Still no secretary for the Department of Energy pending clarification if nominee, Atty. Raphael Lotilla’s directorships in the power companies of Aboitiz and Ayala can be considered an employer-employee relation, which the DoE charter bans for conflict of interest.
Amid loud calls by the business community for President Marcos Jr. to immediately appoint a secretary of the Department of Energy to tackle the continued increase in electricity rates, and the power supply shortages affecting industries, still the floating of comebacking Energy chief Atty. Raphael Lotilla is not a certainty pending review of his current employment status at Aboitiz and Ayala, which are both into the power and energy sectors.
Lotilla, DoE secretary (from March 22, 2005 to July 31, 2007)during the Arroyo presidency is currently an independent director of Aboitiz Power and ACE Enexor of the Ayala group.
In a statement on Monday, Press Secretary Rose Beatrix Cruz-Angeles said Marcos decided to recruit the energy secretary of former President Gloria Macapagal-Arroyo to his Cabinet.
Cruz-Angeles said Lotilla was also a former Deputy Director General of the National Economic and Development Authority (Neda). A law professor in the University of the Philippines, Lotilla received his Master of Laws from the University of Michigan Law School in Ann Arbor, Michigan.
Lotilla’s appointment comes as Marcos (who is said to be recovering from COVID-19) is scheduled to hold his second Cabinet meeting today.
Among the issues his Cabinet faces are stabilizing the country’s food supply and addressing the rising pump prices.
Lotilla is among the four candidates previously being eyed to replace Alfonso Cusi. The other names are former Energy Regulatory Commission (ERC) chairperson Agnes Devanadera, former congressman Juan Miguel “Mikey” Arroyo (son of the former president), Sagip party-list Rep. Rodante Marcoleta (God forbid), and DOE Undersecretary Benito Ranque.
Sec. 8 of Republic Act No. 7638 or the Act Creating the Department of Energy states that “no officer, external auditor, accountant, or legal counsel of any private company or enterprise primarily engaged in the energy industry shall be eligible for appointment as Secretary within two years from his retirement, resignation, or separation therefrom.”
Under the Security Exchange Commission Memo Circular No. 2020 defines an independent director as “not an officer of the covered company.”
‘Highly knowledgeable’
Cruz-Angeles said Lotilla is highly knowledgeable about the energy sector as he also served as president of the Power Sector Assets and Liabilities Management (PSALM) Corporation, and chairman of Philippine National Oil Co.
Devanadera (retired from the Energy Regulatory Commission on July 10) and her replacement has yet to be announced.
According to the Institute for Climate and Sustainable Cities (ICSC), the DOE and ERC would need firm hands to cope with the current crises.
ICSC Senior Policy Advisor Pedro Maniego, who is also the former chairman of the National Renewable Energy Board (NREB), said the pressing challenges include insufficient power supply and reserves, mainly due to the prolonged shutdowns of power plants, intermittent breakdowns of old and new coal-fired power plants, and the derating of natural gas power plants caused by Malampaya gas supply restrictions.
The next DoE chief also needs to address the declining output of the country’s Malampaya natural gas field.
Fitch Solutions Country Risk & Industry Research said in a note in August last year that the depletion of the country’s only indigenous gas field is “problematic” since it accounts for 30% of Luzon’s power generation and services 20% of national demand, Business World said.
‘Just a nomination’
“The designation of Atty. Raphael Perpetuo Lotilla, is right now a nomination, pending clarification of his employment status. (He is) President Ferdinand Marcos Jr’s personal choice to head the DOE,” said Cruz-Angeles just hours after Malacanang announced Lotilla’s appointment.
Prior to being DoE secretary under Arroyo, he was president of the state-run Power Sector Assets and Liabilities Management Corp. (PSALM) and deputy director-general at the National Economic and Development Authority (NEDA).
Marcos earlier said the role of the Energy secretary will be crucial as the government faces surging prices of fuel and energy.
Elevated spot market prices
Because of the chronic power shortage, the spot market prices were elevated necessitating the imposition of the secondary price cap a number of times to arrest the spikes,” stressed Maniego.
He cited WESM’s average price for Luzon grid last June 30 that stood at P9.66 per kilowatt hour (kWh) while peak price reached high of P29.1/kWh. Fossil fuel prices are expected to continue rising amid the Russian-Ukraine conflict. Maniego said these factors will continue to increase electricity rates.
As to the next ERC chair, Maniego said the person must be a member of the Philippine Bar per Section 38 of the Electric Power Industry Reform Act (Epira). If the next chairman does not possess the relevant technical experience, the next ERC commissioner to be appointed must preferably have a technical background and energy experience, he said.
Infrawatch looks forward to Lotilla
Meanwhile, Terry L. Ridon, convenor of public policy think tank Infrawatch PH, said his group looks forward to working with Lotilla.
In the view of former Energy Secretary Vince Pérez, the current chairman of Alternergy group, Lotilla “is an excellent choice by Marcos for Energy Secretary. He is most qualified, is very familiar with the challenges facing the energy sector.
He is “a man of integrity and a true professional. We look forward to working with him during this challenging period of energy transition.”
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