House bill will allow foreigners to own public utilities – opposition solon

Opposition leader and Albay Rep. Edcel Lagman has assailed the leadership of the House of Representatives for prioritizing a bill that would provide a legal cover for foreigners to own public utilities in violation of the citizenship requirements provided in the Constitution.

Lagman said House Bill 5828 provides a statutory definition of

“public utility” which is “actually a subterfuge to allow foreigners” to own and operate public utility enterprises.

HB 5828 is the consolidated version of five bills separately introduced by Reps. Gloria Macapagal Arroyo (Lakas-CMD, Pampanga); Joey Sarte Salceda (PDP-Laban, Albay), Arthur C. Yap (Lakas-CMD, Bohol), Feliciano Belmonte Jr. (LP, Quezon City), Jose Christopher Belmonte (LP, Quezon City), and Monsour T. del Rosario III (NP, Manila).

Lagman said the Constitution requires that public utilities must be owned by Filipino citizens or by corporations, partnerships, or associations where not less than 60% of the capital stock is owned by Filipino citizens.

“No less than Rep. Arthur Yap, the chairman of the House Committee on Economic Affairs, has admitted during the deliberations that once House Bill No. 5828 is enacted into law, foreigners will be allowed to own public utilities,” said Lagman.

He pointed out that the legislative proposal has “deleted the requisite Filipino ownership requirement of public utilities under the Public Service Act, which is identical with Section 11 of Article XII of the Constitution.”

“Moreover, in its definition of a public utility, House Bill No. 5828 has deliberately deleted the concept of ownership and limited the definition to the operation, management, and control of public utilities, even as there can be no operation, management, or control without an owner,” said Lagman, head of the opposition group known as Magnificent Seven.

He added: “The bill also deletes from the enumeration of public utilities traditional public utilities like common carriers and telecommunications companies which are at present operating with controlling Filipino ownership.”

HB 5828 proposes to amend Commonwealth Act No. 146, the Public Service Act. Under the bill, public utility is defined as refering to a “person that operates, manages, and controls for public use” any of the following: distribution and transmission of electricity as defined under the Electirc Power Industry Reform Act of 2001 and water pipeline distribution or sewerage pipeline systems as defined by the law creating the Metropolitan Waterworks and Sewerage System.

Authors of the bill said the proposal will clarify the definition of public utilities in order to open up certain industries to more competition. They stressed that the measure will also provide a mechanism for rate fixing that allows a reasonable rate of return to attract investments ino public utilities.

HB 5828 provides that the maximum rate of return shall be “equal to the post-tax weighted average cost of capital for the same or comparable business computed using established methodologies such as the capital asset pricing model.”

The bill also provides that income tax shall be allowed as a cash outflow for “rate determination purposes.” However, the provision will not “bar the application of performancebased rate regulation if government deems it more efficient and to protect public interest.

The Philippine Competition Competition, under the bill, is mandated to “conduct regular studies on whether regulation is warranted in a sector and submit its recommendation to Congress.”