Saturday, April 30, 2016

Energy 63, EPDP lecture on energy planning

Last Thursday, I went to UPSE to attend this lecture. Great one, as usual. Dir. Irma Exconde is a friend, a fellow UPSE-PDE alumni, her batch in 2002 was 4 years younger than mine.

Dir. Tamang discussed the process in crafting the PH energy plan (PEP) and the Power development plan (PDP). I told Dir. Irma that with the long process of consultations and meetings to produce a national plan, I really would have no patience working in government.

Then Irma discussed the important aspects of the PEP and PDP, 2015-2030. Among the slides she presented, below. In Luzon grid last year 2015, rated or installed capacity by coal was only 35% of total but actual electricity contribution was 49% of total.

In contrast, oil/diesel power plants, installed cap was 16% but actual contribution was only 1%. Why, because they are used only as peaking or peak load plants, they run only for few hours a day on weekdays, on high demand hours and are not used during off-peak hours, or weekends and holidays.

For the new renewables, wind + biomass + solar is 3% of installed cap but actual electricity output only 1% of total.

I mentioned during the open forum that the DOE is subjected to environmental terrorism. If they approve more coal power plants, the DENR and CCC will go to media or in Congress to shift the blame to DOE. Known climate junketers and climate negotiators (Tony la Vina, Yeb Sano, etc.) lambast the DOE and the President why they are commissioning more coal power plants.

I also mentioned during the open forum the need for more dams and hydro power because we are entering a new era of global cooling (warming-cooling cycle, endless climate cycle), meaning more heavy rains, flooding, etc. for many years and decades to come.

Notice that in this slide, renewables like solar and wind, electricity consumers' demand, transmission, etc. have their respective plans, but no mention of coal development plan. To mention coal in public discussions seems to be "politically incorrect"... 

In the "minor" conflict between DENR+CCC+ environmental militants vs. DOE on the latter's granting of permits for more coal plants. I am on the side of the DOE. In 2015, 49% of total electricity generation in the Luzon grid came from coal power plants. Without those coal plants, or even slashing half of them, will result in massive, large-scale, daily and nightly blackouts in M.Manila and the rest of Luzon.

The anti-coal planet saviors will hate this scenario of course. They want their 24/7 electricity, they hate even a 1 minute brown out and power interruption so that they can do fb and tweet how ugly coal power is. Double talk and hypocrisy is their regular characteristic. The DOE, by allowing more coal plants, is protecting the public by securing more power supply, to be away as much as possible even from 1-minute brown outs.

As mentioned above, the actual contribution to electricity generation by solar+wind + biomass in the Luzon grid is only 1%. In case of massive, large-scale brown outs because of the anti-coal drama of DENR, CCC, climate militants, those big firms, hotels, manufacturing plants, hospitals, condos, etc. will keep their electricity. How? Lots and lots of gensets, noisy gensets that run on diesel, more dirty than coal power plants.

And the poor or lower middle class who get disconnected by Meralco or other distribution utilities (DUs) or electric cooperatives (ECs), for a few days or weeks they have no electricity, what do they use? Candles. More candles mean more fires, more destruction to private property, more injuries, more deaths.

Expensive, unstable electricity supply means more LGUs and villages have little street lights. Dark streets mean more road accidents, more crimes, more rapes and robbery. The anti-coal campaigners don't want to recognize this social problem.

Cocktails after the lecture. From left: Rodel Meris, Dir. Tamang, Prof. Ruping Alonzo (UPSE faculty and EPDP Fellow), me, Lawrence Fernandez of Meralco, and Irma.

Room was full. The 1-hour lecture became 2+ hours including Q&A.
Thanks again EPDP, for that fruitful public forum.

See also:
Energy 60, PH solar companies, PagIBIG loan for solar, March 12, 2016 

Energy 61, EPDP lecture on PH power projections by 2040, April01, 2016 

Energy 62, Feed in tariff means more expensive electricity, April 09, 2016 
Election 19, On Grace Poe's renewables coercion, April 14, 2016

BWorld 56, Thomas Hobbes, Saul Alinsky and Duterte

* This is my article in BusinessWorld last Thursday.

An electoral exercise is a process of the changing and evolving function of the state, of local and national governments as key actors -- politicians and political parties -- articulate their vision or lack of it, of where government should focus its roles and function.

Such evolution of state and governments, like markets, is often for the better, towards the rule of law and equality before the law. But sometimes it is a change for the worse, towards the rule of men, unequal application of the law and dictatorship.

Among the leading presidential candidates, Davao City Mayor Rodrigo “Digong” Duterte is the odd-man-out. While the three other leading candidates -- Sen. Grace Poe, VP Jojo Binay, and Sec. Mar Roxas -- promise plenty of subsidies and new welfare programs, or expansion of existing ones, Mayor Duterte is focused on a single issue, fighting criminals, drug pushers and corrupt officials.

One of the three “social contract” theoreticians of why government was invented was Thomas Hobbes (1588-1679), an English philosopher best known for his book Leviathan (1651). He described early human situation under a “state of nature” as one of endless societal conflict, impossibility of peace, and the need to invent a Commonwealth where certain human freedoms are surrendered and curtailed by a supreme ruler in exchange for peace and order in society.

Hobbes wrote in the Leviathan:

Whatsoever therefore is consequent to a time of Warre, where every man is Enemy to every man; the same is consequent to the time, wherein men live without other security, than what their own strength, and their own invention shall furnish them withall. In such condition, there is no place for Industry;... and which is worst of all, continuall feare, and danger of violent death; And the life of man, solitary, poore, nasty, brutish, and short.

-- Chapter 13, “Of the Naturall Condition of Mankind”

The Fundamental Law Of Nature... “That every man, ought to endeavour Peace, as farre as he has hope of obtaining it; and when he cannot obtain it, that he may seek, and use, all helps, and advantages of Warre.”

The Second Law Of Nature... “That a man be willing, when others are so too, as farre-forth, as for Peace, and defence of himselfe he shall think it necessary, to lay down this right to all things; and be contented with so much liberty against other men, as he would allow other men against himselfe.”

-- Chapter 14, “Of the First and Second Naturall Lawes, and of Contracts”

This is what Mayor Duterte has been hammering regularly, consciously and unconsciously. That Philippine society is rolling back somehow to a “state of nature”, a pre-government state where individuals’ actions are bound only by their own desires and restraints, where criminals and brutes rule and can victimize anyone anywhere. Hence, a need for a “social contract” and install an absolute sovereign, a strong central government with the power of the biblical Leviathan (a sea monster) and protect people from their own selfishness, protect the weak from the brutes.

During the third and final presidential debate last April 24, host Karen Davila asked Mayor Duterte, “Sabi niyo po, ‘You cannot be a President if you cannot kill. Papatay ba kayo kung kayo’y Pangulo?” (Will you really kill if you become President?) and Duterte replied, “No, it’s not the actual -- takot ka mamatay, takot kang pumatay, wag kang mag Presidente.” (If you’re afraid to die, afraid to kill, don’t run for President).

And there’s a follow up when Ms. Davila asked him, “Anong gagawin niyo sakaling malaman po ninyo na isa sa mga anak niyo ay gumagamit ng ilegal na droga?” (What will you do if you know that one of your children is using illegal drugs?) The Mayor quickly answered, “Patayin mo.” (Kill him/her)

Killing and murder, individually or by the thousands, are his “default” answer to questions related to enforcing the law. In one interview, he promised to kill 100,000 more criminals and drug pushers nationwide if he wins the Presidency.

Saul Alinsky (1909-1972), a Jewish American community organizer and writer, became famous worldwide as the founder of modern community organizing through his famous book, Rules for Radicals (1971).

There are 13 key rules in that book that proved to be generally effective in organizing successful mass movement and collective action. Five of those rules seem to work for Mayor Duterte:

3. “Whenever possible, go outside the expertise of the enemy.” The other Presidential candidates promise endless welfarism and subsidies, controlling and killing many criminals is beyond their expertise.

5. “Ridicule is man’s most potent weapon.” Constant use of cusswords “P--- ina”, “bayot/bakla”, “go to hell” are powerful ridicules that decent politicians and statesmen and women are less prepared to deal with.

6. “A good tactic is one your people enjoy.” Again, frequent use of cusswords, gutter politics, sexist jokes, even making fun of rape-murder Australian victim three decades ago.

7. “A tactic that drags on too long becomes a drag.” He keeps producing new attacks, new antics that his political competitors can only raise their eyebrows in disbelief. Like his plan to go to the Spratly islands on a jetski, plant the Philippine flag and let the Chinese Navy to kill him if they like.

9. “The threat is usually more terrifying than the thing itself.” Saying that he killed 1,700 criminals in Davao City alone, and promise to kill 100,000 more criminals if he becomes President, make people wonder whether he is joking but his followers take him seriously, impatient about rampant criminality in many parts of the country, whether real or imagined.

One important revelation of this campaign period is that the masa after all, are not so enamored with more welfarism, subsidies populism, and more environmentalism. Rather, they are more concerned with peace and order, physical annihilation of criminals and the corrupt.

Duterte has shifted the debate on the “raison d’etre” or reason for existence of government: Not welfarism and populism, but protection of the people’s 3 freedoms: freedom of private property, freedom from aggression and bullies, and freedom of expression. Somehow this is good.

He has played out this hunger by the public. The welfarists including the UN, foreign aid bodies and their consultants are wrong to persist in welfarism to “fight inequality” as an important election issue. People, even the poor, can live with inequality. What they cannot tolerate is more criminality, more stealing, legal or illegal/outright robbery.

And by riding on this public hunger to control criminality, Duterte is promising more criminality, of state-sponsored murders to achieve that goal. Duterte in effect will be violating the people’s three freedoms without realizing it.

Duterte is a dangerous candidate. He should not win. The problem is that the other leading presidential candidates are showing little capacity to snatch the lead. One practical but seemingly improbable scenario is a consolidation of votes of two least-opposing candidates, that of Sen. Poe and Sec. Roxas. But it seems that the probability of a Duterte victory is higher than the probability of this consolidation of forces.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers, a Fellow of SEANET and member of the Economic Freedom Network (EFN) Asia.

See also: 

Wednesday, April 27, 2016

Drug Price Control 43, Mar Roxas and the Cheaper medicines law of 2008

During the 3rd and final Presidential debate last Sunday, Sec. Mar Roxas said, "Alam mo, Karen, sa kasaysayan ko, binangga ko mga malalaking interes. Pharmaceutical industry, cheaper medicine law, banking industry..."

Then a friend reposted a comment from someone attacking the Secretary saying, "You (Mar) lied by proclaiming you are instrumental in cutting the prices of medicines. On July 2009, there was a Senate press release....

"...Authors of the Cheaper Medicines Act in the House or Representatives urged Roxas to support the move to reinstate provisions on automatic price regulation.

"Authors of the Act in the House noted that Roxas vehemently opposed the automatic price regulation, which is the 'heart and soul' of the House version because it could have reduced the prices of more or less 1,600 medicines by at least 50 percent," Sen. Loren Legarda said in response to a question by members of the audience after her speech.

"Mar's amendments on the Cheaper Medicines Act killed the spirit of that law, and instead set a limit to its mandate in regulating pharmaceutical companies' pricing practices," Loren stressed.

The drug price control policy of 2009 affected about 20 or so molecules, usually the most saleable products by multinational pharma. What Cong. Biron, even Sen. Manny Villar, also Sen. Loren? wanted was the creation of a new bureaucracy, the drug price regulation board (DPRB) with a new set of bureau directors, asst directors, staff, office, travel, etc. to be incorporated in the cheaper medicines law of 2008 (RA 9502).

That law was mainly about amending the intellectual property (IP) code so that some newly-invented, patented medicines by multinational pharma, the patent can be confiscated by the government so that local pharma like Unilab will benefit, they can also manufacture and make good profit of those newly-invented medicines. The chapter on price control was a rider in the law, not part of the original draft bill.

So did Mar lie on his role in the cheaper medicines law?

No. He delivered on that amendment to the IP Code, something that I personally did not support, but the law was created nonetheless. Mar was correct in opposing the creation of that permanent bureaucracy DPRB (likely would have been headed by ex-Cong. Biron) and endless drug price control policy.

The threat of patent confiscation by the state from innovator pharma to local generic pharma (silent cronyism actually) created some downward pressure on patented drugs. The off-patent drugs that constitute about 95% of all essential medicines list (EML) of the DOH, again off-patent, are not affected by that law.

The advocates of the creation of DPRB are mostly socialists, explicit or implicit, or plain bureaucrat extortionists. They argue that private pricing of their products is wrong, it should be the state that should price those products. Then the state and the price bureaucrats may allow some pharma products not to be included in the mandatory price control, in exchange for bribes and extortion.

The world health org (WHO) has its global essential medicines list (EML) and from what I read once, 99% of them were off-patent, meaning only 1% of those EMLs in the WHO list are newly-invented and still patented ones. In the DOH's EML, I read that it's between 90-95% are off-patent. Meaning RA 9502 has zero effect on these non-patented, non-IP protected medicines. Like the famous anti-fever paracetamol molecule, it's been off patent since 30 or more years ago.

Generics medicine was given a huge boost since 1988, the Generics law under DOH Sec. Flavier. So the cheaper medicines law of 2008 (20 years after) has contributed very little to generics promotion. The compulsory licensing (CL) and special CL provisions of RA 9502 were also meant to align PH's IP law with WHO's TRIPS flexibilities. 

Funny thing about drug price control/regulation, the head of PCPI, the local pharma lobby, said during one DOH meeting that perhaps it's the first time that the local pharma + multinational pharma (represented by PHAP) were united in opposing a govt policy. Before, it was easy for them to take a stand. If PHAP takes position A, PCPI almost always takes position B that's opposed to A.

Death from infectious or communicable diseases is falling worldwide. So since all of us, 100% of us will die anyway, that means that more and more of us will die of non-infectious diseases, like cancer, stroke, hypertension, etc. That is where many of medicines innovation are directed, like there are perhaps 200 different types of cancer, then varieties like a patient with prostate cancer + diabetes vs a patient with prostate cancer + hypertension vs a patient with prostate cancer only.

Also during the 3rd and final Presidential debate, Sen. Miriam Santiago said that her physician sister or friend said that there are new anti-cancer drugs that come out in the US almost every week. These are never-heard before, not part of "orig" nature, science-invented molecules and medicines. They are very expensive, to compensate for very high cost of R&D and long processes of clinical trials, and usually very effective. Miriam added that she feels like new, so alive, because of the new medicines she is taking but are very expensive.

Actually the most expensive medicines are those that don't work. Even a P1 tablet is "expensive" if it does not heal a patient, if it allows the disease to evolve into something more sinister and fatal inside a person's body. A drug that costs P1 M or P5M treatment but can heal a cancer patient, can be considered "cheap" if a patient survives to live more years or decades of productive life.

See also: 

Saturday, April 23, 2016

Climate Tricks 52, Counting temp. change only from the end of LIA

This month proves to be the hottest month of the year almost always. Generally cloudless sky although there are days that the clouds would be staying for a few hours. The consolation is that this big El Nino of 2015-2016 will end soon, when it touches the threshold 0.5 C temperature anomaly.

Bloomberg produced this drama story, Earth's Temperature Just Shattered the Thermometer.
Haha, the earth is 4.6 B years old, and the UN and others' baseline is the past 140+ years only? Clever starting point because that was also the end of the little ice age (LIA). Global temp has no way to go but up.

Honest research should go back to temp records over the past 2,000 years, 400,000 years, 1 million years, 1 billion years, etc. There are many paleo-climate data that are freely available on the web.

Plato was born nearly 2,500 years ago (424 BC). He was older than the medieval warm period (MWP), the Roman warm period (RWP). What was the global temp during his time compared to current global temp.? Much warmer. See the start of the graph, on the left.

Climate change (CC) is true, it has happened in the past, happening now. But CC is mainly natural (nature-made, not man-made) and cyclical (not 'unprecedented"). Climate changes from warming to cooling to warming to cooling to .... endless cycle. Now, big El Nino is fading, so what's next? Big La Nina. Like this El nino- La Nina cycle since 1950.

The last big El Nino was in 1997-98, Presidential election period too. I heard that many farmers in Mindanao were even selling their votes for as low as P50/head because they were so desperate. But at least no road occupation then, unlike the recent Kidapawan road occupation.

We still need environmental protection -- like converting low-lying areas into lakes, man-made lakes. For the rivers of Bulacan and Pampanga in particular, they need lots and lots of huge and sustained dredging, will require tens of billions of pesos perhaps, as we prepare for rising rivers and lakes, not rising ocean.

Here's the latest projection for La Nina -- by mid June this year or two months away. For how long, until 2017 or even beyond.

Yesterday, "Earth Day" and many government leaders in NYC were saying "we need more money to fight man-made warming and CC" by signing the Paris COP 21 agreement. More money, more UN power, more environmental regulations and energy taxation/subsidies. More carbon confusion and simply more government.

See also:

Climate Tricks 51, The CCC, Greenpeace and fossil fuels, February 01, 2016

BWorld 55, FIT-All, renewables and elections 2016

* This is my article in BusinessWorld yesterday.

The increase in feed in tariff-allowance (FIT-All) has been approved by the Energy Regulatory Commission (ERC) recently. As a result, Meralco and all other distribution utilities nationwide will be collecting 12.40 centavos per kWh of electricity consumption starting this month. The amount is higher than higher than 4.06 centavos/kWh that was collected in 2015.

Even consumers from Mindanao -- an island not connected to the Visayas and Luzon grids -- will pay this FIT. If Mindanao consumers are spared of this additional charge, the FIT-All will be much larger in Luzon and the Visayas, which host an increasing number of wind and solar farms. Another FIT hike will be expected next year.

Unlike the previous electricity price hikes that met a big public backlash, such as the price hikes of P4+/kWh in November-December 2013 which should go back to old rates after two or three months, FIT additional collections are not short term but long term and can last 20 to 30 years or more.

The Philippines has the highest electricity prices in the ASEAN and has the second-highest in Asia, next to Japan. This is not good especially if we are serious in attracting more investments that can give more jobs to more Filipinos (see graph).

There are many factors why this is so, among which are the various taxes, fees, and royalties imposed by the Philippine government on energy sources (like the natural gas royalty from Malampaya gas field in Palawan) and on companies themselves.

In the coming general elections next month, all presidential candidates support more renewables. Sen. Grace Poe even proposed that power distributors should be “compelled” to use renewable energy. Davao Mayor Rodrigo Duterte is explicit in supporting more coal power plants, and administration candidate Mar Roxas supports the use cleaner fossil fuel like natural gas, along with renewables.

Among Senatoriables, it is weird that former DoE Secretary Jericho Petilla would even blame some provisions of the EPIRA law of 2001 for the high cost of electricity in the country, saying that the law prevents the government from putting up new power plants that can help rival private generation companies.

Government-owned National Power Corporation (NPC) used to be the sole power plant owner and operator nationwide. Instead of bringing down the cost of electricity while raising power capacity, NPC has largely succeeded in piling up huge amount of debts, mountains of debts hundreds of billions of pesos, that it could not pay and hence, were ultimately passed on to taxpayers.

Renewable sources such as solar, wind, geothermal, and hydroelectric have the following characteristics that are dissimilar to conventional sources like coal and natural gas. Among these are: (1) zero or near-zero variable operations and maintenance (O&M) cost, but (2) low capacity factor or actual electricity production relative to its rated capacity, except geothermal, (3) high levelized cost of electricity (LCOE) and, (4) generally higher electricity prices if subsidies are not given.

LCOE is a good summary measure of the overall competitiveness of different power generation technologies representing the per kWh cost of building and operating a power plant over an assumed financial life and duty cycle.

Here is the LCOE in the US four years from today. The capacity factor is generally higher compared to those in developing countries like the Philippines (see table).

When the Renewable Energy (RE) Act of 2008 (RA 9513) was created, a lot of subsidies were put in the law that effectively pampered developers of renewables like solar, wind, and biomass. Among these are the: (1) feed in tariff-allowance (FIT-All), (2) priority and mandatory dispatch into the grid, (3) renewable portfolio standards (RPS) or the minimum share of renewables in power generation, and (4) various fiscal incentives.

The list of those various subsidies and incentives, FIT rates in Germany and the Philippines, are also discussed in my earlier article, “Feed in tariff means more expensive electricity” published by the Albert del Rosario Institute (ADRi) blog, Spark.

A FIT that increases every year -- which has already taken place in Germany, UK and other European economies, and now in the Philippines -- means rising electricity prices even if generation, transmission, distribution, supply, and various other fees and tax rates remain the same.

So far, it seems that not a single candidate for a national position has openly criticized this setup of ever-rising electricity prices in the country. On the contrary, some candidates even justify expensive electricity so that we can help “save the planet.”

Expensive electricity means more dark streets at night as LGUs, villages, and households save on their monthly electricity bills. When many streets and roads are dark at night, there are more road accidents, more destruction of public and private properties, more crimes, more rapes, injuries, and deaths.

Worse, when some households’ electricity connection is temporarily cut off due to non-payment, people have to use candles for a few hours or days, and candles are among the major causes of fires. These social costs are often avoided or not recognized by the campaigners of expensive, unstable renewables.

Expensive electricity also means less businesses and jobs that can potentially be created here. Energy-intensive companies and manufacturing plants will try to avoid investing in the Philippines -- where electricity prices are expensive -- since they will put up their factories and big offices in ASEAN countries with lower energy costs, then export to the Philippines at zero tariff. They only rent smaller offices here to facilitate business transactions.

As a developing and emerging economy, we should have cheaper electricity, bigger power capacity and reserves to ensure 24/7 availability of power, even in periods of huge spikes in electricity demand or damaged power facilities due to strong storms or earthquakes.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers, a Fellow of SEANET and Albert del Rosario Institute.

See also: 

Friday, April 22, 2016

Election 21, Duterte and the Australian, US Ambassadors' comment on rape joke

Here is one news report when the Australian Ambassador, then US Ambassador to the Philippines, briefly commented on that "rape joke" by Duterte. 

"US Ambassador Philip Goldberg echoed the statement issued by Australian Ambassador Amanda Gorely, who criticized Duterte for saying that he should have been the first to rape Jacqueline Hamill, an Australian missionary who worked in Davao City.

“Rape and murder should never be joked about or trivialized. Violence against women and girls is unacceptable anytime, anywhere,” Gorely posted on her Twitter account on Monday.

“I can only agree with the colleague from the Australian Embassy,” Goldberg said in an interview aired by CNN Philippines.

“Any statements by anyone, anywhere that either degrade women or trivialize issues so serious as rape or murder, are not ones that we condone,” he added."

And Duterte went ballistic. He and his supporters say the man is "tough talking" and he is pikon with that simple comment, not related to the elections, can apply to anyone and no one  in particular. 

Change is coming if he becomes President. Change for the worse. Many of his supporters will be cheering with him on this too.

When people self-destruct, we should not interrupt. Lalo lang magagalit mga mob supporters nya at PI din sasabahin.  I like it the more he opens his foul mouth, and I wonder how his supporters, especially the thinking ones, can continue supporting him.

A friend, Jose Custodio posted this in his wall,

"So recently I was talking to a member of the media and I mentioned to the person that as you guys in media cover the Duterte beat and see the throngs of supporters and see their vitriol against the media outfits and reporters, and the actual threats they make against your life and property, isn't it like covering your impending doom as a free and independent media should he actually win the presidency?"

And the reply was... "a weak smile and silence..."

Perhaps a news report in the coming days, "CPP NPA to campaign all out for Duterte and expose US imperialism in PH elections." Hard core fans + CPP-NPA militants + rape jokers = Duterte mob rule.

One more characteristic of Mr. Duterte is his high intolerance of opposing views. Any Ambassador based in Manila who will comment unfavorably on his actions, not even his policies, he will challenge to cut diplomatic ties. Legislature that will not sing Halleluiah to all his pronouncements, he will abolish Congress. Ordinary criminals, including those are just suspects with raw facts, will be summarily executed. Intolerance anytime, anywhere. And his supporters will be clapping him.

Nope, he does not represent the rule of law. Rule of law is enforcing laws without exception. If the law says the accused criminal is entitled to a due process, then there should be due process, allow the suspect to have some legal defense. Automatic and summary execution of suspected criminals is not rule of law. It is rule of men, rule of dictatorship.

See also:

PH as 4th biggest shipbuilding nation in the world

I saw this article, I shared in my fb wall, and soon, more than four dozen other people including some friends, have re-shared it. People look for good news and they find it, they gladly share.$5-billion-maritime-business-in-the-philippines/

Shipbuilding is very energy-intensive. Hence, we need more power capacity, cheaper energy that are available 24/7.

I saw Tsuneishi shipbuilding plant in Balamban, Cebu, around 2002 when  I joined the UPSE-PDE study tour in Cebu. Not for "ordinary" workers there, required medium to high-skilled labor, like welding different steel parts -- no trace of welding, it's like one whole metal sheet folded. So the skills training was intensive at the start, through time, the locals have developed their own set of skills.

A friend added that ‘The locals were sent to Japan to be trained. A successful venture with the Aboitiz! Done almost "off-the-radar".’

Another friend suggested that the PH should start building military ships like an aircraft carrier. But who would buy such giant carrier made in the PH? The existing shipbuilders here like Tsuneishi, they may have zero work or experience making military ships, only cargo and passengers ships -- those huge ships transporting steel, cement, coal, rice, etc.

With AEC, "unli flights" by ASEAN-based airlines will soon kick off. To follow will be "unli sails" by ASEAN-based shipping lines. RORO ports almost everywhere as fast craft boats, designed and manufactured in the PH, become more available, more affordable.

From the Manila Bulletin news,

“In 2013, the Philippines was ranked as the fifth world’s largest shipbuilding country after China, Japan, Korea and Brazil, as more local shipyards are building more ships of larger tonnage capabilities like bulk carriers, container ships and passenger ferries, particularly Tsuneishi Heavy Industries, Inc. (THICI), Hanjin Heavy Industries Corporation Philippines and Keppel Philippines Marine, Inc., which cater to the export market,” said Bañas. -- June 22, 2014.

What government can do, or should NOT do, to help this industry develop further:

1. Do not create new taxes or raise existing ones that apply to the sector. Business bureaucracies, simply cut and reduce them.

2. Further bring down  the cost of electricity via less taxes and bureaucracies for gencos.

Monday, April 18, 2016

Election 20, Digong Duterte's rape "joke" of the Australian victim

In a campaign rally, Presidential candidate Rodrigo "Digong" Duterte made these statements referring to the Malaysian missionary who was among those hostaged, gang-raped and later murdered by escaping prisoners in Davao City in 1989. The video was posted in youtube. Digong said,

“Nirape nilang lahat ng mga babae so ‘yung unang asolte, kasi nagretreat sila, naiwan yung ginawa nilang cover, ang isa doon yung lay minister na Australyana. Tsk, problema na ito…Pag labas, edi binalot. Tinignan ko yung mukha, tangina parang si… parang artista sa Amerika na maganda,”

“Putangina, sayang ito. Ang nagpasok sa isip ko, nirape nila, pinagpilahan nila doon. Nagalit ako kasi nirape? Oo, isa rin ‘yun . Pero napakaganda, dapat ang mayor muna ang mauna. Sayang,”

Dapat ang Mayor mauna, sa pag rape! 
This man is mentally- or morally-challenged.

I am reposting two comments in fb from two friends:

(1) Ted Te:

"Define obscenity : When a public official jokes about rape in a public speech and has the gall to ask for your vote to make him president.

I am Filipino. I am from Davao. And NO, he is not my president."

(2) Bernard Ong:

"It's not about foul language. It's not about the joke. It's about repeated pattern of offensive behavior & remarks that treat women as sex/rape objects. It's about twisted mindset that sends the wrong message to everyone from kids to would-be rapists.

'Mayor dapat mauna' sa gang-rape is not gutter language. It is madness & pure evil.

Clearly he just doesn't get it. The enormity of his mistake - not from the political point of view, but from a moral perspective. He doesn't know right from wrong. Black from white. Tama o mali.

I also grew up with toughies who talked 'gutter language' in Cotabato, Leyte, Cebu & later Diliman. We spoke Bisaya - Cebuano. We also had foul language & our daily dose of cursing. But we never, ever found rape acceptable or funny."

In the late 90s, I have a housemate who was a former political detainee during the Marcos years. He told me that when he was caught, the military mixed up the pol. dissidents with ordinary criminals on same cells. The latter including hardened ones look up to the former, would listen to them inside the jails. My friend observed that these criminals would have no problem with fellow prisoners who have stolen, stabbed or shot someone. But they are super-angry at rapists, binubugbog daw nila ang mga rapists na mapasok sa selda nila.

Lesson? Even ordinary criminals who have disrespect for private property and fellow men have some respect for women. This Du30 is a different animal.

Meanwhile, many Duterte supporters were laughing and having fun at this kind of joke? Anak ng... Magsama ang parehong utak at ugali.

See also:

Friday, April 15, 2016

BWorld 54, Rice farming, trading, smuggling and electioneering

* This is my article in BusinessWorld last April 14, 2016.

Several issues related to rice farming and trading in the Philippines hogged the news recently. The first of course is the big El Niño and crop failure in many provinces in the country and many other tropical countries. Second, the farmers’ rally in Kidapawan, Cotabato that turned bloody early this April. And third, on large-scale agricultural smuggling including rice.

The 2015-2016 El Niño indeed was huge, reaching up to 2.5 Celsius deviation from the average temperatures, but it is comparable to the 1997-1998 El Nino (see graph).

The Kidapawan rally that claimed two dead rallyists and two policemen in coma was unique because while this El Niño also adversely affected many provinces in the country, there was no highway occupation for days and bloody demonstration that occurred.

On the third item, Dr. Ben Diokno in his column here in BusinessWorld last April 6, 2016, quoted Bobi Tiglao’s numbers saying that “smuggled value averaging $19.6 billion annually, an explosion from the comparable figures of $3.1 billion and $3.8 billion yearly during the terms of Presidents Joseph Estrada and Gloria Macapagal-Arroyo, respectively.”

These three and related events in rice farming have become part of the issues raised by Presidential, Vice-Presidential and Senatorial candidates running for the May 2016 elections. We discuss these issues by asking these questions:

1. Is this El Niño so bad and “unprecedented” that prompted many people to demand doubling, even quadrupling of government spending in agriculture to help “fight man-made climate change”?

2. Is rice “self-sufficiency” a valid must-goal for the Philippines and hence, demand massive reallocation of resources from other sectors to agriculture in general and rice farming in particular?

3. Is continued rice protectionism valid, and agricultural smuggling really that bad against the Philippine economy and the consumers in particular?

From Graph 1, the answer to #1 is No. This big El Niño has a precedent, the most recent was the 1997-1998 El Niño and consistent with natural weather and climate cycles, we should expect another big La Niña to follow later this year like what happened in 1999-2001. That means another round of heavy rains and flooding that can cause another round of huge crop damages.

To answer question #2, the numbers here will help (see table). 

From the above numbers, the answer to #2 is another No. Our neighbors Thailand and Vietnam simply have plenty of rice land, around two times that of the Philippines, in contiguous and single land mass, with access to huge irrigation from Mekong River, Ton Le Sap River, other huge rivers that provide huge irrigation.

The Philippines has a comparatively small rice land area, slowly being converted to residential, commercial and industrial uses. Being an archipelago, there are very few large rivers that can provide continuing irrigation to wide rice lands.

Besides, Thailand and Vietnam get perhaps only about 1/5 of the number of typhoons that enter the Philippines, average of 20 typhoons a year, about half of which make actual landfalls and cause more damages and crop losses. These two countries are also done with their agrarian reform and forced land redistribution; the Philippines is not done yet, after 43 years of implementation, starting only in 1972 Marcos’ land reform, not counting earlier land reform programs.

So forcing rice “self-sufficiency” cannot be a valid goal. Instead, pursuing rice “food security” is more appropriate. We continue producing more rice with the help of more modern technology, and any deficit can be filled by rice importation at free trade, lower prices from our ASEAN neighbors.

And the answer to question #3 is another No. This is not to justify rice smuggling but bringing in cheap rice from Thailand and Vietnam and other ASEAN countries is pro-poor and pro-consumers, like the carinderia owners and customers (especially jeepney and taxi drivers, students, job seekers).

The government rice protectionism policy -- via rice quantitative restrictions (QR), imposition of 35% tariff for imported rice, the National Food Authority (NFA) rice importation monopoly -- is both anti-poor, anti-consumers. For many Filipinos, they want cheap rice, and such is readily available from our neighbors Vietnam and Thailand, and soon, Cambodia, Laos, possibly Myanmar.

The following are reform measures that the next administration may consider.

One, if the government should insist on rice “self-sufficiency,” then it should allow corporate, large scale rice farming. Economies of scale, tapping the knowledge and services of plant scientists and geneticists, use of more farm mechanization, will greatly improve the country’s rice output. Double or triple the current four tons per hectare average output, coupled with reduce post-harvest losses.

Two, decouple NFA’s marketing/proprietary and regulatory functions. Privatize the former and retain the latter, sell many NFA assets like warehouses, use the fund to help reduce huge NFA debt, about P155 billion as of mid-2014. Assuming a 3%-4% interest rate, we are paying around P5 billion each year on interest payment alone for the NFA debt.

And three, liberalize rice importation by removing NFA importation monopoly delegated to licensed importers and traders, removing the QR for rice, and significantly cutting the import tariff of 35% down to 5% or even zero.

Postscript on the Kidapawan demonstration: (1) The majority’s freedom of mobility is superior to rallyists’ freedom of assembly. Highway occupation and closure is wrong. To remove the conflict between these two freedoms, mass actions and demonstrations should be held in public plaza, or idle farms near big roads and highways. And (2) use of live bullets by the police to disperse the crowd is wrong. The state should be above the fray and avoid killing its people as much as possible, regardless of the provocation by rallyists. Exceptions would be when firearms are explicitly displayed and fired by the demonstrators against the police, the public, shops and other civilian structures.

Bienvenido S. Oplas, Jr. is the President of Minimal Government Thinkers, a SEANET Fellow and member of the Economic Freedom Network (EFN) Asia.

Thursday, April 14, 2016

Election 19, On Grace Poe's renewables coercion

Ahh, Sen. and Presidential candidate Grace Poe wants us to pay for more expensive electricity from intermittent, unstable power sources. Must be upon the prodding of her ecological socialist adviser Tony la Vina, among other reasons. One more reason I won't vote for her then.

She's dependent on mostly the Ateneo group. While Ciel Habito makes sense in economics, Tony la Vina is clearly socialist and central planner -- in some instances in the past, he posted things praising socialism and forced equality -- in energy and environment policy, can be her DENR Sec. if she wins. 

Meanwhile, people should walk their talk. If they love solar and wind, then they should do it on their own, pay for the high price, NOT coerce, force, arm-twist everyone else to subsidize expensive power via higher monthly electricity bills. This renewables coercion and dictatorship will make our already "2nd most expensive electricity prices in Asia" (next to Japan) to become even more expensive -- via FIT, RPS, mandatory dispatch to the grid.

If we have to follow renewables coercion, that we should embrace wind, solar, biomass asap, we should have massive, large-scale black out in the whole Luzon grid. Data from DOE as of mid-2015. ACTUAL electricity output from wind, solar, biomass in Luzon was only 1%. At Meralco franchise area, those renewables' share is zero, nada.

So if people love their 24/7 electricity, they will realize that mandatory, forcible, coercive renewables is NOT the answer.

Expensive electricity from renewables, actual numbers, are shown in a chart and table here, cases of Germany, UK and the PH, 

Grace Poe wants huge, energy-intensive manufacturing companies to be located in Vietnam, Thailand, Indonesia, Cambodia, Malaysia, create tens of thousands of high-skilled jobs there, then they can export to the PH at zero tariff anyway.

The largest solar farm in Southeast Asia so far is in Cadiz City, Negros Occidental, my hometown. Rated capacity about 132 MW. This means... more expensive electricity for Negros and the Visayas grid. Coal and natural gas can give us electricity at P4-5/kWh (sometimes less than P4), zero electricity uncertainty. Solar automatic P9+/kWh, and very erratic. Zero output for 12 hours at night, bet 1% to 65% capacity factor at day time. I recognize though the job creation + real estate taxes contribution of that solar farm in Cadiz.

But if people want more industrial zones, more manufacturing plants, more hotels in Cadiz and Negros, they need coal and natural gas, not solar or wind. With or without the Sun, with or without the wind, the elevators, lights and air-con in hotels and industrial parks must run, 24/7.

Among the other Presidentiables, they all seem to be supporting more renewables, but I  was surprised to read that Rodrigo Duterte is openly and explicitly supporting coal. He even lambasted the UN and Al Gore hypocrisy in forcing renewables in developing countries like the Philippines.

See also:

Saturday, April 09, 2016

Energy 62, Feed in tariff means more expensive electricity

* This is my article in SPARK by ADRi last April  06, 2016

The Philippines has the unhealthy label of having the “second or third most expensive electricity prices in Asia” next to Japan and Singapore. This is not a good news for energy-intensive industries like manufacturing and hotels where electricity demand can be running 24/7.

With ASEAN economic integration, many big energy-intensive industries will be put up in cheaper-electricity countries like Vietnam, Thailand, Malaysia, Indonesia and Cambodia, then export to the Philippines at zero tariff. That means potential job creation that fails to materialize here.

It is important then that all succeeding government energy policies should be geared towards reducing the prices of electricity. Unfortunately, we are doing the opposite with the implementation of the feed in  tariff (FIT), priority dispatch, and  renewable portfolio standards (RPS) under the Renewable Energy law of 2008 (RA 9513).

FIT means guaranteed fixed price for solar, wind, biomass and run-of-river hydro for 20 years. FIT for solar and wind in particular are 2x current average prices of conventional energy sources. Priority dispatch means even if cheaper conventional energy is available, expensive renewables will be prioritized in the grid. And RPS is the minimum percentage of generation that should come from eligible RE resources.

Let us briefly review the  case of Germany – #1 in solar installation  in the planet, #3 in wind after the  US and China, and perhaps having the most gallant policies  in FIT, other subsidies, and priority dispatch of renewables in the industrialized world.

Figure 1. Electricity prices in selected rich countries, 2015.

Source: Gilbert Kreijger, Stefan Theil, Allison Williams,  “How to Kill an Industry”, Handelblatt, 24 March 2016,

So Germany has the most expensive residential electricity tariff and second most expensive in industrial tariff next to Japan. The authors further made these observations:

* Ordinary consumers saw their electricity bills double since the introduction in 2000 of RE; total cost has risen from €0.9 billion in 2000 to €23.7 billion last year and will likely hit €25.5 billion this year.

* Some 350,000 German households have had their power cut off, up 13 percent from 2011. Shocking inefficiency with RE producing €25 billion in electricity-bill surcharges this year will only be worth €3.6 billion on the market.

* Green-power surcharge on electricity bills already cost consumers €188 billion since it was first introduced in 2000 – or €4,700 for each of the country’s 40 million households. The nuclear shutdown will cost another €149 billion by 2035, according to a Stuttgart University study.

How expensive is FIT in Germany that they are among the factors why a number of that country’s top manufacturing and energy-intensive firms like Siemens and BASF are moving or have already moved their production facilities abroad?

Figure 2. FIT rates in Germany, lessons for the Philippines

Source for Germany: No Tricks Zone, Germany’s Electricity Price More Than Doubles…Electrocuting Consumers And Markets, December 07, 2014.

In 2003 in Germany, FIT constituted only 2.4% of the electricity price. By 2011, it ballooned to 14% and further up to 21.4% by 2014. In the Philippines, there is a huge % increase in the FIT-Allowance (or FIT-ALL) from 2015 to 2016, tripling FIT-ALL rates in just one year.

The RE law or RA 9513 was enacted in December 2008 but FIT was only granted in July 20012 mainly due to public opposition to more expensive electricity, and was finally implemented in February 2015. Starting this April 2016, the FIT-ALL will rise to 12.40 centavos/kWh. Households that consume up to 200 kWh a month will pay an extra P24.80. Households that consume up to 300 kWh a month will pay an extra P37.20/month.

Aside from FIT, priority dispatch and RPS, the RE law gives many other subsidies or relaxation of taxation to renewable producers, privileges that are denied to producers of conventional but cheaper power sources. Among these additional sweetheart deals contained in Section 7 of RA 9513 are: income tax holiday for 7 years, duty-free importation of RE machinery, equipment and materials within the first 10 years, special realty tax rates, net operating loss carry over (NOLCO) for the next 7 years, 10% corporate tax rate (not 30%), and tax exemption of carbon credits.

Renewables are good and useful because they help expand power capacity in the country. But the FIT, other subsidies and privileges given to them are not, they contribute to more expensive electricity prices and grid-destabilizing power supply that go up or down within minutes.

If cheaper electricity, more stable power supply, and more investments and job creation are to be the priority for the Philippines, we should allow market pricing of energy sources and in the grid dispatch. The expanded MW allocation for solar, from the original 50 MW to 500 MW, should be recalled. There are pressure and lobbying to further raise solar allocation to 2,000 MW to be eligible to FIT.

Compromise measures would look like these: (1) revert the FIT-eligible solar allocation from 500 MW back to 50 MW, or down to 250 MW but retain priority dispatch for solar at market rates for up to 1,000 MW. (2) revert the FIT-eligible wind allocation from 400 MW back to the original 20 MW, but retain priority dispatch for wind at market rates up to 1,000 MW.

Biomass and run-of-river hydro do not create much problem now compared to solar and wind. So the existing FIT-eligible allocation of 250 MW for both can be retained. Additional pressures to expand this capacity should be resisted too.
Bienvenido S. Oplas, Jr. is a Fellow of the Albert del Rosario Institute, a BusinessWorld columnist, and President of Minimal Government Thinkers.

See also:
Energy 59, Cheap oil and the OFWs, March 07, 2016

Energy 60, PH solar companies, PagIBIG loan for solar, March 12, 2016 

Energy 61, EPDP lecture on PH power projections by 2040, April01, 2016