Thursday, January 30, 2014

MeTA 15: Forum 2014 on Healthcare Ethics and Transparency

The Medicines Transparency Alliance (MeTA) Philippines will hold its annual forum this year with a timely theme, Transparency and Ethics in Healthcare. Things that are expected of various players and professionals in the health sector -- pharma companies, drugstores and pharmacies, hospitals and clinics, doctors and pharmacists, etc. And patients and the public too, we should have our own "code of ethics".

Here is the provisional program as of January 25. I removed the time slots to focus on topics and speakers. Lunch time is indicated, so readers can see which ones are morning and afternoon sessions.

The Mexico City Principles (MCP) is a set of ethical conduct adopted by APEC member countries for the pharmaceutical sub-sector several years ago, held in Mexico City. As shown in the program above, there will be a high-level multistakeholder panel discussion on the adoption of MCP in the Philippines and a call for voluntary codes of business ethics from different sectors and players. 

Day 2 morning, there will be foreign speakers who will talk about global developments in regulating medicines promotion (Tim Reed, Executive Director, HAI Global), regional trends in ensuring transparency in pharmaceuticals policy (Klara Tisocki, Team Leader-Essential Medicines and Health Technology, WPRO), and the way forward for the Good Governance for Medicines (GGM) Program (Deirdre Dimancesco, WHO Geneva). 

In the afternoon, two special topics that have great impact on healthcare in the Philippines - health promotion and sustainable funding, will be discussed by speakers from  HealthJustice  and the AIM.

Participants will come from various sectors and represent all stakeholders in the dialogue about health, medicines and transparency.  They will have opportunities throughout the forum to participate in open forums, ask questions and articulate their positions and perspectives through the stakeholder workshop.

They will be given links to all forum documents, including studies and researches cited in the presentations, as well as reference materials on transparency, ethics in health, addressing corruption in health and related topics.

Meanwhile, I have changed the title of this thread from "Health Transprency" to simply "MeTA" as this thread is mainly about MeTA fora and activities.

See also:
Health Transparency 11: MeTA Philippines and Multistakeholder Process, September 19, 2012 
Health Transparency 12: MeTA Philippines Dynamism, October 02, 2012 
Health Transparency 13: MeTA International Visit to Manila, April 16, 2013 

Health Transparency 14: IMS-CHAT Meeting, April 18, 2013, Friday, July 12, 2013 

Drug Price Control 36: Advisory Council, James Auste and China, July 12, 2013 
FDA 6: Business and Modernization Plan, July 17, 2013

Tuesday, January 28, 2014

Energy Econ 12: EPIRA, WESM, PSALM and DOE Bureaucracy

I like this new article by Romy Bernardo. My comments after his paper, below.

BUSINESS WORLD, January 26, 2014 10:15:33 PM

By Romeo Bernardo

The way forward for the power industry

THE RECENT sharp spike in power rates led to the understandable shock and anger of consumers; most are unfamiliar with the structure and workings of a now market-based power industry. Headline news and public discourse have generated more heat than light. It can be satisfying to embrace conspiracy as a short-cut to thinking about a complex subject which the ideologically opposed to privatization are quick to fan.

What is emerging though from various congress hearings and submissions to the Supreme Court, is that this temporary two month spike was a product of a most unlikely and unfortunate perfect storm of planned and unplanned plant outages on top of already thin reserves. And what failures there were arose not from collusion, but from a bid and offer system that requires further refining, and perhaps, from insufficient diligence.

By way of disclosure, I was Undersecretary of Finance during the last two years of Aquino 1 and the first four years of Ramos administrations, an independent director in one major publicly listed power company and in an unlisted diversified holding company active in the energy business. While in government, I was involved in trying to addresss crippling blackouts in the early 1990’s that led the government to contract Independent Power Producers (IPPs) as part of the solution. Quick solutions had to be found -- the most expensive power was no power. Due to the outages, GDP flatlined for two years, 1990/92, lost output of P800 billion in today’s prices, equivalent to twice the cost of government’s infrastructure budget last year, or 20 years of its conditional cash transfer program. This is not even counting investments that were driven away, and the country’s lost momentum.

I resurrect this dark episode in Philippine economic history as a background to what may ensue if counterproductive actions are taken that lead to underinvestment yet again in power generation. Under the Electric Power Industry Reform Act (EPIRA; 2001) it is private sector players who are expected to deliver electricity under a competitive playing field, with government providing the enabling environment. This national policy was not arrived at willy-nilly but after seven years of debate both within the executive department and in Congress, with the active participation of all affected publics.

Modelled after successful privatizing countries, EPIRA was a recognition of the fiscal and institutional limitations of government in building and running power assets efficiently. As we know, such led to costly under-provision during the blackout years, and expensive stranded costs when the long-term growth forecasts failed to materialize post 1997 Asian Crisis.

Today many questions have been raised on whether EPIRA was a success. I submit that, while there has been a delay, a fair call is “so far, so good.” EPIRA has provided the framework for the restructuring of the Electric Power Industry, including privatization of National Power Corp.’s assets, defining the responsibilities of various government agencies and the private sector, and transitioning to a functioning competitive structure. The end goal was to make sure we had an ample and reliable supply of electricity, at reasonable and competitive rates.

What has happened since EPIRA was passed?

Sunday, January 26, 2014

Global Warming Hits the Philippines, Part 3

Updating this article and inserting this news story today...

All time lows were 14.6 C in February 1962, then 15.1 C recorded in February 1987 and December 1988.

Here's my original posting yesterday,  January 25, 2014:

It is rather cold these days in the Philippines that many legislators are seen with their hands in their own pockets. Partly joke, partly true.

Cold mornings, even at noon time, are common these days in Metro Manila and the rest of the country. A friend of a friend, Mike Blanco Ella Sarsoza, posted this image this morning. 14 C in Binan, Laguna, just a few kilometers south of Metro Manila. Wow.

This morning in the house around 5am, I was forced to wear jacket while checking emails. Much colder than previous mornings. And here's why... (source, gmanews)

The cold spell has been with us since last December. Second coldest so far in M. Manila this month was 17.5 C last Sunday. In Baguio City, 8.1 C also last Sunday.

The non-stop rains in Mindanao since last week have killed more than four dozen people already.

Reported also in local tv news, cows in some upland municipalities of Cebu being covered with coats; some have died, reports this week.

Not only farm animals, aquaculture is also adversely affected.

Meanwhile, the global picture...


Meanwhile, I will join my mountaineering friends in climbing Mt. Pulag this coming January 31. This is the 2nd highest mountain in the Philippines at 2.92 kilometers above sea level (asl), or almost twice the height of Baguio City, 1.54 kilometers asl. We expect that temperature there can drop to -8 C in early morning.

The first time we climbed that mountain was 3rd week of January 1994, or exactly 20 years ago. Around 8pm that time, the temperature dropped to -2.5 C. It could have dropped further to -4 or -5C the next morning, portions of our drinking water froze.

See also: 
Global warming hits the Philippines, part 2, January 07, 2011 
Global warming hits Asia, part 3, February 15, 2011 
Typhoon Nesat ("Pedring") in pictures, September 28, 2011

Taxes, The Beatles and Adam Smith

A friend, Dr. Amado “Bong” Mendoza of the UP Political Science Department, posted his poem in his fb wall today….

Taxing to death
A septon on political economy

Taxation is the purest of political games
The process determines
Who gets what, where, and when

Smith (Adam, that is) warned
If taxes were onerous
Mobile capital can frustrate the avaricious prince

Taxes are as sure as death
Lennon and McCartney crooned
Dead men should declare the pennies in their eyes.

© 2014 All rights reserved

I like it, so I added a stanza from The Beatles’ song, “Taxman”,

Let me tell you how it will be
Just one for you nineteen for me
Cause I'm the taxman, yeah I'm the taxman…
And you're working for no one, but me.

On top of taxes (from income tax to death/inheritance tax), there are also "non-tax revenues" aka mandatory fees. They come from cradle to grave: birth certificate fee (at city hall LCR or NSO), marriage certificate fee (NSO), death certificate fee. In between, there are passport fee, driver's license fee, terminal fee, NBI clearance fee,...

And on top of taxes and fees...mandatory or forced contributions: SSS, PhilHealth, PagIBIG. The first two are rising starting this month.

And on top of taxes, fees, mandatory contributions, there are royalties for certain industries and companies, mostly in energy, mining, quarrying sectors.

To a large extent, government mainly exists for itself, an end in itself. Provision of certain services are just gravy and alibi to justify those taxes, fees, forced contributions, royalties. Many people are retreating to self-contained villages and condos where peace and order, garbage collection, roads/drainage construction and maintenance, street lighting, education, healthcare, parks and mini forest, etc. are ALL private provided. And they pay big amount to enjoy those privately-provided services. And still, they pay taxes, fees, etc. to the government even if they hardly use or benefit from those.

Lennon-McCartney in their younger years could be libertarians. They disliked high/big taxes and hence, big government. They disliked revolution, violence, central planning, and advocate more personal responsibility. From the song Revolution: 

You say you'll change the constitution
Well, you know,
We all want to change your head.
You tell me it's the institution
Well, you know,
 You better free you mind instead...

There is a continuing debate between libertarian anarchists (zero government advocacy) and libertarian minarchists (limited, minimal government). I belong to the latter. The former want zero taxes, zero fees, etc.; the latter recognize the need for some taxes to finance limited government functions like ensuring the rule of law, justice administration, limited infra. (most infra can be done by the private sector via tollroads). Classical social contract thinkers Thomas Hobbes, John Locke, Jean Jacques Rousseau, believed that the “social contract” was limited to rule of law function of government, in justice administration. They did not or hardly mentione about infrastructures as core government function.

Adam Smith believed in limited government too. He wrote,

According to the system of natural liberty, the sovereign has only three duties to attend to, three duties of great importance, indeed, but plain and intelligible to common understandings:

first the duty of protecting the society from violence and invasion of other independent states;

secondly, the duty of protecting…every member of society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice;

and thirdly, the duty of erecting and maintaining certain public works and certain public infrastructure which it can never be in the interest of any individual or small number of individuals to erect and maintain.
-- The Wealth of Nations, IV.ix.51.

If a particular government will follow Adam Smith's three main functions of government, there would be only two branches of government needed: Executive and Judiciary. The Executive will be composed of (a) Office of the President or Prime Minister, (b) Foreign Affairs, (c) National Defense, (d) Interior and Police, (e) Public Works, (f) Health, (g) Edcation, and (i) Finance and Taxmen.

(b) and (c) will do function 1, protect society from violence and invasion of other states.
(d) and the Judiciary will do function 2, ensure the rule of law and justice administration; and
(e) will do function 3, erecting and maintaining public works and hard infrastructures,
(f) and (g) will also do function 3 for “soft” infra; limited to infectious diseases, people with physical and mental problems,
(a) will monitor and supervise the implementation of the 3 functions, and
(i) will collect the money for all of the above.

I can support this limited or minimal government. 

See also: 

Saturday, January 25, 2014

EFN Asia 34: Chatib Basri on Subsidy and Protectionism for the Poor

My first exposure to international and regional free market network was in 2004. First in the US in April-May that year when I was one of the International Fellows of Atlas, then in Hong Kong September of that year, during the Economic Freedom Network (EFN) Asia Conference 2004, sponsored by the Friedrich Naumann Foundation (FNF) and co-sponsored by five Beijing- and Hong Kong-based institutes.

Among the great presentations in the HK conference was one by Dr. Chatib Basri, who was then a faculty member of the University of Indonesia and individual member of EFN, now Indonesia's Finance Minister.

This is his first slide after the title. I remember my eyes brightened at these clear and erudite words from two of the intellectual giants of the free market literature.

 The two questions that his paper wanted to explore and answer...

He presented short-run impact of eliminating fuel and electricity subsidies, which actually benefit the non-poor.

These slides are interesting, about bribes given by the public to certain government officials and bureaucrats as regulations are plentiful, complicated and costly.

Thursday, January 23, 2014

John Cowperthwaite, Statistics and Central Planning

Interesting article here shared by a friend, Andrew Work, co-founder of Lion Rock Institute (LRI), a free market think tank in Hong Kong. He is also the CEO and Publisher of New Work Media, which publishes Harbour Times, among others.

When Andrew was Executive Director of LRI, he would often mention to us Mr. John Cowperthwaite, the main architect of Hong Kong's free trade, free market philosophy and public policy. Today, Andrew posted this article in his facebook page, No Statistics, No Mischief by Andrew Ferguson, about the man.

Reposting portions of it here, original article is 2,000+ words. I like this story, hope you will enjoy it too.

John Cowperthwaite...

... The name is familiar to economic historians, academics in postcolonial studies, specialists in the tax policy of the Far East, and avid libertarians, but less well known to normal people. Cowperthwaite was a lifelong government bureaucrat who should be lionized by anyone who loathes and fears bureaucracies. In 1945, as a member of His Majesty’s colonial administrative service, he was sent to Hong Kong, which was then (and remained until 1997) a British protectorate. Hong Kong was in bad shape at the end of the war. Things only got worse when hundreds of thousands of refugees streamed in as the Chinese Revolution raged next door. 

Cowperthwaite rose through the ranks and became financial secretary of the colony in 1961. For the next 10 years he had near-total control over the economic laws and regulations governing Hong Kong. By the time he left office, in 1971, the number of Hong Kongers in poverty had dropped by two-thirds, average wages had risen 50 percent, and Hong Kong had gone from one of the poorest places on earth to one of the richest.

Hong Kong’s rise seems almost miraculous today, and surely the envy of any maker of economic policy. (US Fed) Chairman Yellen, unlike Cowperthwaite, is a determined advocate of the redistribution of wealth and other governmental manipulations that are guaranteed to make us happier, healthier, and more wonderful generally….

Cowperthwaite took as financial secretary…. keeping a flat income tax rate of 15 percent, deregulating nearly every enterprise that caught his attention, nullifying labor laws, and dismantling barriers to imports and exports—are things that Yellen, as Fed chairman, couldn’t do even if she wanted to, which she wouldn’t.

Instead, Chairman Yellen should contemplate another of Cowperthwaite’s initiatives. Asked once what the greatest and farthest-reaching policy of his tenure was, he replied: “I abolished the collection of statistics.” If only in this regard, Chairman Yellen, who will sit atop a vast apparatus built primarily for the gathering of statistics, could do us all a favor by following the Cowperthwaite Way. It’s true that there will suddenly be many unemployed economists wandering around Washington, D.C. But this is only one of the potential benefits. 

Cowperthwaite wasn’t anti-intellectual; he did not scorn statistics. The figures gathered by the International Monetary Fund are the most eloquent testimony to Hong Kong’s achievement in the Cowperthwaite era. As far as he knew, in his day statistics were being compiled all over the colony. He just didn’t want to know what they were. More precisely, he didn’t want other economic policymakers to know he knew what they were. He refused to allow government money to be spent cooking them up. Otherwise, he reasoned, “I might be forced to do something about them.” 

The connection between statistics and mischief is indissoluble. He explained himself to a gathering of legislators who were pressing him for figures on the colony’s gross domestic product—a term of art that everyone uses but no one can usefully define…

At other times Cowperthwaite suggested the causality works the other way around: Statistics themselves are what create, or at least justify, high taxation and other interventions in the economy. In a way it’s a supply-side problem, if you’ll forgive the expression. Say’s law tells us that supply creates its own demand. A supply of statistics will spontaneously generate a flock of people who will want to study them, and who, having studied them, will reach conclusions about them, and then, still worse, will want to shape their conclusions into government policy that will tug the citizenry this way or that, distracting workers and businessmen alike from the important task of minding their own business. 

Cowperthwaite went on:

One of the honourable Members who spoke on this subject said outright, as a confirmed planner, that he thought that [economic statistics] were desirable for the planning of our future economic policy. But we are in the happy position, happier at least for the Financial Secretary, where the leverage exercised by Government on the economy is so small that it is not necessary, nor even of any particular value, to have these figures available for the formulation of policy. We might indeed be right to be apprehensive lest the availability of such figures might lead, by a reversal of cause and effect, to policies designed to have a direct effect on the economy. I would myself deplore this….

Stripped of his numbers an economist would have to resort to the old home truths about how the world works: If you tax something you get less of it; as a general rule an individual manages his own affairs better than his neighbor can; it’s rude to be bossy; the number of problems that resolve themselves if only you wait long enough is far larger than the number of problems solved by mucking around in them. And the cure is often worse than the disease:

In the long run, the aggregate of the decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is likely to do less harm than the centralized decisions of a Government; and certainly the harm is likely to be counteracted faster.
Somehow the most successful practical economist of the twentieth century knew this was true, and he didn’t have to work out a single equation. 

Andrew Ferguson is a senior editor at The Weekly Standard.

See also: 
Lion Rock 5: Free Will vs. Power Over Others, December 26, 2012 
Lion Rock 11: Barun Mitra on Democracy, Reading Salon 2013, October 28, 2013 
EFN Asia 31. Friends in the Asian Free Market Movement, November 07, 2013

EFN Asia 33: Bibek Debroy on Property Rights

Among the key members and personalities within the Economic Freedom Network (EFN) Asia is Prof. Bibek Debroy, a famous free market economist at the Center for Policy Research, India. Below are some interesting quotes from him when he was interviewed in 2008 by EFN staff.


Amen, Bibek. He has been a friend of mine since September 2007 when I first met him here in Manila during the IPN-MG conference on innovation and public health. He was among the three speakers of high international exposure that day.

Below is a portion of his article, "Democracy vs. Socialism", published at the Economic Times, India. on September 04, 2010.

… Take the devolution agenda that any incoming coalition is bound to support. Most stuff one wants government to spend on is in social sectors. These are state, municipal or panchayat subjects.

Why not transfer funds directly to states, and lower down, scrapping the central sector and centrally-sponsored schemes? At best, there can be a menu of options the states can spend on….

Let all other devolution be formulae-based, without indicators for deprivation. Following the same line of argument, let forest and environmental clearances be decided by states. Let the ministry of environment and forests become irrelevant, except for international negotiations. Let there be decentralised identification of poor families and make the Planning Commission irrelevant.

Let’s make oil pricing market-determined. Policy paralysis and governance deficits, more important than current account and fiscal deficits, have been caused by Delhi. Let’s make Delhi irrelevant, even if the Seventh Schedule cannot immediately be amended. Friedrich Hayek correlated socialism and dictatorship. Though we are stuck with the Preamble, we can invoke democracy and demolish Delhi’s dictatorship….

Nor is foreign direct investment the key. If make Delhi irrelevant is one strand, make the world irrelevant is another. Let’s fix the domestic supplyside. Let’s reform agricultural markets and ensure inter-state movements of agricultural produce. If we fix the domestic problems, growth and investments will revive. So will manufacturing and exports.

This isn’t a pension, banking, insurance and Industrial Disputes Act agenda. Idon’t see why any incoming government should refuse to accept these two strands. All it requires is an acceptance of making itself less important and converting Centre-state (which is not an expression in the Constitution) to Union-state (which is one). Democracy, thus defined, is the best antidote to the dictatorship of socialism inflicted on us."

Amen, once again.

See also:

Wednesday, January 22, 2014

Business 360 15: How to Improve Economic Freedom in Asia

* This is my article for Business 360, a monthly magazine in Kathmandu, January 2014 issue.

Economic freedom essentially means individual liberty, the freedom of an individual to voluntarily exchange various goods and services in various markets, as a seller or buyer, as a producer or consumer, the individual has various choices whom to buy and sell and to whom not to buy or sell. The individual is also protected from aggression and coercion by bullies who will rob them the fruit of their hard work.

Sadly, this kind of economic freedom is deprived to many people in Asia. Their freedom to put up a business is often restricted by various government regulations and bureaucracies. For those who manage to officially put up legitimate businesses, they have to pass to the consumers the cost of various regulations, taxes and mandatory fees.

The Fraser Institute, a free market think tank in Canada, produces the Economic Freedom of the World (EFW) annual reports. These reports are presented in various countries around the world, including the Economic Freedom Network (EFN) Asia annual conferences.

The EFW is composed of five main areas: (1) Size of government (its annual consumption, state enterprises, income tax rates), (2) Legal system and property rights (judicial independence, impartial courts, legal enforcement of contracts, reliability of the police, etc.), (3) Sound money (money growth, inflation, freedom to own foreign currency account), (4) Freedom to trade internationally (tariff rates, trade regulations, black market exchange rate, control of people and goods movement), and (5) Regulations (credit, labor, business incl. cost of tax compliance).

A score is given in each area and sub-areas for each country to indicate degree of economic freedom. Thus, high government spending and taxes means low score in area one, weak enforcement of private property rights means low score in area two, and so on.

Table 1 shows Below is a summary table of the scores of selected countries in Asia over the last 15 years. Has economic freedom in our continent improved or regressed over these years?

As of the EFW 2013 Report, half of the 21 Asian countries ranked 75th or better out of 152 countries covered worldwide. The other half ranked 80th or lower.

In what areas do many Asian countries score low, meaning in what areas their governments need to improve to give their citizens more economic freedom?

The next table will show this. Not included in this list are outliers Hong Kong, Singapore and Myanmar. The first two scored high in all areas while the latter scored low in all areas.

Many countries in Asia need to improve the enforcement of the rule of law, they need to relax the various restrictions in sound money, international trade, and business regulations.

Economic freedom and individual liberty are ends by themselves. They are not means to certain other objectives like national sovereignty or forced equality in society. Governments, politicians, business and civil society leaders in Asia should learn to appreciate more the value of individual freedom and individual responsibility.

See also:
Business 360 11: Avoiding Middle Income Trap, September 19, 2013 
Business 360 12: Optimum Size of Government, October 13, 2013 

Business 360 13: US Government Shutdown and Lessons for Asia, November 28, 2013 

Business 360 14: Middle Income Trap and Economic Freedom, January 02, 2014

Fat Free Econ 53: WESM, Myths and Realities

* This is my article yesterday in

With the debate on whether the power generation rate increase -- mistakenly referred to as "Meralco rate hike" -- is justified or not, the role of WESM has been put under question.

The Wholesale Electricity Spot Market was created under Sec. 30 of Republic Act 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA). Power generators, distribution utilities (DUs) and electric cooperatives, bulk consumers, similar entities authorized by the Energy Regulatory Commission (ERC) can participate there.

Below are some allegations or criticisms about WESM:

1.  DUs or electric cooperatives like Meralco collude with certain power generators and bid up the price at WESM.

2.  DUs and bulk consumers can easily buy forward contracts or buy electricity for specified short periods in the future to cover any foreseen exposure they may have. This is on top of their long-term bilateral contracts with power generators.

3.  DUs who buy at WESM would know who supplied them power at any time, any day.

4.  It is “a misnomer, a huge farce: More than 90 percent of its transactions aren’t spot trading transactions at all. They are bilateral contracts, with the price and quantity not having anything to do with market conditions at any given time.”

5.  The rule that WESM “must offer all available electricity capacity to the spot market” is mocked and disobeyed by many power companies by offering the maximum bid of P62 per kilowatt-hour (kWh).

6. WESM and its high rates in the November-December period could have been bypassed by running the state-owned Malaya power plants.

How true or valid are these allegations? Let us tackle each of them -- with hard data.

1.  The allegation of collusion between some DUs like Meralco and power generators is belied by the average generation cost in 2013 -- P5.52 per kWh – which was lower than the P5.76 in 2012. The spike in the December billing – which was based on the November generation cost -- was mainly due to the absence of cheaper natural gas from Malampaya, and the purchase of more expensive power from diesel plants, so that brownouts would be avoided.

To prove “collusion,” one must show who colluded. Barring this, collusion is simply an allegation. Item number three below will illustrate why identifying who colluded is impossible. 

2.  DUs and bulk consumers can buy or contract electricity at WESM – say about 10 percent of their projected demand -- just one or two hours ahead, not weeks or months ahead. There is an allowance if some of its contracted generator plants will conk out or suffer output reduction due to mechanical problems, or the demand would suddenly go up.  It is a spot market and as such is characterized by price volatility. But at least power supply is delivered, and disruption or a brownout, is avoided. When supply exceeds demand by a wide margin, the price goes down. When this margin narrows, the price goes up.

Here is a short history of WESM prices from July 2006 to November 2013. The three outliers, January 2009 – when prices were very low -- and February-March 2010 and November-December 2013 – when prices were very high -- are explained in bold sentences. Note the lower cost of WESM load-weighted average price (LWAP) compared to average Napocor rates.

3.  Knowing who sold power and by how much at WESM is fungible. When you buy, you no longer know from which plant and how much power is coming, so there is no way Meralco or ERC can know. Suppose there are 10 generators (excluding those covered by bilateral contracts) supplying WESM in a given hour, and there are 60 buyers (excluding those covered by bilateral contracts) during the same hour, it is impossible to attribute to one generator any output bought by a buyer.

Take this case. On December 6 -- or two days before Typhoon ‘Yolanda’ struck Eastern and Central Visayas -- coal and hydro plants could produce less than 5,000 MW in Luzon, while demand stood at 5,400 MW. More than 3,200 MW of power were either on planned/scheduled shutdown or on forced outage. The oil/diesel plants provided the power to address demand that coal and hydro could not supply. But the supply came at a higher price, in exchange for no brownout that day in Luzon.

Knowing which among the various oil-based power plants supplied how much energy to different DUs and bulk consumers at different prices at different hours of the day cannot be determined. DUs decide whether to buy at that particular price that hour, or beg off on those hours and suffer brownouts in certain cities and municipalities of their franchise area. 

Sunday, January 19, 2014

Climate Tricks 25: Demonizing CO2 as a Toxic, Pollutant Gas

Carbon dioxide or CO2, is a gas composed of one molecules of carbon and two molecules of oxygen. It's not a harmful gas, it is not an evil gas. But with the UN, Al Gore, and various campaigners of more environmental and energy regulations, more government, CO2 has been demonized.

Here's a chart, global air temperature UAH and RSS average (blue) and their trend line (red) vs. CO2 concentration in the atmosphere (green), January 2002 to December 2013. There is "causality"?


A friend, Dr. Tony Leachon, posted yesterday in his facebook wall, "Global warming is everyone's problem, but which countries have contributed to it the most?"

I asked him, "Doc Tony, you are a scientist yourself. You believe in the claim that CO2 is a pollutant and harmful gas?"

Then Rosel DS joined. He wrote,
“Yes Nonoy, if CO2 is in excess as it contributes to the Greenhouse effect. US EPA Chief Jackson wrote: "In the endangerment finding, Jackson declares that current and projected concentrations of “the six key well-mixed greenhouse gases–carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6)–in the atmosphere threaten the public health and welfare of current and future generations.” see

EPA Administrator Lisa P. Jackson announced this morning she would resign as hea...See More

What happened to people’s high school or college biology? The gas that we and the rest of humanity exhale, the gas that our pets, farm and wild animals exhale, the gas that our plants, crops, trees use to produce their own food via photosynthesis, is CO2. It is a useful gas. No CO2, no plant life, no animals, humans that eat various agri crops. Now it is a harmful, pollutant, evil gas? Some institutions are just too corrupt to bend even basic natural science for their political agenda.

I asked Rosel if he or EPA head Jackson can see CO2? If so, what is its color as a pollutant? Can heand Jackson smell CO2? If so, how does it smell as a pollutant?

Rosel replied,
“Nonoy, we all agree on our biology basics. When in excess, carbon dioxide (coming mostly from industrial sources) becomes the primary green house gas that is the cause of climate change. I assume you agree on this. Hence for the public I share: Do you have anything to add to enlighten the discussion? Lizbeth de Padua Dante Guanlao Simbulan Jr. Gina Lopez Doc Emer Jimmy Valena Thanks

Carbon dioxide (CO2) is the primary greenhouse gas emitted through human activit...See More

And Doc Tony Leachon also replied that “Yes, CO2 is toxic.”

And Rosel added,
“I have to agree with Tony Leachon. A good thing can easily be a bad thing in excess. "Carbon dioxide content in fresh air (averaged between sea-level and 10 kPa level, i.e., about 30 km altitude) varies between 0.036% (360 ppm) and 0.039% (390 ppm), depending on the location.["CarbonTracker CT2011_oi (Graphical map of CO2)".]

“CO2 is an asphyxiant gas and not classified as toxic or harmful in accordance with Globally Harmonized System of Classification and Labelling of Chemicals standards of United Nations Economic Commission for Europe by using the OECD Guidelines for the Testing of Chemicals. In concentrations up to 1% (10,000 ppm), it will make some people feel drowsy. Concentrations of 7% to 10% may cause suffocation, even in the presence of sufficient oxygen, manifesting as dizziness, headache, visual and hearing dysfunction, and unconsciousness within a few minutes to an hour.[Wikipedia]”

And I have to ask again Rosel as he did not answer my questions: “Can you see CO2 as a pollutant? Can you smell CO2 as a pollutant? Answerable by yes or not, answer them, do not evade.”

His point, "When in excess, CO2... becomes the primary GHG..."
What is that excess? From about 285 ppm at the start of the Industrial Revolution or nearly 2 centuries ago, currently it's 400 ppm or 0.04%. Then you introduce 10,000 ppm, 70,000 ppm, you are introducing sort of zoombie dinosaurs and highly fictional stories. Get real. UN IPCC guys talk only of "doubling of CO2" (meaning about 800 ppm) to cause catastrophic/apocalyptic/horrific result in antropogenic global warming (AGW) of up to 4 C by the end of this century. Of course they mean "send us more money, lots and lots of money, and we will fight CC".

I suggested to Doc Tony that since he believes that  "CO2 is toxic", then he should be careful when he kisses his wife lips to lips too long, they will be poisoning each other as they both exhale CO2.

As I pointed out above, CO2 is a useful gas. No CO2, or very low levels of CO2 means plant extinction or near-extinction. No rice, no veggies, no grass for cattle, etc. In many greenhouse farming, CO2 as plant food and plant fertilizer, is introduced as supplement, up to 1,000 ppm.
If CO2 is increased 200 ppm above the current levels, (which have already increased production by the 13 to 15% cited above) production will increase by 13 to 15% (see here and here ).

Additional articles on CO2:

By Ed Caryl on 8. Oktober 2013
Carbon Dioxide and the Ocean

By P Gosselin on 17. Mai 2013

From Dr. Benny Peiser of the GWPF

Guest essay by Dr. Tim Ball

Friday, January 17, 2014

Energy Econ 11: On the Power Rate Hike

Below are my comments in one thread in Government andTaxes, Liberty and Responsibility facebook group, about the ongoing  debate on electricity  rate hike.

January 12-16, 2014

(1)  Bobi Tiglao (he is in this list) has implied that there should be more government intervention in the power sector, like adopting the Singapore model of vesting contracts.

About the proposal by Cong. Evardone to give the President "emergency powers", Speaker Belmonte has an answer to it: The President is not even asking for it. It's a non-issue, but some legislators, some media can sensationalize it to a big issue.

Take note guys, there WILL be rotating brownouts this coming summer 2014 in Luzon including M.Manila, then another set of brown outs in summer 2015, most likely until summer 2016. The big power plants will come online by 2017 and 2018.

The main problem is in the power generation sector, not in transmission (via NGCP) or in distribution (via Meralco, other electric coops). Some days in 1st week of December 2013, last month, up to 3,800 MW of power was offline due to scheduled + unscheduled shutdowns. Forced shutdowns occur mostly in power plants that are more than 20 years old.

(2) I do not think that the left, the socialists and the pro-nationalization are winning the public debate to re-nationalize power generation and distribution. Government is the most un-trustworthy institution in the country, or even in almost all countries. People are complaining of corruption left and right, from Executive to Legislative to Judiciary, from local to national governments, from armed to non-armed units, and you give heavy political power and control of the important electricity system to the government?

The worst thing that can happen is frequent brown outs. Like what they have in Nepal, N. Korea, and to a certain extent, in Mindanao. People are willing to pay a high price just to have electricity, that's why they buy more expensive gen sets running on expensive diesel. Or the cost of frequent fires because of too many candles is something that the public will hate. A rise of P4/kWh for one month, and perhaps another rise the next month, then back to old rates the next month, is not enough justification for the public to be hoodwinked to the propaganda of the left and socialists.

(3) The typical "nationalize, socialize" argument from the Freedom from Debt Coalition (FDC), no new argument, no studies presented, just press conference.

From, January 13, 2014,

This group btway cannot advocate freedom from borrowings policy. Only spend-tax-borrow, then demand freedom from debt later.

(4)  "Let foreign power companies compete with our own power producers and distributor. For the leftists and protectionist Centrists, a free power sector is a radical solution. I agree, freeing not only the power industry but the whole protected economy is a radical solution, but this is exactly what we need if we are to survive, both politically and economically."
-- VincentonPost,  January 14, 2014

(5) Politicians and legislators tend to have very parochial minds. For any problem, to them the solution is more politics, more government. Can any politician put up a power plant in one month or one year? The main problem here is not enough new power plants. Many are old, bought from NPC, 20 yrs old, 30, 40 yrs old. Some would break down from time to time. 

Instead of asking what government should do, they should ask what government should NOT do, like not imposing too many taxes, fees, royalties, permits, other regulations and restrictions to new power plant projects.

Wednesday, January 15, 2014

GMOs, Greenpeace and Public Health

Sometime in July 2013, I had a debate with some Greenpeace activists, about genetically modified organisms (GMOs). I initially called them as “anti-CO2, anti-coal, anti-nat gas, anti-nuke, anti-GMO, anti-Bt corn, anti everything”.

The GP guy, Francis, replied that they are “against burning coal and fossil fuels, not only because doing so produces CO2 that causes global warming and nuclear power is beset with a lot of issues, esp. safety issues. but we are not "anti-everything" in fact, we are for other cleaner and safer sources of energy and energy efficiency. our stand against GMOs (e.g. Bt talong) is also a stand for sustainable agriculture. so hindi rin anti-everything.”

Here are the succeeding exchanges….

Nonoy 12 years ago, we have a loooong discourse and debate about GMOs, particularly Bt corn, a cousin of the Bt eggplant controversy. Bacillus thuringensis is a soil-dwellling bacteria, part of nature, that corn borers and other pests dislike and find so yucky. You put the Bt on corn, eggplant, your crop almost become organic -- no need for pesticide, insecticide, as the borers and other pests will simply not attack them. But Greenpeace priests hate natural pesticides, they want what?

Meanwhile, lawyers and judges at the Court of Appeals (CA) can now decide with finality scientific debates that require deep sciientific expertise? You need molecular biologists, chemists, botanists, zoologists, physicians, and other scientists to make a ruling of "safe" or "non-safe".

Greenpeace hates modern science and products of molecular biology. If GM feeds for chicken and hogs were not developed because Greenpeace opposed them and got Court ruling, the price of chicken and hogs could be P200 a kilo or more. Mass production is the clear solution to drastically raise food output and avoid hyper food inflation and food riots. We are thankful that Greenpeace fanaticism against modern science has not reached this far yet. But who knows, maybe tomorrow or next year.

That is why people should not support Greenpeace. The money you donate will be used to further stupefy and idiotize the public -- from GMOs to "man-made" warming to coal to natural gas and nuke. Nothing personal but the ideology of ecological socialism, of anti-capitalism, is what makes Greenpeace and allies become dogmatic in their environmental nirvana

Ipat commented,
“Brilliant PR work. Step 1: hide the multinational giants behind "FIlipino scientists". Step 2: Hide the multinational billions and highlight Greenpeace's money sourced ONLY from individuals, no corporations, Step 3: Make it a nationalist issue, as if the Pinoy scientists have no other backing and invented the GMO technology themselves (heck they're only testing it and if they think it's okay, farmers would have to keep paying for the intellectual property rights!) But with that, I have to tune out also, I've heard Mr. Oplas on this before and ne'er the twain shall meet.”

Tuesday, January 14, 2014

Thailand Politics and the Monarchy, Part 2

There will be a snap elections in Thailand on February 2 or less than 3 weeks from now. The Protesters can democratically and constitutionally remove the current administration if they succeed. But they want an unelected People's Council to assume power immediately with two years no election. Rule of law huh? Photo from BBC,

The Democratic Party of Thailand does not seem to appreciate fully what rule of law and political liberalism really means. 

Assuming the protesters including the Democratic Party will succeed in forcing the current government to step down without elections, they will be inviting another round of protests and "step down unelected" demonstrations. Despise for the rule of law invites another round of such despise, directed unto itself.

Before, the changes in government administration were between or among different clicques within the monarchy. Meaning they were all friends of the monarchy even if they stab each other in the back, they did not threaten the monarchy and his family. When Thaksin came in 2001, it was different, the monarchy and his family was uncomfortable with him. He was too populist, and some economic interests of the family and friends of the monarchy were threatened by his presence.

(Photo right from CNN). They succeeded in ousting Thaksin in 2006, and in all 4 or 5 elections after that, the Thaksin camp always wins an election, including the last election in 2010 where Thaksiin's sister, Yingluck, became Prime Minister. That is why the protesters are scared of elections, they know that they are mainly Bangkok-based, far from the rural voters where Thaksin made an impression there. The protesters know that they will always lose, that is why they advocate to set up a non-elected "People's Council", they select among themselves. And if they succeed, they do not want election for the next 2 years. Very undemocratic, even dictatorial.

There have been lots of military coup in Thailand before, but they hardly shot each other, it's called "coup de talk". The generals talk and threaten each other to relinquish power, if the military opposition has enough force on its side, the ruling military will give way. But somehow whatever faction wins, they have the approval of the monarchy.

Wrong policy on the part of the Democrat Party (DP, headed by former PM Abhisit Vejjajiva) to boycott the elections. They are affiliated with the Council for Asian Liberals and Democrats (CALD), supposed to advocate the primacy of rule of law. But the DP chose the rule of men option. Despise of traffic rules, despise of the constitution, despise of elections, They and the other opposition groups just want to install un-elected People's Council in power for two years with zero elections.

Not that I am pro-Thaksin. I am just pro rule of law. People should follow what is stated in their existing constitution.

See also: 
Thailand politics and the anti-globalists, November 20, 2008 
Thai politics and the Monarchy, December 04, 2008 
Killings in Thailand and Military Crackdown, April 16, 2009 
Rule of Law 4: On Thailand Crackdown, April 18, 2009

Tobacco Tax 9: Why Earmarking Legislation is Wrong

The Sin Tax Reform Act of 2012 (RA 10351) is one year old (enacted December 20, 2012) and after its first year implementation, it seems to have exceeded its revenue target. BIR said sin tax collection in 2012 full year was P50.4 billion, and January-November 2013 collection was P91.6 billion, higher than full year 2013 target of P85.8 billion.

Now some legislators and the advocates of the law are asking, where is that money?
See various reports yesterday,

Phil. Star, Cayetano asks where sin tax money goes
Rappler, Senators: Where is sin tax money going? 
Tribune, After 1 year of rich windfall, gov’t still has no sin tax IRR IRR

This is one reason why earmarking legislation, setting aside the projected revenues to particular sectors and government agencies, is wrong. I don't support earmarking of any revenue measures from new tax or tax hikes, or privatization proceeds. The supposed beneficiaries of earmarking are setting themselves for great disappointment. This happened after Fort Bonifacio privatization, others. Will happen in the future.

Soon, PAGCOR will be privatized, there is no way out with huge public debt of the government, rising by P400-P450 billion a year (!!!) but to privatize it and a few other govt corporations. Other agencies like DepEd, SUCs, LGUs, etc. will lobby for earmarking too for themselves, to the exclusion of other sectors or departments. Wrong. New revenues from whatever sources should be used mainly to reduce the public debt. Savings from interest payment alone, P330-350 billion a year, can be used for priority sectors and departments.

Those who campaigned hard for the passage of this law need not throw the towel. For now, it should be a lesson for them that earmarking legislation is wrong. They are setting themselves for huge disappointment. 

They should also watch PAGCOR privatization, at least P200 B or more, of additional revenues, but other Departments will lobby for earmarking, and exclude public health, agri, etc. Winner take all for the strongest lobbyists among different agencies.

DOH UnderSec Ted Herbosa said that the DOF releases tax collections only after the collection year is completed. Sin tax collections from Jan. 1-Dec 31, 2013 is now in the 2014 budget. P33 B to fund the health premiums for NHIP of the poorest 14.7 million families or estimated over 40 million Filipinos.  Hospitals may get their increased income by providing health services to these Filipinos who were previously uninsured.

I thanked him for his good clarification, but while additional tax revenues were realized, the PH public debt keeps rising. From P5.21 trillion in Sept. 2012 to P5.61 trillion in Sept. 2013, or P400 trillion rise in one year. A P6 trillion total public debt by middle of this year seems no sweat. And that exposes one problem of budgetary earmarking -- luck to one or two department/s, woe unto others. When PAGCOR, other parts of Fort Bonifacio, other military camps, etc. will be privatized, woe unto other departments too as they will be excluded from additional revenues. Meanwhile, the public debt, and annual interest payment, will keep rising, and keep depriving everyone else of more money, they will go to the pockets of lenders. About P352 B this year on interest payment alone.

Meanwhile, see this new development. DOH is not so much a fan of the UP PGH, it thinks that the Department has been giving away research money somewhere else. From interaksyon

See also:
Tobacco Tax 6: On Cigarette Smuggling, February 27, 2012. 
Tobacco Tax 7: DOH on NCDs and Tax Hike, March 04, 2012 
Tobacco Tax 8: Ban Smoking, or Raise its Tax?, March 12, 2012

Privatization 4: Utilizing Proceeds and Revenues, August 06, 2010
Privatization 8: Government Debts: Military Camps and Spratly Issue, June 20, 2011 
Privatization 9: PAGCOR and Casino Operations, May 16, 2012 
Fat-Free Econ 12: Privatizing PAGCOR, June 08, 2012 
Privatization 10: More on Selling PAGCOR, June 12, 2012