Friday, May 26, 2023

BWorld 605, Climate cycle, climate loans, and the PPP Act

* BusinessWorld, May 17, 2023. 
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With endless “climate crisis” or “climate catastrophe” narratives that we hear and read, we have been led to embrace more wasteful, bottomless climate loans and climate bureaucracies.

See how the multilaterals like the Asian Development Bank (ADB) and World Bank (WB) lobby in stories published in BusinessWorld this month alone: “ODA, loans not enough for climate goals — ADB” (May 4), “PHL to host Asia-Pacific conference on disaster risk reduction” (May 8), “Gov’t seeks $500-million climate risk loan from WB” (May 11), “ETM seen helping PHL accelerate transition to clean energy” (May 16).

The Energy Transition Mechanism (ETM) is an economically dangerous and blackout-friendly climate loan scheme concocted by the ADB to fast-track the transition from fossil fuels to renewables, especially wind-solar. Buy out then kill via early retirement of coal plants and invest more in wind-solar. As of the first quarter of 2023, coal contributed 61% of total electricity generation in the Philippines, while wind and solar combined contributed only 4%. See how blackout-prone the Philippines will be if such a dangerous and economically suicidal policy is enforced.

THE CLINTEL REPORT

Last week, on May 9, the Climate Intelligence Foundation (Clintel), an Amsterdam-based independent think tank founded in 2019 by emeritus professor of geophysics Guus Berkhout and science journalist Marcel Crok, released its new report: “The Frozen Climate Views of the IPCC: An analysis of AR6.”

It is a 180-page date-heavy report that tears into the UN Intergovernmental Panel on Climate Change’s (IPCC) recently published 6th Assessment Report (AR6). Simply put, the Clintel Report showed in many charts and graphs that the IPCC AR6 is focused on “dangerous anthropogenic climate change,” ignores natural climate change, leans on extreme emissions scenarios, and cherry picks the time periods and the literature to make climate change appear “dangerous.”

Among the important data of the report is this chart showing that weather-related losses as share of global GDP is actually falling, not rising.

The report can be downloaded free at https://clintel.org/download-ipcc-book-report-2023/.

THE PPP ACT

The Public-Private Partnership (PPP) Act was passed in the House of Representatives last December: House Bill 6527, “An Act Providing for the Enabling Environment to Foster the Growth of Public-Private Partnerships for Infrastructure and Other Development Projects.”

There are six versions of the PPP bill in the Senate, and on April 18, the Senate Committee on Public Works conducted a public hearing on the subject.

The PPP Act is a quick win for the government and the public because it will expand infrastructure projects around the country at little or no cost to taxpayers because the private sector proponents will shoulder the bulk of financial, technical, and engineering costs.

The President will deliver his second State of the Nation Address (SONA) in two months. In his first SONA last July, President Ferdinand Marcos, Jr. mentioned that the PPP Act aims to address three things: ambiguities in the existing law, bottlenecks and challenges affecting the implementation of the PPP Program, and lack of a competitive and enabling environment for PPPs.

So, the PPP Act, when enacted as a law, will unify the fragmented legal framework and improve governance of PPPs to improve doing business and protect the consumers. Currently, there are different legal frameworks for PPPs, each with their own requirements and processes: the Build-Operate-Transfer (BOT) Law, the Joint Venture (JV) guidelines of the National Economic and Development Authority (better known as NEDA), local PPP and JV ordinances, and guidelines issued by other agencies with special charters.

The proposed PPP Act will address bottlenecks in the PPP process. The approval thresholds of the current BOT Law have not been amended since 1994, so the PPP Act will increase the approval threshold for national PPP projects, making the approval process streamlined and more efficient. The proposed approval thresholds for national PPP Projects are seen in the table in this story.

The autonomy of local government units (LGUs) in the approval of local PPP projects is recognized and preserved by the PPP Act. Some mechanisms should be ready to ensure coordination in investment programming between the National Government and LGUs. These include cases where: 1.) there are proposed National Government undertakings for approval by NEDA’s Investment Coordination Committee, or, 2.) the local PPP project affects national development or master plans and projects, so an endorsement from the National Government through local development councils shall be required.

The tight fiscal condition of the National Government at a time when public demand for more modern, bigger infrastructure projects keeps rising should help the Senate in fast-tracking the enactment of this bill into a law.
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See also:
BWorld 602, Declining inflation and the budget deficit, May 13, 2023 
BWorld 603, The NGCP wall: Transmission problem blamed as generation problem, May 14, 2023
BWorld 604, The Philippines had fastest GDP growth in the world in Q1, May 25, 2023.

The origin and control of money

Last night, my second girl and 12 yo daughter Bien Mary, who just finished Grade 7, going to Grade 8 this coming school year, asked me, "Dad, what happens if there is no money in the world?" I briefly answered it with "then people will go for barter, like several centuries ago." She followed it up with "And what happens if there is no politics, no government?" Hehe, my second girl has some DNA of me -- non fan of more politics, more government. My first daughter too, Elle Marie, told me she finds her subject in Grade 11 "Politics and Government" confusing and non-interesting.

Anyway, I checked Adam Smith's "The Wealth of Nations" (1776), Book 1 Chapter 4 is "Of the origin and use of money." See some origins or pre-money, pre-coins, form of exchange: use of cattle, salt, shells, tobacco, sugar, etc. Then people realize the inconvenience of carrying and exchanging different commodities. So they later use metals as form of exchange.


Then people experienced the inconvenience of metals -- weighing it, assaying it whether it's real gold or silver or other metals, or mixed with lower-value metals. So they began to use coins. The British pound sterling, the Roman copper, etc.


And coins were invented, used as form of exchange.
Then Smith's discussion of two types of value -- use value and exchange value. He used two very good examples. Water has high use value but little exchange value because it is widely available. Diamond has little use value for ordinary people but has very high exchange value for other people.


Bottomline is scarcity of a commodity. Air is very useful, so river or sea water, but since they are abundant and non-scarce in many places, people won't bother with their exchange value.

Control of money. By governments, of course. Modern governments print money, control how much to be released in circulation, when to "mop" it back to the central bank, and so on.

So there. And thanks to my two girls, the younger one especially, she accidentally pushed me to read that part of The Wealth of Nations.

Thursday, May 25, 2023

BWorld 604, The Philippines had fastest GDP growth in the world in Q1

* BusinessWorld May 15, 2023.
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While many sectors and economic observers in the country tried to play down if not criticize the “low” GDP growth of 6.4% in the first quarter (Q1) this year as reported by the Philippine Statistics Authority (PSA) last week, it was actually excellent growth by global standards. Why?

As of yesterday morning, I counted 29 economies that reported their Q1 2023 GDP data. The GDPs of both the Philippines and Ireland were 6.4% and these countries were in the top spot. Next was Malaysia with 5.6%. Four of the 29 economies suffered contractions: Germany -0.1%, the Czech Republic -0.2%, Taiwan -3%, Lithuania -3.7%. The United Kingdom and Singapore both had almost flat growth at 0.2% and 0.1%, respectively (see Table 1).

So, congratulations, Philippine entrepreneurs, workers, and consumers! Congratulations too to the government economic team — good job!

On the same day that the PSA released the GDP figures, the Department of Budget and Management (DBM) released a very appropriate statement titled: “Pangandaman: PH now has a dynamic domestic economy as GDP posted a 6.4% growth in Q1 2023.”

DBM Secretary Amenah F. Pangandaman was quoted as saying: “The country now has a dynamic domestic economy. This means that even if the regional and global economic environment would worsen, ours has its own momentum and own dynamism to sustain growth…. With all these data coming in, I can say that the Philippines’ 6.4% is actually outstanding. It would be excellent if it reached 7%, but 6.4, or even 6%, is already outstanding.”

This assessment is 100% correct. Why?

One, as discussed above, the Philippines (along with Ireland) was the fastest growing economy in the world in the last quarter, at least among the 29 economies.

Two, consider that the 8% growth in Q1 2022 was largely due to election-related spending. With such a high GDP base or level a year ago, a no-election Q1 2023 would have logically been below 6% and yet it grew 6.4%.

On the growth outlook, Secretary Pangandaman added in the same statement: “So, we now project 6.6-7.5% growth from the second quarter to the fourth quarter of 2023, and full-year GDP growth target of about 7.1%.”

Yes, I believe this is also a realistic projection. The low unemployment and underemployment rates this March of 4.7% and 11.2% respectively, versus 5.8% and 15.8% in March 2022, and 7.8% and 15.9% in 2021 already point to higher growth in 2023 than 2022 in the next three quarters.

SOURCES OF PHILIPPINE GROWTH

I checked the components of the Philippine’s GDP over the last six years. The good news is that on the demand side, growth in 2022 and 2023 was led by private investment or gross capital formation which comprises 22% of GDP, followed by household consumption which is 75% of GDP.

On the supply side, GDP growth was led by the Services sector which comprises 61% of GDP, manufacturing (20% of GDP) in 2022, and Finance (10% of GDP). Transportation and storage had high growth but comprised only 3.5% of GDP (see Table 2).

LOCKDOWN, VAX-VAX-VAX, AND THE ECONOMY

The single worst economic policy made by the previous Duterte administration was the strict prolonged lockdown and business closures in 2020-2021. The Philippines experienced a GDP contraction of 9.5% in 2020 – the worst in Asia that year, and the worst in Philippine economic history since just after World War 2.

The single best economic policy made by the current Marcos Jr. administration has been the lifting of all forms of domestic mobility restrictions, and promising that he will not impose new lockdowns.

But President Marcos Jr. still has to neutralize the remnants of the lockdown, the vax-vax-vax deep state in Philippine bureaucracy especially at the Department of Health (DoH) and its consultants, authoritarians with “MD” after their names. The entry of more foreign visitors is still partially hampered by the need for vaccinations or a negative test (if unvaccinated) upon entry. The vax-vax-vax business is assured of continuity.

I think the President made a mistake in keeping Dr. Maria Rosario Vergeire as DoH Acting Secretary for a year because she continued the same virus scare-mongering unless vaxxed done by the previous secretary, Francisco Duque III.

The next DoH Secretary should veer 180 degrees away from the scaremongering, economy-crippling medical tyranny espoused by the previous and current DoH leadership. No more lockdowns, no more mobility restrictions, no more mandatory vax-vax-vax which required about P150 billion in new borrowing from 2021-2022 which will have to be paid by future high taxes.

Economic freedom will unleash the entrepreneurial spirit and consumer confidence. And sustain growth at high levels. With economic freedom and no medical-political tyranny, I see GDP growth of 7.1-7.5% in full-year 2023.
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See also:
BWorld 601, Rising oil-gas reserves and their unstable prices, May 12, 2023
BWorld 602, Declining inflation and the budget deficit, May 13, 2023 
BWorld 603, The NGCP wall: Transmission problem blamed as generation problem, May 14, 2023.

Deindustrialization 14, Net Zero slowly on the retreat in Europe

See these news stories.



How Macron stole a march on Britain – by hitting pause on net zero
Green energy crusade risks leaving UK more isolated than ever

Swiss Re joins other major re/insurers in leaving Net-Zero Insurance Alliance
Steve Evans  22nd May 2023
  
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See also:
Deindustrialization 11, Failing grid and Net zero, March 03, 2023
Deindustrialization 12, Bypassing the usefulness of fossil fuels, more on net zero, April 09, 2023
Deindustrialization 13, More wind-solar, more expensive electricity, May 11, 2023.

Sunday, May 14, 2023

BWorld 603, The NGCP wall: Transmission problem blamed as generation problem

* BusinessWorld May 10, 2023.
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Consider these three instances of good news and bad news in the Philippine economy.

Last Monday morning, May 8, the good news came when employment data for March 2023 was released by the Philippine Statistics Authority (PSA): the labor force participation rate remained high at 66% vs. 65.4% in March 2022, 63.3% in 2021 full year; unemployment and underemployment rates remained low at 4.7% and 11.2% respectively, vs. 5.8% and 15.8% in March 2022, and 7.8% and 15.9% in 2021. See this report in BusinessWorld, “Underemployment rate at 18-year low” (May 9). These numbers are good news for investors, they will come, stay and possibly expand here because people have jobs, have money to buy.

Then, on the afternoon of that day, the bad news came when there were wide-ranging red and yellow alerts — the National Grid Corp. of the Philippines (NGCP) transmission line in Zambales tripped, leading to the Masinloc power plants tripping, leading in turn to rotating blackouts in some cities and provinces in Luzon. This sort of event will scare investors because their machines, appliances etc. can be damaged by power outages and fluctuation. Running their gensets for hours will mean higher operational costs.


Yesterday morning, May 9, there was another piece of good news, also from BusinessWorld: “PHL ‘on track’ to become an upper middle-income country, says WB” (May 10). The target of the economic team is for the Philippines to attain this level, per capita income of $4,256-$13,205 a year, by 2025. Good target.

Then yesterday afternoon, another piece of bad news: NGCP’s Duhat-Hermosa 230-kV transmission line in Bataan tripped. This affected three power plants — GNPower, Mariveles, and Limay. There were a few hours of yellow alert and Meralco had to use automatic load dropping (ALD) to avoid blackouts.

And on the morning of April 27, the PSA released the gross regional domestic product with this headline, “All Economies of 17 Regions Continue to Record Positive Growths in 2022; Western Visayas was the Fastest Growing Region at 9.3 Percent.” I am from Negros Occidental, my wife is from Iloilo, our folks in both provinces and the region have micro businesses there so this is good news.

Then, on the afternoon of the same day this news from Sunstar: “NGCP reports Visayas grid disturbance; red alert raised for potential power outages.” There was a related story from BusinessWorld, “Unstable power on Panay could persist indefinitely” (April 30).

Blackouts, potential or actual, are anti-business, anti-consumer, anti-economic growth. Philippine businesses and the government economic team are working hard to have sustained fast growth for the country. And the NGCP, the only remaining private monopoly nationwide, earning tens of billions of pesos in profit yearly, has become the growth-dampener, and in some instances, business-spoiler.

Yesterday I attended the press conference of the Department of Energy (DoE) about the large-scale red alert last Monday. DoE Secretary Raphael P.M. Lotilla said in his opening statement: “In the Luzon, Cebu-Negros-Panay, and Mindanao-Visayas transmission projects, we extended assistance together with other agencies to NGCP, the private concessionaire, to fast-track the completion of long-delayed transmission projects and free up stranded power supply. Notwithstanding these efforts, these projects still have not been completed. The recent prolonged power outages in Panay and Negros, and the power interruption experienced yesterday have been traced principally to inadequacies in the transmission system.”

Amen to that, Secretary Lotilla.

From the succeeding DoE presentation by Undersecretary Rowena Guevarra, this is the sequence of events last Monday, May 8:

1. NGCP’s Bolo-Masinloc 230-kV transmission line 2 tripped at 1 p.m.

2. Masinloc power plant units 1 and 2 immediately tripped, also at 1 p.m.; 659 MW of power supply was available but there was no “highway” or line to deliver it to distribution utilities (DUs) like Meralco and electric cooperatives (ECs).

3. The NGCP issued red alerts (2-4 p.m., 7-8 p.m.) and a yellow alert (5-6 p.m.) for the Luzon grid, a yellow alert for the Visayas grid. The NGCP restored transmission line 2 within 19 minutes but the damage had been done to the Masinloc plants — unit 1 was restored by 4:30 p.m., unit 2 was restored by 3:26 a.m. of May 9.

Other power plants also had outages, but these were not related to NGCP line 2 tripping: a forced outage of 310 MW (Calaca unit 1, 1590 bunker station 1) plus derated capacity of 255 MW (Sual unit 1, Calaca unit 2, and SNAP Binga hydro). Sub-total: 565 MW.

4. Affected by the red alert with rotating blackouts that afternoon were: Meralco, Zambales (Zameco), La Union (Lueco), Pangasinan (Cenpelco), Dagupan (Decorp), Nueva Ecija (Neeco), Isabela (Iselco), Quezon (Quezelco), Batangas (Batelec), Laguna (Fleco), and Camarines Sur (Casureco).

So the root or main cause of the red alert and rotating blackouts in many cities and provinces in Luzon that afternoon was NGCP’s Bolo-Masinloc line 2. It was mainly a transmission problem, not a power generation problem.

But in most news headlines that followed, there was a distortion of the story: the power plants were blamed. See these reports for instance: “Power outages hit Luzon grid as five power plants conk out,” “5 power plants conk out,” “Luzon grid on red alert over plant shutdowns, low power production — NGCP,” “NGCP places Luzon grid on red alert amid lack of supply.”

I would like to think that NGCP has a shrewd team of PR guys, turning the table, shifting the blame away from the monopolist, by constantly and repeatedly arguing that whenever red alerts happen, the power plants and lack of power supply are to blame.

Somehow this is true. The Philippines has the lowest power generation in both total terawatt-hours (TWH) and kwh per capita in major economies of East Asia. I saw data from the World Bank — the Philippines has high transmission and distribution losses, 9.4% of total electricity output in 2014, the latest data available by the WB (see table).

But it is possible also that some power generation companies are discouraged from expanding capacity because an expanded supply killed or restricted by transmission line tripping would mean immediate power plant tripping, business losses, and they will be blamed after even if the fault does not lie in them.

What needs to be done?

Let me start with these direct no-nonsense proposals from an industry insider (he gave me permission to use this): 1.) Have enough reliable reserves, 2.) Strengthen the transmission backbone, ensure solid ancillary services (AS), 3.) DoE to compel all sectors to cooperate — this is not just NGCP, this is symptomatic of an industry wide problem —, and, 4.) Include inefficient ECs in the inventory and help off-grid areas.

Amen to that.

Plus, there are these two as reported in BusinessWorld: “NGCP warned red alerts may ultimately go before Congress” (May 9), “Palawan, Mindoro called ideal sites for nuclear reactor facilities” (May 8).

Yes, the NGCP franchise monopoly came from Congress, not from the DoE or the Energy Regulatory Commission or MalacaƱang. With this serious problem of frequent yellow-red alerts in the country, 33 years after the big blackouts of 1990-1991, Congress should now assert its oversight function on private corporations which got franchise monopolies from them.

And for the off-grid islands that run practically on 100% fossil fuels via big gensets from the National Power Corp. and private power companies, the subsidy given to them via the universal charge for missionary electrification (UC-ME) — now at P0.178/kwh and soon to become P0.33/kwh — should end. Small modular reactors (SMRs) will greatly help the off-grid islands and provinces to end frequent blackouts and dependence on subsidies from on-grid consumers, from Cagayan to Zamboanga.
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See also:
BWorld 600, Taxpayers’ burden from uniformed pensions, May 11, 2023
BWorld 601, Rising oil-gas reserves and their unstable prices, May 12, 2023
BWorld 602, Declining inflation and the budget deficit, May 13, 2023.

Weekend Fun 83, Academic lessons on Mother's day

NANAY, MOTHER IS THE BEST TEACHER IN THE WORLD

Dahil tinuruan niya ako ng…

AGRONOMY. “Kada butil ng bigas kinakain mo pinagtrabahuhan ng tatay mo. Ubusin mo.”

ANATOMY: “Mata ang ginagamit sa paghahanap, hindi bibig.”

ASTRONOMY: “Para kang nasa buwan kung maglakad. Bilisan mo.”

BIOLOGY: “Manang mana ka sa tatay mong unggoy.”

CHEMISTRY: "Pag inuna mo lakwatsa kesa pag-aaral, maghalo ang balat sa tinalupan."

DEMOGRAPHY: "Pag sumama ka sa nobyo mong pangit, dadami ang matsing sa mundo."

ECONOMICS: “Limited supply yan litson baboy, share mo sa kapatid mo at good shot ka sa akin."

ELECTRONICS: “You’re grounded. Hindi ka aalis ng bahay.”

HISTORY: "Noong bata ako, piso lang ang baon ko. Maswerte ka pa nga.”

HORTICULTURE: "Pag bumagsak ka sa exam mo, magtatanim ka ng kamote."

HYPNOSIS: “Makuha ka sa isang tingin!”

KINETICS: "Pag tumakbo ka at naabutan kita, malilintikan ka."

ORTHOPEDIC: "Pag nahulog ka dyan at nabali paa mo, pipilayan kita."

PENOLOGY: “Kung ayaw mo sumunod, bahala ka sa buhay mo.”

PHILOSOPHY: “Ano? Bakit di ka makasagot?" Tapos kapag sumagot ka, “At natututo ka ng sumagot?”

POLITICAL SCIENCE: "Kaya ganyan kasi sinabi ko."

PHYSICS OF MOTION: “Papunta ka pa lang pabalik na ako.”

THEOLOGY: “Pag inuna mo magnobyo kesa pag-aaral, magdasal ka na.”

ZOOLOGY: "Pag hindi ka pa umakyat sa kama mo, matutulog ka katabi aso, pusa at ipis.
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See also:
Weekend Fun 80, Political jokes for 2022 elections, October 10, 2021
Weekend Fun 81, Sic o'clock News - Rewind, January 15, 2022
Weekend Fun 82, Bawal Party, BBM supporters, May 08, 2022.

Saturday, May 13, 2023

BWorld 602, Declining inflation and the budget deficit

* BusinessWorld May 8, 2023.
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Last week, the Philippine Statistics Authority (PSA) released the inflation rate for April — 6.6% — and it was a significant decline from 8.6% in February and 7.6% in March. Following this trend, this column projects that inflation will be around 5.5% for May this year.

Based on January-April data, the G7 industrialized countries (except Japan) continue to have high inflation rates, led by the United Kingdom (UK), Italy, and Germany. For East Asian economies plus India, the Philippines has the highest average inflation rate this year. During the same months last year, India and Singapore had the highest inflation rates (see Table 1).

From the PSA data, we see that the top three sources of high inflation in March and April were alcoholic beverages and tobacco, food and non-alcoholic beverages, and restaurants and accommodation services. This implies that people are going out to eat and drink more, travel and party more, which implies that consumer confidence is high — and this is good. When someone is spending that means somebody else is earning, and this helps sustain a dynamic domestic economy towards a higher level of spending, income, and GDP.

Inflation from transportation has significantly declined, from 13% in 2022 to 10% in January and February this year, and 4% (average) in March and April. Lower oil prices contributed to higher consumer confidence.

COR AND THE BUDGET DEFICIT

Also last week, the Bureau of the Treasury (BTr) released the cash operations report (COR) for March 2023. I downloaded the historical monthly COR data and compared it with COR for the first quarter (Q1) of the year.

The good news is that revenues continue to rise so the budget deficit has been controlled to below P300 billion, unlike in 2021 and 2022, and financing or borrowing was also controlled to below P1 trillion, again unlike in 2021 and 2022.

The big problem continues in the spending side. More than P1 trillion in Q1 while revenues are only P0.7 to P0.8 trillion. The three biggest items on the expenditure side are National Government (NG) disbursements, transfers to local government units (LGUs), and interest payments to service the huge public debt (see Table 2).

The way public expenditures expand, even if revenues rise high they will never keep up with expenses because many officials, appointed and hired personnel, pensioners — especially the military and uniformed personnel (MUP) — and subsidy-dependents keep raising their claims to taxpayers’ money as if they have entitlement to money they did not earn.

The MUP pension system, in particular, is really unsustainable and bordering on shameless because the active personnel contribute zero to the fund and when they retire, they get huge benefits — tax-free — and these can be passed on to their spouses when they die. The fund was P160 billion/year in 2021 and 2022, and will rise to P200+ billion/year in 2023-2025. This fund should be zero and non-existent in the annual budget. Personnel in other sectors — like government doctors, nurses, teachers, engineers, etc. — do not have this kind of privilege.

Then there is a need to trim the fat or excess personnel in government via the National Government Rightsizing Program (NGRP). Some redundancies are useful, like in cyber security and internal defense against rebels and organized criminals. But some redundancies are wasteful, like having so many signatures and permits required to do business in the country. This kind of redundancy should be trimmed and controlled, then public spending and borrowings can also be controlled.

The public should support these moves by the economic team: MUP pension reform, NGRP, and Land Bank of the Philippines — Development Bank of the Philippines merger, with the LANDBANK as the surviving and sole government bank. These reforms will benefit the taxpayers through lower public expenditures, less need to borrow and tax, and lower interest payments.

LECTURE SERIES

Meanwhile, the Ruperto P. Alonzo (RPA) lecture series for the second quarter of 2023 will be held in the afternoon of June 22 at the UP School of Economics (UPSE) auditorium. The main speakers will be Finance Secretary Ben Diokno and Budget Secretary Amenah Pangandaman. Mr. Diokno is a good friend and was a colleague of Prof. RPA at UPSE for decades, while Ms. Pangandaman was a student under Prof. RPA for two semesters at the Program in Development Economics (PDE) in the 1990s.

After the lectures by the two officials, there will be a PDE grand alumni homecoming. Graduates from batches from the 1960s to 2020s will have a great time looking at how the program has evolved and how Prof. RPA played a key role in it, especially molding young minds to become technically prepared, disciplined, and effective public officials like Secretary Pangandaman, Public-Private Partnership Center Executive Director Cynthia Hernandez, Tariff Commission Chair Louie Mendoza, and Department of Budget and Management Undersecretary Joselito Basilio. They and many other mid- to high-level government workers were former students of Prof. RPA at PDE.
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See also:
BWorld 599, Growth projection, electricity generation and PPP Center, May 07, 2023
BWorld 600, Taxpayers’ burden from uniformed pensions, May 11, 2023
BWorld 601, Rising oil-gas reserves and their unstable prices, May 12, 2023.

Friday, May 12, 2023

Covid 82, Political science that masquerade as medical science

Dictatorship, medical martial law and tyranny, political science that masquerade as medical science. Endless scaremongering to justify endless control over people's mind and lives.


These things I still believe.

1. Natural immunity from natural infection works. It's not just man-made or government-imposed "vax immunity."

2. Thus isolation -- lockdown -- of people that prevent or delay natural immunity among the young and healthy is wrong.

3. Mandatory and prolonged masking is wrong.

4. Old, decades-proven human-grade treatment like Ivermectin, HCQ, work.

5. Emergency use because there are no long-term studies vax are not really "Safe and effective," it remains a hypothesis contradicted with thousands of vaccine adverse events - VAERS, VigiAccess, EudraVigilance, even Phils. FDA reports show this.

6. People's basic civil rights and freedom -- freedom to work, freedom of mobility, freedom about their own body to take a vax or not -- been compromised, heavily restricted precisely because the lockdown is mainly political science + military science that masquerade as medical science.

7. Covid cases and deaths heavily exagerrated because there is large incentive, large subsidy in medical costs and hospitalization, if sickness and deaths are declared as Covid. For example, hospital reimbursement for Covid mild pneumonia about P100k, for severe pneumonia P333k, and for critical pneumonia P780k.

8. People's innate immunity compromised, their natural immunity dilapidated by multiple boosters. Resurgence of high "Covid cases" -- because there are no more regular flu -- one proof of this.

Meanwhile, some old reports: 

German Mainstream Media: “Serious Flaws In Pfizer BioNTech Vaccine Study”…”Many Irregularities”
By P Gosselin on 25. February 2023
https://notrickszone.com/2023/02/25/german-mainstream-media-serious-flaws-in-pfizer-biontech-vaccine-study-many-irregularities/

Survey: 36.6% Of German 18 To 29 Year-Olds Experienced Severe COVID Vaccine Side Effects
By P Gosselin on 17. March 2023
https://notrickszone.com/2023/03/17/survey-36-6-of-german-18-to-29-year-olds-experienced-severe-covid-vaccine-side-effects/

Autism On The Rise: CDC Data
TYLER DURDEN, MAR 27, 2023
https://www.zerohedge.com/medical/autism-rise-cdc-data

Bombshell Vax Analysis Finds $147 Billion In Economic Damage, Tens Of Millions Injured Or Disabled
TYLER DURDEN, MAR 29, 2023
https://www.zerohedge.com/markets/bombshell-vax-analysis-finds-147-billion-economic-damage-tens-millions-injured-or-disabled
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See also:
Covid 79, Lockdown, news reports of vax injuries, March 01, 2023
Covid 80, 3rd anniversary of lockdown, March 25, 2023
Covid 81, Dr. Iggy Agbayani in my column, April 18, 2023.

BWorld 601, Rising oil-gas reserves and their unstable prices

* BusinessWorld May 3, 2023.
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The persistent lobby for energy transition from fossil fuels (oil, gas, coal) to renewables (wind, solar, etc.) and moving to “net zero” carbon dioxide emissions is anchored on the assumptions (among others) that fossil fuels are non-renewable and will soon be depleted, and that this will cause large-scale global economic turmoil if the alternative renewables are not ready in high volumes.

Are these assumptions correct and realistic? If yes, fine. If no, then all the economic and energy policies leading to net zero are also wrong and distortionary.

To help answer this question, I put together this table and limited the annual data for proven oil and natural gas reserves to 1980, 2000, and 2020. Reserves/Production (R/P) measures how many years the reserves will last if current production by a country (both for domestic use and exports) is constant. So, an oil R/P ratio in 2020 of 27 for Brunei means it will take 27 years before its oil reserves will be totally depleted (in 2047), assuming the production volume is constant, and no new reserves are discovered.

The numbers show the following:

One, proven reserves for both oil and gas for all countries keep rising through the years. Research and drilling technology keeps improving. Before, machines could drill down one kilometer only, now they can drill 10 kilometers or deeper. Modern fracking technology also allows for vertical then horizontal extraction of oil and gas, unlike traditional vertical drilling only.

Two, the R/P ratios for 2020 show that some countries can keep pumping and extracting oil for hundreds of years. Libya can keep it up for 339 years, Syria for 159, and Iran for 140. For gas, Iraq and Venezuela can keep producing for an average of 335 years, Qatar for 144 years, Iran for 128 years, Syria for 90 years, and so on.

Three, China, India, and Vietnam are ramping up their oil-gas reserves discovery — their gas R/P ratio now reach from 43 to 74 years.

Four, the US has a low R/P ratio of only 11 years for oil and 14 years for gas. This should be the main reason why US troops went to Iraq, Libya, Yemen, Syria, etc., to secure more oil supply for itself. US troops went to Syria uninvited from 2014 to the present and occupy a big oil-gas producing region. Such a practice is part of what the US calls “rules-based international order.” What a joke.

To criticize Russia’s invasion of Ukraine is understandable. But to criticize the occupation of Ukraine while justifying the occupation of a big portion of Syria is a joke.

Five, the total world reserves are almost doubling every 20 years (see Table 1).

So, to the question: Are fossil fuels — oil and gas in particular — soon to be depleted?

The quick answer based on the above numbers is “no.” The world will never run out of oil and gas, and coal too, so long as research, exploration, and extraction are left unpoliticized. The Earth’s crust is up to 70 km deep. Current drilling for oil and gas is not even 1/5 of the Earth’s crust.

So, if reserves and potential supply seem unlimited, why are oil and gas prices rising, or at least unstable (see Table 2)?

The quick answer is politics — too much politics in the world — military conflict and threats. Prior to the Yom Kippur war (1973) in the Middle East, Dubai crude was only $2/barrel in 1972. It jumped to $10.40 in 1974. Then there was the Iran revolution in 1979, followed by the Iran-Iraq war in 1980-1988. Dubai crude in 1978 was only $13/barrel, and it jumped to $30 in 1979 and $35.70 in 1980.

Most recently, the Russia-Ukraine war in February 2022 led to a big jump in oil prices by the middle of last year, but these have gone down to the pre-war level of below $85/barrel. The problem is not the war itself because Russia’s oil-gas production and exports were continuing. It was the economic sanctions where Russia would not be paid in US dollars or euros, and its central bank reserves of $300 billion were frozen. When more countries started paying Russia in rubles or China yuan or Indian rupees, Russian oil and gas began trading normally, leading to current low prices.

There are two lessons for the Philippines here. One, we should distance ourselves from the heavy net-zero lobby and narrative because it is based on false and dishonest claims that future fossil fuel supply will be depleted while demand keeps rising. Two, we should further expand and diversify our international reserves to more foreign currencies plus gold. This will help us address high price fluctuations on dollar-denominated merchandise trade.
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See also:
BWorld 598, High inflation in the Philippines could be due to dynamic domestic economy, May 06, 2023
BWorld 599, Growth projection, electricity generation and PPP Center, May 07, 2023
BWorld 600, Taxpayers’ burden from uniformed pensions, May 11, 2023.

On US preparation for another war, in Taiwan

US continues its illegal occupation of a big part of Syria since 2014, part of their "rules-based international order" kuno, doing heavy proxy war vs Russia in Ukraine, and now explicitly preparing for war vs China with bigger defense budget, reports below.

Meanwhile, some data on defense spending by countries.


https://www.pgpf.org/infographic/infographic-the-facts-about-us-defense-spending?utm_term=us%20military%20budget

Pentagon Leaders Say New Budget Will Help Prepare for War With China
Dave DeCamp | Mar 24, 2023
https://libertarianinstitute.org/news/pentagon-leaders-say-new-budget-will-help-prepare-for-war-with-china/

Pentagon: Budget readies US for possible China confrontation
Pentagon leaders have told Congress that the U.S. military must be ready for possible confrontation with China
LOLITA C. BALDOR and TARA COPP, March 23, 2023
https://abcnews.go.com/Politics/wireStory/pentagon-budget-readies-us-china-confrontation-98073526

Pentagon Releases National Defense Strategy That Names China as Top Threat
The strategy was first briefed to Congress back in March
Dave DeCamp Posted on October 27, 2022
https://news.antiwar.com/2022/10/27/pentagon-releases-national-defense-strategy-that-names-china-as-top-threat/

Thursday, May 11, 2023

BWorld 600, Taxpayers’ burden from uniformed pensions

* BusinessWorld May 01, 2023.
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The pushback against military and uniformed personnel pension reform has come strongly since Finance Secretary Benjamin E. Diokno announced the reforms on March 28. President Ferdinand R. Marcos, Jr. approved the reforms with the concurrence of Defense Secretary Carlito G. Galvez, Jr. and Interior and Local Government Secretary Benhur Abalos.

Under Mr. Diokno’s proposal, the reforms will apply to all active personnel and new entrants. It will remove the automatic indexation of pensions to the salary of active personnel of the same rank. Uniformed personnel will start getting their pensions when they turn 57. Mandatory contributions will be required for active personnel and new entrants, similar to GSIS pensioners.

These reforms are necessary to address certain economic distortions. For instance, active personnel contribute zero to their future pensions, the cost of which had reached P160 billion a year and is projected to reach P200+ billion a year by 2023-2024. These pensions are tax-free, indexed to one grade higher, and 75% is passed on to the spouse when the pensioner dies, still tax free. This is even more generous than the US military pension system.

Taxpayers are already burdened with costs such as free education for four years at the Philippine Military Academy and Philippine National Police Academy; high salaries, especially doubling of military pay by former President Rodrigo R. Duterte in 2018; high expenditures for arms, ammunition, trucks, tanks, ships, choppers, planes, training, etc. so that they have superiority over rebels and criminals and their chance of dying is low; and pension upon retirement.

If soldiers and policemen were sent to battle without those heavy equipment in land, sea and air, they are indeed entitled to generous pensions as additional incentive for their service to the country.

I built this table to have a bigger picture of the fiscal situation. From 2016 to 2022, the tax burden increased from P21,400 to P31,800, while the expenditure burden rose from P24,900 to P46,200. The debt burden increased from P64,400 to P124,000, while the military and police pension burden rose from P585 to P1,470. Their pensions, maintenance and other operating expenditures plus capital outlay burden such as the purchase of new tanks and choppers doubled to P2,600 (Table 1).The fiscal burden on taxpayers keeps rising, not flatlining or decreasing. And the huge military and police pension cost is part of this problem.

So, I ask our soldiers and policemen — active and pensioners — to please do your share. “Serve and protect” the taxpayers too, contribute to the pension fund, end the indexation and support other reforms. Do not limit the “Serve and protect… our taxpayer-funded pension.” Thank you.

Last week, I got data from the DoF on excise tax revenues. Collections from tobacco products are the biggest as the tax rate keeps rising: P35 a pack in 2019, P45 in 2020, P50 in 2021, P55 in 2022, P60 this year and a 5% increase yearly thereafter, or P63 a pack in 2024, P66.15 in 2025 and so on.

Alcohol tax rates are also rising. Sugar-sweetened beverage tax was imposed only in 2018 under the TRAIN law of 2017. Petroleum excise tax is vanishing because all oil players have shifted to imports since 2021, and the small tax collections in 2022 came from the remaining inventory.

One big and noticeable item showed up in the DoF data — revenues from tobacco taxes have declined for the first time, from P179 billion in 2021 to P160 billion in 2022. Then I computed the percent share of tobacco and alcohol, the Budget of Expenditures and Sources of Financing projections in August (or July) of the same year’s share to actual. The DoF has over-projected revenues from tobacco tax — P210 billion versus P160 billion actual, or a ratio of 131% (Table 2).

The big drop in tobacco tax is mainly a result of worsening smuggling and illicit trade in the country. I personally saw cigarettes sold in western Pangasinan early this year at only P40 a pack. These were 100% illicit products because the retail price was lower than the tax at P60 pack, and there were no graphic warnings. And these were openly sold in mom-and-pop stores.

The control of illicit trade, which is economic sabotage, is mainly a function of local governments, DoF agencies and the Philippine National Police and Philippine Coast Guard. They have a huge budget — the police had P190-P192 billion a year in 2021-2023, and the coast guard had P15.4 billion in 2021, P19.3 billion in 2022 and P21.3 billion in 2023.

So this is a case where some uniformed agencies have a huge annual budget, big annual pensions that require higher taxes but are remiss in their function to control smuggling that reduces tax revenues.

Meanwhile, the tax-tax-tax health activists should be happy because their target of reduced smoking is attained. But they may have become unintentional allies of the smugglers, criminals and corrupt enforcers in government because more smokers have shifted to illicit, smuggled tobacco that pay zero tax.
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See also:
BWorld 597, GDP expansion and an irrational lobby, April 24, 2023
BWorld 598, High inflation in the Philippines could be due to dynamic domestic economy, May 06, 2023
BWorld 599, Growth projection, electricity generation and PPP Center, May 07, 2023.

Deindustrialization 13, More wind-solar, more expensive electricity

Continuing monitoring of some news reports on the subject. First item below, more wind-solar like Denmark, Germany and UK, more expensive electricity.
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Household electricity prices worldwide in June 2022, by select country
https://www.statista.com/statistics/263492/electricity-prices-in-selected-countries/


My Household Electricity And Gas Prices Rise 87% And 178% Respectively!
By P Gosselin on 19. February 2023
https://notrickszone.com/2023/02/19/my-household-electricity-and-gas-prices-rise-87-and-178-respectively-here-in-germany/

Coal Keeps Germany’s Lights On
The supposedly evil energy source saves the day in Europe.
By The Editorial Board, March 9, 2023
https://www.wsj.com/articles/germany-coal-energy-electricity-renewables-4700b442

Surprise: “Coal Became Most Important Energy Source For Electricity In Germany” In 2022
By P Gosselin on 14. March 2023
https://notrickszone.com/2023/03/14/surprise-coal-became-most-important-energy-source-for-electricity-in-germany-in-2022/

Wall Street Journal makes fun of Germany's energy policy
March 17, 2023
https://blackout-news.de/aktuelles/wallstreet-journal-macht-sich-ueber-deutschlands-energiepolitik-lustig/

Deforesting To Save The Planet? Europe’s Forests Shrinking As Wood Used For “Green” Energy
By P Gosselin on 22. March 2023
https://notrickszone.com/2023/03/22/deforesting-to-save-the-planet-europes-forests-shrinking-as-wood-used-for-green-energy/

ESG tentacles could strangle growth in ASEAN countries
Vijay Jayaraj March 30, 2023 
https://www.bizpacreview.com/2023/03/30/esg-tentacles-could-strangle-growth-in-asean-countries-1345595/

Column: Wake Up, West – a new energy world order is building, fast
Terry Etam April 4, 2023
https://boereport.com/2023/04/04/column-wake-up-west-a-new-energy-world-order-is-building-fast/


Germany’s Renewable Heating Plan To Cost Many Times More Than Expected: 776 Billion Euros!
By P Gosselin on 11. April 2023
https://notrickszone.com/2023/04/11/germanys-renewable-heating-plan-to-cost-many-times-more-than-expected-776-billion-euros/

Fewer Coal Power Plants Close in 2022 Than in Recent Years
by Anna Fleck, Apr 12, 2023
https://www.statista.com/chart/29701/coal-capacity-from-plant-openings-and-closures/

Net Zero grid batteries alone would bankrupt America
Craig Rucker May 9, 2023
https://www.americanthinker.com/blog/2023/05/net_zero_grid_batteries_alone_would_bankrupt_america_.html
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See also:
Deindustrialization 10, Net zero, ESG and carbon tax, February 09, 2023
Deindustrialization 11, Failing grid and Net zero, March 03, 2023
Deindustrialization 12, Bypassing the usefulness of fossil fuels, more on net zero, April 09, 2023.

Sunday, May 07, 2023

BWorld 599, Growth projection, electricity generation and PPP Center

* BusinessWorld April 26, 2023.
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Last week, the Development Budget Coordination Committee (DBCC) held a press conference on the revised macroeconomic and fiscal targets from 2023-2028. The DBCC — or the economic team — is composed of the Secretaries of the Departments of Finance and Budget and Management (DoF and DBM), the National Economic and Development Authority (NEDA), and the Governor of the Bangko Sentral ng Pilipinas.

It is good that the economic team is keeping the original growth targets at 6-7% for 2023, and 6.5-8% for 2024-2028. As argued in this column last Monday, the Philippines’ quarterly GDP growth momentum in 2022 plus employment data as of February 2023 show that the domestic economy is dynamic, and local businesses can sustain a virtuous cycle of production-consumption at higher and rising levels.

I also think that the macroeconomic assumptions to make the growth projections are realistic. For instance, the Dubai crude price of $70-$90/barrel for 2023-2024, and $60-$80/barrel for 2025-2028. The actual Dubai prices from January 2023 to the present range from $75-$85/barrel, so there are four months of actual data that support the assumption already. Oil price pressure is stabilizing if not declining because many countries continue to buy cheap Urals or Russia oil, which is $10-$15/barrel cheaper than Dubai and other OPEC exporters. This competition is somehow good for us.

This week, the Independent Electricity Market Operator of the Philippines (IEMOP) released the mid-April update for power supply-demand prices. I computed the total power generation by source or technology, then averaged in supply-demand, January-March 2023, and compared them with same period last year.

The share of coal in installed capacity has not increased — roughly about 40% of the total — but actual power generation has increased from 54% in the first quarter 2022, to 61% of the total generation this year. So, it is unwise and dangerous for the country to listen to the climate lobby about restricting and even killing coal power because their beloved wind-solar can contribute only 4.7% of total generation.

Electricity prices have increased from an average of P6.47/kWh last year to P7.24/kWh this year mainly because of declining power margins; demand is picking up while supply is not rising at commensurate levels (see Table 1).

Meanwhile, in Boo Chanco’s column in the Philippine Star last week (April 24), “Cabinet Rigodon,” he wrote: “When the President says we need the private sector to partner with the government for big projects, he must make sure the NEDA, PPP Center, and all the other bureaucrats get the message and not add to the red tape for approvals. Proponents complain that there is so much back and forth on requirements that waste time…”

As stated earlier, I am following the work of the economic team including NEDA and the PPP Center (Public-Private Partnership Center of the Philippines) and I can say that Boo’s assessment of the bureaucracy at these two agencies, especially the PPP Center, is lousy. There are three reasons why I think so.

One, there is a robust number of PPP projects in the pipeline which are processing faster. I checked the PPP Center website — there are 100 projects costing P2.249 trillion in the pipeline already: 15 projects in transportation (airports, seaports, rail, terminal), 15 on toll roads, nine in property development, six in health, six in water and sanitation, five in information and communications technology (ICT), four in solid waste management, three in power/energy, and one in tourism.

Two, the PPP Center has to observe and follow the project approval timelines of the 2022 Revised IRR of the Build-Operate-Transfer (BOT) Law, which addresses bottlenecks and seeks to streamline the process. If there is very fast approval, some people will complain of “undue haste,” that the projects are not well-studied, that there is no due diligence by government.

In the past, the actual Investment Coordination Committee (ICC) approval timeline, that passed through the Technical Board (TB) and Cabinet Committee (CC), was an average of 15.7 months for solicited projects and 19.7 months for unsolicited projects. Under the Revised 2022 BOT Law IRR, Indicative ICC approval timelines are projected to be down to only 4.3 months for solicited and 11.8 months for unsolicited projects. These indicative timelines could be shorter if all documents are sufficient to aid decision making, or longer if conditional approval is given (see Table 2).

Three, the economic team now holds regular meetings for the ICC-TB, ICC-CC, and the NEDA board. I asked some friends in NEDA about the frequency of meetings, they told me that in less than a year, the Marcos Jr. administration has already held 10 ICC-TB meetings, three ICC-CC meetings, and six NEDA board meetings with two PPP matters on the agenda. The PPP Center just makes sure that all the requirements are met and acts on them, it does not wait for schedules anymore.

There, the numbers speak for themselves — there is less bureaucracy, there is faster approval of projects that will help businesses and the economy overall.

Meanwhile, the BusinessWorld Economic Forum (BWEF) 2023 will roll out on May 25 at the Grand Hyatt Manila at Bonifacio Global City, Taguig. The theme this year is “The Digital Future: Accelerating Business and Sustainability.”

As an advocate of individual liberty and free market economics, I think more digital business can support this advocacy because there will be less bureaucratic and arbitrary interventions. And investors from abroad — or even digital workers in remote beach resorts in the country with access to the web — can follow the rules and status of their compliance. But safeguards should be in place so that future authoritarian governments will not harvest and use digital information on people and businesses for more dictatorial policies and impositions.

To see the speakers, agenda, and to register for the BWEF 2023, check here: https://www.bworldonline.com/bwefthedigitalfuture/.
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See also:
BWorld 596, More on Meralco distribution charges and energy transition, April 20, 2023
BWorld 597, GDP expansion and an irrational lobby, April 24, 2023
BWorld 598, High inflation in the Philippines could be due to dynamic domestic economy, May 06, 2023.

Energy 170, Electric cooperatives and NPC

Here are some photos of the presentations by speakers from electric cooperatives (ECs) and the National Power Corp. (NPC), at the Philippine Electric Power Industry Forum (PEPIF) 2023 last March 20-21 at Diamond Hotel, sponsored by the Independent Electricity Market Operator of the Philippines (IEMOP).

Vulnerability to electricity price fluctuations is experienced by all -- generation companies (gencos), ECs, distributors, consumers, etc. But he is right that the lack of interconnection capacity among islands (Iloilo-Negros-Cebu, Leyte-Bohol, Mindanao-Visayas) is another reason for imbalance in power supply-demand in some big islands. 


This problem is not unique to ECs, also experienced by private distribution utilities (DUs) and retail electricity suppliers (RES). ECs cannot argue that they are singled out.


I doubt if it's really "people's ownership", more of EC bureaucrats and financiers' ownership. Consumers in many ECs franchise area on average are charged higher than consumers of private DUs.


Actually it is the taxpayers who are the ultimate losers. When ECs lose money due to wastes, corruption or plain inefficiencies, they run to the National Electrification Agency (NEA) and NEA goes to Congress to ask for taxpayers money to bail out the losing ECs, and Congress gives money from taxpayers.


The NPC guy. I still believe that subsidy for missionary electrication -- paid by consumers of all on-grid islands from Aparri to Zamboanga -- should end. Off-grid islands must have their own big power plants aside from gensets running on diesel. Preferably small coal or gas plants, or small modular nukes (SMRs).