Ducky Paredes

“(G)overnment economic managers now foresee a deficit of some P75 billion for 2009.” 

by Ducky Paredes

            Selling the government’s remaining 40 percent stake in Petron Corporation will bring in close to P25.7 billion to the national coffers. The amount represents the expected revenue from the 3.75 billion government shares held by the Philippine National Oil Company (PNOC). This will be sold at a price of P6.85 per share. This would have been an asset that. If held, could bring in more money at some future time but the sale is in line with the privatization policy of the government.

         Last October 6, Petron sent the Notice of Transfer to the Ashmore Group in compliance with the Right of First Offer (ROFO) provision of the Petron shareholders agreement which requires that notification of such intent to sell should be sent by the selling party to the other non-selling major stockholders.

         Ashmore has 60 days from receipt of such notice to indicate whether it intends to exercise this right. It can also pass on this right to a third party of its choosing in case it declines to buy the offered shares. Word in th market is that Ashmore was hard-hit by the current world financial crisis, which is wht San Miguel Corporation is expressing interest in taking over from Ashmore.

         The expected revenue will shore up the government’s finances at a time when the Philippines faces serious economic difficulties arising from the worldwide repercussions of the collapse of giant banking and financial institutions in the United States. It is to be noted that the US financial meltdown has shaken even such leading economies as Japan and the rich industrial nations of the European Union like the United Kingdom, Germany, France, and Italy. The effect on us will be the diminution of out ecport trade with the US and Europe.

         Unlike last year when the government succeeded in paring down the budget deficit to just over P12 billion, government economic managers now foresee a deficit of some P75 billion for 2008 as a result of the sudden increase of prices of prime imports such as rice and oil this year. And while the price of oil in the international market has slipped below $80 dollars per barrel in the past few days, we are now feeling the effect of the US financial contagion, especially in the export sector and in both portfolio and foreign direct investments.

         To mitigate the impact of the expected economic slowdown, especially among the poorer segments of our population, the government will increase spending for social services and infrastructure. Hence, it has proposed a national budget of P1.415 trillion for 2009. Of this amount, P230 billion will go to infrastructure, 20.7 percent higher than the P122.2 billion allocation for this year. Greater infrastructure spending should help create jobs in the countryside and employ more poor people.

         More than P434.5 billion or about 30.7 percent of the 2009 budget is for social services. Budget Undersecretary Laura Pascua said that for the promotion of social security and welfare and employment alone, the government is allocating some P86 billion, or P16.5 billion more than what was programmed in the 2008 budget. The safety nets for the poor, she said, will come in the form of conditional cash transfers, skills training, health insurance assistance for indigents, scholarships and better educational services. A P40 billion fund is also provided in the 2009 budget for a Rice Self-Sufficiency Plan.

         The economic difficulties have also drawn the attention of the opposition. Senator Mar Roxas suggest that the government set aside a P100 billion fund to be spent for safety nets for the poor. Among other pro-poor programs, Roxas wants P10 billion for the conditional cash transfers to poor families; P20 billion for a one-time income tax credit or refund of P5,000 each for four million fixed-income workers; P12 billion for a health peace corps project; P20 billion in additional budget for the education sector; P200 billion for school books; P3.8 billion for the salaries and training of school teachers; and P7.2 billion to finance an extra year in high school.

         These will need a lot of money. However, the Department of Finance anticipates a budget shortfall of at least P60 billion, which could get bigger depending on how much negative impact the financial problems of the US and our trading partners in Europe will create for us.

         The sale of the PNOC shares in Petron will help bridge the funding gap next year and provide money for pump priming the economy.

         There is the question, of course, of whether the Ashmore Group would bite the government’s tender offer of P6.85 per share. At the moment, the Ashmore Group is already the majority stockholder of Petron. It bought the 40 percent share of Saudi Arabian firm Aramco last May and another 10.57 percent from small shareholders.

         In case Ashmore declines to buy the government stake, what would motivate other investors into gobbling up the 40 percent PNOC holding? It would help if Ashmore also sells its 50.57% share to the new investor. Petron is a god buy. It is the largest oil refinery in the country with the biggest share – at 38 percent – of the market, and supplies close to 40 percent of the Philippine’s total fuel needs.

         Petron is a stand-alone company with solid fundamentals and a wide customer base. In the first quarter of this year, Petron budgeted US$300 million to upgrade the petrochemical facilities of its refinery in Bataan. It posted a net income of P6.4 billion last year, up 6.3 percent over the 2006 profit.

         The company has diversified its interests, venturing into the production of petrochemical feed stocks and investing as well in non-fuel business, which it has been expanding. Its Petro Fluidized Catalytic (PetroFCC) unit and Propylene Recovery unit enable the production of what the company calls “white products” and the high value petrochemical feedstock propylene.

         It recently started operation of its Subic Bay blending plant that can produce 12,000 metric tons of fuel additives annually. The plant supplies the company’s additive requirements for its fuel brands like XCS and Dieselmax. The facility will not only generate savings for the company but also provide substantial income as well.

         It is clear, therefore, that while the amount of the investment alone calls for the participation of buyers with sufficient resources, Petron does represent a solid investment for serious investors on the lookout for prospects that they could hold on to over the long term.

         Another question that may be looming in the public mind is, why sell an asset that is not only part of a strategic industry, buy one that plays a social role – as in exerting influence in the pricing of socially sensitive products like gasoline, diesel, kerosene and LPG.

The question is relevant, but Petron is really only one of the players in the petroleum business, and as experience has shown, it has not really been able to exert any significant influence at all in the pricing of oil and petroleum products. In spite of the Oil Deregulation Law, real competition in the local petroleum business has not really been able to take root. The pricing of these products is largely dependent on market forces, both here and specially abroad.

In the first place, the sale of the PNOC share is in compliance with the privatization program of the government as an integral element of the country’s policy of deregulation and economic liberalization. The only real hope for local consumers of petroleum products is a dream that may never come — for our country to finally score an oil strike big enough to at least supply our own consumption.

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hvp 10.22.08)

“(I)f there was any commitment, it might have come from the International Monetary Fund but, certainly, since the WB has denied it, this could not have come from the World Bank!” 

by Ducky Paredes

No amount of explanation can clarify why Gloria Arroyo took it upon herself to report to the world that the World Bank had agreed with her that they should help Asian nations and, thus, she reported,  the WB pledged $10 billion towards that end.

The next day, the World Bank clarified that it did not “anticipate” what Gloria had suggested and thus denied that it had done as Gloria was telling everyone. According to Gloria, the meeting was held in Washington, DC and the ASEAN nations agreed to put up a standby fund to which the WB had pledged $10 billion.

Later, Malacañang admitted that Gloria Arroyo made a mistake in announcing that the World Bank had committed to infuse $10 billion into her proposed regional bailout fund. Obviously, Gloria was reporting what her economic advisers had reported to her. Except that, somehow, she had gotten it wrong. She misunderstood. Yet, like some cub reporter on her first day on the job, Gloria excitedly included the item in a speech.

The real question is this: Why does she feel compelled to report to the world on things that she does not fully understand, did not fully comprehend and has no business reporting on it? It even showed gross ignorance of protocol. One who was not even in a meeting has no business announcing the results of that meeting.

Her financial advisers who ought to be saying “mea culpa” since they obviously did not report whatever it was well enough so that she could not misunderstand the report, want to pass the blame to the rest of us.

Says Trade Secretary Peter Favila who told her about the development and, either did not fully comprehend  it, did not get the full story, did not fully understand or failed to fully explain it to Gloria, says: “The President should not be blamed for it. Instead of bickering and finger pointing on an issue that can easily be clarified, we should work on getting the much-needed facility in the midst of a world financial meltdown.”

How did this snafu come about? Favila explains that Finance secretary Margarito Teves called him from Washington with the good news. Favilas then relayed this to the President. Clearly, something was lost in the retelling. As it turned out, if there was any commitment, it might have come from the International Monetary Fund but, certainly, since the WB has denied it, this could not have come from the World Bank!

Does this mean that Gloria and her financial advisers do not know the difference between the IMF and the WB? Or is it Teves alone who has no idea that the two are vastly different from each other?

Whatever it is, the more important question still is why Gloria Arroyo feel compelled to be the rapporteur for her Finance Secretary.

Why does she compete with the rest of the world in being the first to break the news. What’s in it for her? Certainly, even if this was an original Gloria Arroyo idea that a global financial institution (IMF or WB) approved, it is still far from being a truly original idea.  It is Gloria wanting to be in on the global financial crisis. She would set aside bailout funds for Asia even as the region does not need it. What killed the European and American financial markets was a lack of regulation. Out part of the world is, if anything, over-regulated.

Note that no one else in Asia of ASEAN is thinking of bailouts. All of us know that every Asian country can take care of itself.

Gaya-gaya puto maya.

The story gets very complicated and our Trade Secretary even goes out of his way to pick a fight with some WB officials just to save his President from embarrassment.

The one to blame is, of course, Gloria herself. It is not right for her to be making these types of announcements. That is not what a President is supposed to do. One can understand a newscaster wanting to be President but  why, in Heaven’s name would a President want to be a newscaster when she has never been one.

In fact, now Teves is saying that the regional fund that the Philippines proposed can still be set up with or without the IMF and/or the WB. This is a clear sign that the premature (contrary to all protocol) unauthorized announcement by Gloria Arroyo caused the two entities to back out altogether.

Does President earn points by being the first to deliver the news? Certainly, not if the news she brings is totally false. If she were a newscaster, she would be fired on the spot; it is too bad that there is no provision for firing an incompetent president.

* * *

If DILG Secretary Ronaldo Puno and PNP Chief Jesus Verzosa were telling the truth about the cash hoard that was found on  a retired PNP officer’s wife on leaving Russia after an Interpol meeting, that story would have died a natural death by now.

As it is, their constantly changing storylines only stresses that there are too many unanswered questions:

If the close to seven million pesos found in the bag of the wife of recently retired PNP comptroller Eliseo de la Paz was official PNP money, why was this in the possession of De La Paz’s wife? Shouldn’t this have been in De La Paz’s possession?

If this was money to cover the travel expenses of the PNP delegates to the Interpol Meeting in Russia, why was it still intact at the end of the trip?

Is it possible that the Russian customs personnel had been alerted that the wife was bringing out more than the allowed amount of currency? Because, why would she be the only one caught, if everyone else had also been so meticulously searched?

Is it possible that the De La Paz couple did not have this money when they left the Philippines since they never declared anything on leaving Manila or on entering Russia? (There is no cost or downside to declaring the amount of excess money one has on leaving or entering an international port. It is always wiser to do so. By not declaring one’s excess cash, one puts his money in danger of confiscation.)

Could this money have come from the Russian Mafia (which is constantly under surveillance) which could also be why Russian Customs knew that it would be in Mrs. De La Paz’s bag?

The police and customs in Russia used to be under the KGB, surely, they still have a lot of bright operatives working there – brighter than our own PNP officials, anyway.

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hvp 10.21.08)

“(T)he coal plant’s location is on the outskirts of the city along a coastal area at the end of Barangay Ingore, La Paz which is not overly populated as claimed by the governors.”

by Ducky Paredes

 La Paz District is where the Central Philippine University, the old Domestic Airport, the Panay Power Plant, the International Port terminal and a Gaisano Mall are located. This is also where a new coal plant serving all of Panay Island will be located.

Gov. Sally Perez Chair of Antique, the Regional Development Council of Reg. 6, Gov. Carlito Marquez of Aklan, Gov. Victor Tanco Sr. of Capiz, Gov. Isidro Zayco of Negros Occidental, and Gov. Felipe Hilan Nava of Guimaras are asking for the withdrawal of the Environmental Compliance Certificate (ECC) issued by the Department of Environment and Natural Resources (DENR) last month to the Global Business Power Corp. (GBPC): “We are disturbed by the approval of the ECC. As leaders of the family of provinces in Region 6, we are morally obliged to present this sentiment in behalf of our constituents. We strongly petition the national leadership to recall and revoke the ECC.”

The governors say that they are not totally  against coal-fired power plants “as we do recognize the need for power to bolster economic opportunities. ” But, they say that the plant site is in a thickly-populated city; thus, this puts at risk the health and lives not only of the residents of Iloilo City but also of the thousands of their own provincial constituents who are in the city either as students or workers.

Iloilo residents, point out, however, that the coal plant’s location is on the outskirts of the city along a coastal area at the end of Barangay Ingore, La Paz which is not overly populated as claimed by the governors. It is also far from the city proper where most students and workers reside.

DENR Secretary Lito Atienza adds that the proponent had met all the necessary requirements, including those on health and environmental issues, prompting the issuance of the ECC last September 1, 2008. Atienza stresses that the ECC stays unless there is a flagrant violation of the permit.

Atienza also points out that the governors should also look at the power shortage in Iloilo and consider the power needs not only of Iloilo but the whole of Panay Island as well.

Coal power is widely used in the Americas, Europe and Asian countries like Hong Kong, Singapore, Taiwan, Korea, Japan and China, adding that these countries are not solely dependent on fossil fuel for its power needs.

Iloilo Governor Neil Tupas is the only governor on Panay who gives his full support to the coal-fired power plant.

While Tupas respects the move of the governors against the ECC of the coal-fired power plant, but points out that he is looking into the future benefits of Iloilo having additional power supply.

The governor said the province has a new and modern airport of international standards, but having frequent power brownouts would not attract investors to come in.

* * *

Lawyer Ernesto Francisco looks like he is doing battle with the windmills when he asks the Supreme Court to return child murderer Claudio Teehankee, Jr. to the National Penitentiary.

Francisco was one of the private prosecutors who represented the families of Teehankee’s victims during the trial 15 years ago.

Teehankee was sentenced to two life terms in 1995 for the thrill-killing of Roland John Chapman and 16-year old Swedish-Filipino Maureen Hultman. He was also sentenced to 12 to 20 years in prison for the frustrated murder of Jussi Leino, who was the principal witness against Teehankee.

Everyone in the government says that the President’s power to pardon and forgive is absolute. She need not abide by any rules or consult anyone. (I agree but point out that her being given that absolute power also presumes that the President can call on her innate wisdom before using that power. What happens when the dispenser is bereft of wisdom?)

Francisco says that the Penitentiary officials recommended the grant of executive clemency and commutation of sentence of Teehankee even if, under their own rules, he did not qualify for commutation of sentence.

The DOJ and the BPP failed to comply with their own guidelines for recommending executive clemency for Teehankee. There was absolutely nothing to show that the grant of executive clemency was with the objective of “preventing a miscarriage of justice or correcting a manifest injustice.”

Secretary Gonzales also failed to give the required notices to the convicting trial judge, the private and/or public prosecuting lawyers and the offended parties.

According to Francisco, the respondents also failed to comply with the required publication in a newspaper of national circulation of the names of prisoners being considered for executive clemency in order to give the public the opportunity to file written objections.

Besides, Teehankee still had  to settle the civil aspect of his sentence with respect to Chapman in the amount of P2.05 million and Leino in the amount of P4.14 million and $55,600. So, how could he be given executive clemency when, in fact, he had not yet done for his victims what the Court had ordered him to do.

* * *

The excuse that the PNP General caught with more money (P7.5 million in euros) than he is allowed to take out of Russia was carrying official money that had been advanced for the trip falls flat.

No part of that money could be the per diem given the other police officers on the trip. That had already been given to them as soon as they left Manila. Neither could this be for their airfare or their pre-departure requirements for visas and other things; nor could this be for their hotel bills since their hotel rooms had already been properly paid, else how cold they leave Russia?

That has to be private money. I do not know how smart Russia’s port people are; if they are as sharp as the agents of the former Komityet Gosudarstvennoy Bezopasnosty (KGB), I doubt if a Pinoy police general who is hiding anything can be a match for them.

Of course, I will not wish the KGB on anyone. The man, however, has embarrassed this country. Imagine getting caught with contraband at a meeting of the Interpol! He has to be dealt with as harshly as our laws will allow.

It is impossible that a police general does not know that one cannot bring huge bundles of money in  and out of countries without declaring the amount that is brought in or taken out.

Don’t just take his word for it; we owe it to the Interpol to trace the money. How much did he have when he left the country? Was it more or less than P7.5 million in euros? If more, where did he get the additional money come from? If less, where did he spend the missing funds?

Clearly, though, this was not what was officially advanced for the trip. Advances cannot possibly still be intact at the end of the trip.

Then, the general should be asked how he came to have so much money on a policeman’s salary.

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hvp 10.17.08)

“My unsolicited advice to Rep. Plaza is to examine these facts and  immediately distance himself from this troika of greed.”

by Ducky Paredes

Rep. Rodolfo Plaza is a congressman who does his job and wants only to do well; Ompong may not be fully aware that he is being used in a shakedown operation by a female reporter who had been fired by a major daily and her husband, a self-proclaimed publicist.

Congressman Plaza filed a bill seeking the repeal of the franchise granted 25 years ago to what is now a leading radio station in Luzon broadcasting from the province of Pampanga.

Among the reasons cited by the solon in seeking the repeal was the alleged impropriety of a new investor coming into the radio station. This is debunked by another congressman — the very author of the Republic Act (RA) which granted the franchise.

But the real reason for the attack on radio station GV Broadcasting System and its new investor goes much deeper than that.

It has to do with the reporter’s demand for the new investor to pay her  several millions for the role she supposedly played in facilitating the investor’s entry into GV Broadcasting.

The reporter (with a colorful past) was not paid for the simple reason that the services she allegedly “provided” the investor exists only in her mind. Having been refused her unfounded demands, she threatened the investor that she would use all of her congressional contacts to exact revenge.

It is ironic that the investor had even provided work to the husband out of sheer generosity as his labor was actually neither sought nor needed. When the investor asked the husband to knock some sense into his wife, the husband replied that he cannot rein in his wife.

Then came the repeal bill authored by Rep. Plaza. The congressman may want to know that copies of his bill had been sent by a former senator-cum-labor leader to various foreign companies to convince them not to do business with GV Broadcasting.

The ex-senator is an uncle of the journalist’s husband. They share the same surname.

Among the recipients of the ex-senator’s letters warning them about the repeal move in Congress against GV Broadcasting were:

Chase Carey, president and chief executive officer of US satellite broadcasting firm Direct TV Group, Inc. based in El Segundo, California; Charles Ergen, chairman, president and CEO of another US broadcast giant DISH Network Corp.; and Robert Bednarek, president and CEO of SES New Skies, a Danish company.

Included in the letters were copies of Plaza’s HB 5028, which seeks to repeal RA 8169, which granted GV Broadcasting its franchise; and RA 8591, which amended it.

The fact that the ex-senator, who is the uncle of the publicist (also fired by another solon for sheer incompetence) of the greedy conjugal twin, has been undertaking a demolition job on GV Broadcasting with foreign companies as target audience should leave no doubt as to what motivates the trio. He has also been sending off press releases attacking the new investor on another matter. This makes the ex-senator a main player in the shakedown operation!

My unsolicited advice to Rep. Plaza is to examine these facts and  immediately distance himself from this troika of greed before he is perceived as a witting party to the shakedown. It would do well for him to withdraw his repeal bill, which according to Rep. Carmelo Lazatin was without any basis.

Lazatin gives Plaza the benefit of the doubt: “I believe that my colleague, Rep. Plaza, was provided with false and malicious information by a group of people as part of an ongoing effort to discredit GV Broadcasting and its shareholders.”

Representing the 1st district of Pampanga where GV Broadcasting operates, Lazatin brushed aside the claim that the entry of the new investor into the radio violated its franchise.

On the contrary, Lazatin points out that Section 10 of GV’s franchise specifically encouraged it to seek new investors when it says: “The issuance of shares to any investor pursuant to or in connection with any increase in grantee’s authorized capital stock which shall result in the dilution of the stockholdings of the grantee’s then existing stockholders.”

 Lazatin should know the provisions of GV’s franchise since he authored RA 8169 and can vouch for the integrity of GV’s founding investors, knowing them as his constituents and as respected entrepreneurs in Pampanga.

In fact, Lazatin said he encouraged GV to seek new investors when its shareholders told him of their desire to seek new capital to be able to take a slice of the market for emerging broadcast technologies.

GV Broadcasting System has been operating for 25 years and now the top radio stations in Pampanga and Batangas, namely DWGV 99.1 MHZ, DWGV 792 Khz and DZGV 99.9 Mhz.

Imagine the howl of protest from Kapampangans and Batangueños if these top-drawing stations would be forced out of the air just because the reporter wanted a P50-million windfall without betting on the lotto. It would be akin to shutting down dzRH, the only station that can boast of a nationwide broadcast from just one microphone; something unthinkable.

For more than two decades now, the GV radio stations have been providing jobs, local and national government revenues and public service through news reports and entertainment.

 According to Lazatin, both the original and amended franchise of GV Broadcasting had been thoroughly scrutinized by Congress, thus their grant to the company. Now, will a motley crew motivated by multi-million reasons be allowed to make a mockery of Congress and to destroy the media institutions that are the DWGV radio stations.

Pure unmitigated, conjugal greed is at the bottom of this issue.

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hvp 10.15.08)