Department of Energy

The year of the fund

A fund here, a fund there; funds were everywhere in the news, this year.

Whether it was the Supreme Court’s final ruling on the disposition of the coco levy funds invested in United Coconut Planters Bank or the investigations into the abuse of Congress’ Priority Development Assistance Fund, the misappropriation of the Malampaya Fund or the president’s social fund, funds were all over the news this year.

There is one common thread that runs through all of them: funds set aside for some kind of social or economic development need were used for personal or political motives. It didn’t matter whether they were taxpayer-sourced as in the case of PDAF or revenues from government activity such as the lottery, gambling or mining operations. The fact remains that special purpose funds can be turned into slush funds quite readily.

Perhaps that is the reason Sec Cesar Purisima stated in May this year that the idea of a Sovereign Wealth Fund created out of our foreign reserves proposed by the Bangko Sentral had lost traction and would not be taken up by this administration. It is as if the president intuitively knows that such a fund might be raided by future governments.

Unfortunately, he is busy enough dealing with the mess created by the funds that are already in place, that the setting up of a new one might seem a bit too ambitious. And there has a palpable public backlash against the use of such special purpose funds in the wake of the pork barrel scams, anyway, that such a scheme might face stiff opposition.

At any rate, since these funds have dominated the news this year, then addressing them would probably be the order of the day in the coming year. Let us not forget that in the wake of typhoon Haiyan, a Php 100 billion reconstruction fund was created to speed up the recovery of the most affected regions in the central Philippines, or that following the passage of the sin taxes act, Php 63.6 billion in revenues were generated as of September this year, which should boost the trust fund of the Philippine Health Insurance Corporation.

So let me offer some unsolicited advice (as I often do in this space) on how the government ought to manage these funds.

As a general principle, if we were to retain them (and not co-mingle them with the general government revenue pot as some have suggested), then we have to move away from putting such funds under the sole discretion of an individual and allow for better governance through a deliberating body to consult and provide advice on how these funds should be spent.

With respect to PDAF, this matter has already been settled by the Supreme Court. All forms of pork cannot be allotted to members of congress to dispose of after the general appropriations act has been passed. They would have to identify the need during budget deliberations, and leave it to line agencies to address their requirements through the usual open and competitive bidding process if their proposed budget items are adopted.

Secondly, with respect to the Malampaya fund, a professional board comprised of energy and development experts must be set up to advise the Department of Energy and the president on how to apportion funds available for investment. This board could undertake public consultation through stakeholder engagement.

The proposal of several legislators to use it as a stabilisation fund against power increases could be studied as well. A comprehensive plan publicly available and developed based on the best alternatives available should be put together by this board and recommended to the president. The president could then respond to these recommendations point by point and release an annual report on the status of the fund and its activity.

Thirdly, with respect to the president’s social and charity funds resulting from the revenues from the lottery and gambling corporations of the government, the National Anti-Poverty Commission should be given the role of screening the proposed uses of the funds and advising the president on whether to adopt them. This does not limit the president’s discretion to dispose of the funds as he pleases, but at least he would do so in a considered way, as part of an anti-poverty strategy, and creating an additional layer through the commission would provide a process through which his decisions could be better informed.

Finally, when it comes to the coco levy fund recovered from UCPB and San Miguel, the same process would apply. Only this time, members of the claimant community consisting of copra or coconut farmers and beneficiaries must be represented in whatever body is set up to oversee the fund. This would allow their voices to be heard in the governance of the board that manages their money.

In all these cases, the same basic principle applies, leaving decisions to the sole discretion of an individual, be that the president or local representative sets up opportunities for corruption and cronyism. Allowing a board comprised of major stakeholders to be in charge of filtering ideas, critically assessing options and making recommendations to the executive by releasing a periodic report, and making the government account in a transparent manner the disposition of the funds through an annual statement creates greater probity and integrity into the system.

Perhaps if we could begin to demonstrate better governance in managing these special purpose funds over the next two years, then by the time the president steps down, he would leave behind a legacy of instituting substantial reforms in the way we manage and account for such public funds. These reforms would not only ensure that the money is apportioned based on its intended use, but that such appropriations are part of an overall strategy and plan and not just made willy-nilly based on personal preference or transactional methods.

DOE Steps Up Government Energy Management Program

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(Taguig City) In relation to a pronouncement by Executive Secretary Paquito N. Ochoa Jr. urging government agencies to put in place conservation measures, the Department of Energy (DOE), through its Government Energy Management Program (GEMP), will intensify efforts in reducing energy consumption. Administrative Orders (AOs) 110 and 110-A issued in the past, institutionalized the GEMP, which aims to reduce the monthly electricity and fuel consumption by at least 10%. in all Government Departments, Government Owned and Controlled Corporations (GOCCs), State Colleges and Universities, Hospitals and other instrumentalities of the government except for constitutional bodies including the judiciary and legislative bodies.

The current global energy situation makes it more imperative for government to lead in managing energy use to demonstrate its commitment to effect significant reduction in energy expenditures. The GEMP, from 2005 to 2010, has already effected savings of Php 1.4 billion in electricity and Php 239 million in transport fuel. The DOE has also conducted spot checks in 719 government facilities and certificates of energy/monetary savings have been issued to 62 government agencies.

This year, the DOE steps up its plan to go online for the submission of government agencies’ monthly energy consumption reports. In addition to GEMP, government agencies are also being reminded of the other AOs (nos. 103, 126, and 183), which have been issued in the past that highlighted conservation measures. AO 103 directs the continued adoption of austerity measures in the government, particularly “consumption of fuel, water, office supplies, electricity and utilities.” AO 183 also authorizes the installation and use of energy efficient lights and fixtures.

Memorandum Order No. 8 established the Energy Audit Team headed by Atty. Herminio M. Alcasid, Sr. of the Philippine National Oil Company- Development Management Corporation (PNOC-DMC) with DOE Undersecretary Loreta G. Ayson sitting in as a member. The Energy Audit Team is assisted by the DOE through its Energy Utilization Management Bureau, Energy Research and Testing Laboratory Services, Information Technology and Management Services, and Energy Policy and Planning Bureau.

“The GEMP and other parallel energy conservation measures in the government will become important as we are facing times where our supply is threatened. It is important to bear in mind that the measures we can actually do need not be done in one fell swoop but it can be done by an individual. These solutions, if done by everyone, can be a big help,” the Energy Department said with regard to the program.

Media release via DOE.

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