inc., Trans-Asia Oil and Energy Development Corporation, and DMCI Power Corporation.

Under Republic Act 9136 or EPIRA, PSALM is mandated to privatize all the assets of the National Power Corporation, including the Angat HEPP. On April 28, K-Water, a utility wholly-owned and controlled by the Republic of South Korea, submitted the highest bid, amounting to $440.8 million, among six qualified bidders. Angat Dam is the single-most important water source of Metro Manila as it provides 97 percent of the water needs of at least 12 million residents of the country’s capital and irrigates some 31,000 hectares of farms across 20 towns and municipalities in Bulacan and Pampanga.