From Energy to Waste: The Philippine Cabinet Reshuffle

By Dean de la Paz

In the energy industry, waste to energy (WTE) is one of the alternative fuels to ensure sustainable supply and decreased dependence on expensive foreign, dollar-depleting importations sourced

from geopolitically volatile petroleum producing economies.

Allow us to allude to the reverse WTE (energy to waste or ETW) as an allegory to describe the recent Philippine cabinet revamp as we will clearly see its appropriateness soon enough.

Following what many consider as a tactical loss in the Senatorial elections where candidates allied with Ferdinand R. Marcos had failed to garner a decisive number to ensure a favorable impeachment outcome as a threat to the 2028 presidential looms this early in the political horizon, falling approval ratings compelled a critical review and revalidation. Logically, and quite decisively, Marcos started with the unsatisfactory performances of cabinet alter-egos.

While a host of other lower-ranked factotums were included in draining the bureaucracy of dregs, the first courtesy resignations accepted are the most telling of underperformance if not incompetence. Those served as major factors impacting on the negative approval ratings and the public’s will regarding an impending impeachment trial at the Senate.

Two cabinet secretaries were immediately removed. One was the environment secretary - a professional of the highest order yanked out of her element in the private sector and forced to confront the most powerful and influential political players in a milieu populated by hostile large- and small-scale polluters. The revamp allowed her a timely opportunity to re-focus on her environmental advocacies and comfort zones shorn of political pressures.

In stark contrast, the removal of the Secretary of the Department of Energy was immediately celebrated by various domestic and international non-government organizations, industry watchdogs and a host of wisened veteran professionals in the energy sector.

As under-currents of an imminent reorganization predicated the cabinet revamp, pre-emptively and quite ominously the DOE include in a public relations campaign an ominous statement, “We at the department and its attached agencies are one with the President in working together to realize a future for all Filipinos where energy is accessible and affordable, reliable and resilient, and clean and environmentally sustainable.”

Ironically, we will see that all these were violated, and it is to his credit that Marcos had taken timely notice and had quickly cut off and disemboweled a festering cancer. Indulge us a post-mortem analysis supporting Marcos’s decision.

What follows is a list of questionable competency issues. It is a list of thirteen issues too many for the removal of an official albeit now relegated to the vacated environment and waste management portfolio.

1.      Given that the Electric Power Industry Reform Act (EPIRA) was passed a quarter of a century ago under the watch of the same DOE secretary, now decades after, again under his watch and more relevant now, as to the question of the public’s increasing dissatisfaction with its leadership, headline inflation and the highest electricity rates in the region continue to quell productivity, and dampen foreign investment interest. This has been a continuous and constant bane serving as an almost permanent feature under the administration.

2.      Allow us some specificity. In the first days of 2024 there were massive systemwide blackouts across several islands including independent power grids from Western to Eastern Visayas. Such was

unprecedented and had not occurred under any of the previous DOE heads in its long history. Connect the dots. It is worth noting that it is in these specific islands where the opposition to the impeachment issues pending at the Senate is most powerful.

3.      Moreover, to this day there is a constant and continuous derating of at least twenty-two power producers. This effectively decreases the systemwide reliability of the electricity sector as a driver of gross domestic productivity (GDP) and as a counterfoil for debilitating inflation whose bloating is due to high energy costs. Without question, this impacts negatively across the BCDE electorate.

4.      Where energy governance is concerned, at least thirty-seven power producers have so far failed to justify their fuel supply costs that comprise the charges that they pass on to the public already

reeling from high fuel-caused headline inflation.

5.      Worsening matters, under the watch of the sacked energy secretary specific distribution utilities had overcharged its electricity subscribers by over P19.9 billion all of which remains recorded as unsettled liabilities sans penalties and interest. P19.9 billion is no joke.

6.      Still on energy governance or its glaring absence, critical transmission, and distribution utilities whose rates should have been reset periodically to assure that these are offered on a least-cost basis, had gone without the statutory reset for serial periods. This led to both overcharging and to questionable power supply agreements with private power producers.

7.      A constant observation in the Senate Committee on Energy was the DOE’s failure to recognize and address powder keg national security and safety issues where energy officials through dereliction

countenance a hostile foreign hegemonic superpower’s substantial ownership and technological control of critical transmission infrastructure that unfortunately serves as the monopolistic backbone

of the electricity grid. The de facto surrender of specific resources and patrimony was a critical issue in the Senate elections and a constant threat to the voting public.

8.      In what might be described as inordinate pandering, a select albeit formidable cartel of LNG-related importers and power producers was allowed to establish themselves contrary to the long-term policy to wean-off and move away from deadly, toxic and imported dollar-depleting fossil fuels.

9.      Related to this dereliction, an existing deadly coal-fired plant was allowed to expand its toxic carbon footprint despite an existing ban of constructing coal-fired plants. It bears noting that the airborne toxic discharges of the coal-fired plant impact directly an Eastern Visayan constituency where a popular 2028 opposition presidential challenger reigns.

10.  On both foregoing failures, there is perceivable bias towards selected oligarchies where their revenues are prioritized in place of public interest.

11.  Still on the development of fossils versus clean energy sources, substantial control of an indigenous gas energy supplier was transferred to an inexperienced and unqualified relative start-up

despite a pending graft complaint surrounding a precedent award to another unqualified, undercapitalized, inexperienced contractor.

12.  Likewise, there was a failure to address conflict-of-interest issues such as first-degree nepotism between energy officialdom and an immediate relative strategically appointed in a regulated company.

While this was questioned at the Senate budget deliberations, the issue continuously festers un-addressed.

13.  Privatization and deregulation which were principal features of EPIRA are considered failures by many and are now ironically subjected to calls for nationalization in at least two value chain links – in

the transmission monopoly and among selected private power producers.Such overwhelming negativity covers not simply current energy governance failures but one that spans well over two and a half decades ironically bracketed by a single common denominator.

(Dean de la Paz is a former investment banker, retired business, policy finance and mathematics professor and officer of a renewable business company. He was also a former managing director of a New Jersey-based power company operating in the Philippines.)

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