PHILIPPINES:PHILIPPINES:

Impact of Power Privatization to Impact of Power Privatization to the National Power Corporation the National Power Corporation

EmployeesEmployees

NATIONAL POWER CORPORATION NATIONAL POWER CORPORATION Quezon Ave., cor. Agham Road, Diliman, Quezon CityQuezon Ave., cor. Agham Road, Diliman, Quezon City

PhilippinesPhilippines

ABNER P. ELERIAABNER P. ELERIA PresidentPresident

NAPOCOR Employees Consolidated Union (NECU)NAPOCOR Employees Consolidated Union (NECU)

GENERATIONGENERATION

Restructured Power IndustryRestructured Power Industry

TRANSMISSIONTRANSMISSIONDISTRIBUTION (wires) & supplyDISTRIBUTION (wires) & supply

CONSUMERCONSUMER

• TRANSCOTRANSCO (formerly NPC)(formerly NPC)

•NPCNPC

• NPC IPPs NPC IPPs ((PSALM)PSALM)

•Private IPPsPrivate IPPs• Private utilities Private utilities (e.g. MERALCO, VECO)(e.g. MERALCO, VECO)

•Electric coopsElectric coops

• residentialresidential

• commercialcommercial

• industrialindustrial

WESMWESMPower tradingPower trading

(PEMC)(PEMC)

sellsellBuyBuy

min. 1MWmin. 1MW

buybuy

dispatchdispatch

SUPPLYSUPPLY

* aggregatoraggregator

Massive job losses due to retrenchment, Massive job losses due to retrenchment, reorganization, terminationreorganization, termination

Retrenchment, reorganizationRetrenchment, reorganization- 1994: NPC has 1994: NPC has 17,00017,000 employees employees- 1997: NPC has 1997: NPC has 13,50013,500 employees employees

Termination (as provided by 2001 EPIRA law) Termination (as provided by 2001 EPIRA law) - 2003: All NPC employees (2003: All NPC employees (8,5308,530) terminated:) terminated:

> > 3,8003,800 employees rehired (with NPC) employees rehired (with NPC) > > 3,4003,400 employees rehired (with TransCo) employees rehired (with TransCo) > > 3030 employees rehired (with PSALM) employees rehired (with PSALM) > > 1,300 1,300 employees not rehired employees not rehired > > 2,4682,468 employees as of Dec. 2011 (NPC)employees as of Dec. 2011 (NPC)Note: Proposed Re-organization for CY 2012 will incur Note: Proposed Re-organization for CY 2012 will incur

additional termination/retrenchment of employees.additional termination/retrenchment of employees.

Rehired NPC workers Rehired NPC workers with lower working conditions & paywith lower working conditions & pay

NPC workers who were rehired after termination NPC workers who were rehired after termination were forced to accept employment contracts at: were forced to accept employment contracts at:

– position grade levels lower than what they previously position grade levels lower than what they previously enjoyed enjoyed

– 25-30% reduction of salaries & benefits25-30% reduction of salaries & benefits

Increase in contractualization, Job Order and service Increase in contractualization, Job Order and service agreements at NPCagreements at NPC

High Court: High Court: NPC employees were illegally terminatedNPC employees were illegally terminated

Sept.2006Sept.2006: Supreme Court ruled that NPC Board : Supreme Court ruled that NPC Board Resolutions terminating NPC employees in Feb 2003 Resolutions terminating NPC employees in Feb 2003 were ‘void and without legal effect’ because they were ‘void and without legal effect’ because they lacked votes for adoptionlacked votes for adoption

Sept. 2008Sept. 2008: Supreme Court (SC) ruled with finality:: Supreme Court (SC) ruled with finality:– Immediate reinstatement of NPC employeesImmediate reinstatement of NPC employees– Payment of P34.7B++ in backwages, wage adjustments to Payment of P34.7B++ in backwages, wage adjustments to

NPC employeesNPC employees– Still awaiting enforcementStill awaiting enforcement– August 17, 2009: Recognition by ADB that backwages and August 17, 2009: Recognition by ADB that backwages and

other financial claims of NPC workers as recognized by SC other financial claims of NPC workers as recognized by SC form part of legitimate costs of restructuring of Philippine form part of legitimate costs of restructuring of Philippine Power SectorPower Sector

Outstanding claims of NPC workersOutstanding claims of NPC workers(to date)(to date)

Outstanding claimsOutstanding claims::

1. ‘DAMA’ (Supreme Court) case:1. ‘DAMA’ (Supreme Court) case: P 34.7B++ P 34.7B++ 2. COLA:2. COLA: P 8.4B++ P 8.4B++ 3. WAIVE (step increment):3. WAIVE (step increment): P 594M++ P 594M++ TOTAL : P 43.694B+TOTAL : P 43.694B+

++

TO DATE THE TOTAL AMOUNT INCLUDING INTEREST : P 54 B ++TO DATE THE TOTAL AMOUNT INCLUDING INTEREST : P 54 B ++ Court cases still awaiting actionCourt cases still awaiting action

Damages due to illegal terminationDamages due to illegal termination:: Based on remaining years of service: Average = 5 yrs / employeeBased on remaining years of service: Average = 5 yrs / employee

= P 50,000 (average salary / mo) = P 50,000 (average salary / mo) x 12 mo / yrx 12 mo / yr x 5 yrs / employee x 5 yrs / employee x 8,530 employees x 8,530 employees = = P 26B (conservative estimate)P 26B (conservative estimate) Claims chargeable to ADB Claims chargeable to ADB

Non-recognition of NPC unionsNon-recognition of NPC unions

No full recognition by NPC managementNo full recognition by NPC management– Non-remittance of union dues since 2005 to dateNon-remittance of union dues since 2005 to date

Non-recognition of unions by PSALMNon-recognition of unions by PSALM

Lack of transparency & no consultation with Lack of transparency & no consultation with unions:unions:– NPC reorganization plansNPC reorganization plans– Sale of NPC plantsSale of NPC plants– etcetc

No workers’ protection in sale of NPC plantsNo workers’ protection in sale of NPC plants

PSALM does not recognize bargaining power of PSALM does not recognize bargaining power of unions, weakening the unionsunions, weakening the unions

PSALM does not obligate buyers to retain existing PSALM does not obligate buyers to retain existing workforce, hence more job lossesworkforce, hence more job losses

PSALM does not include Manual of Employees PSALM does not include Manual of Employees Benefits (MEB) as part of bidding documents, citing Benefits (MEB) as part of bidding documents, citing huge costshuge costs– But labor costs is only 3-5% of total costsBut labor costs is only 3-5% of total costs

PSALM does not consult with unions before sale of PSALM does not consult with unions before sale of any plant in violation of EPIRAany plant in violation of EPIRA

No overtime beyond 8 hrs in privatized plants a No overtime beyond 8 hrs in privatized plants a violation of Philippine Labor Lawsviolation of Philippine Labor Laws

New OMA (Feb 09)New OMA (Feb 09)

Feb 2009Feb 2009: NPC & PSALM signed Operations & : NPC & PSALM signed Operations & Maintenance Agreement (OMA) Maintenance Agreement (OMA)

April 09April 09: NPC unions filed case in court against OMA : NPC unions filed case in court against OMA provision in violation of EPIRAprovision in violation of EPIRA– Still awaiting decisionStill awaiting decision

NOTE:NOTE:

To date, NPC Management continue to implement To date, NPC Management continue to implement the OMA despite the agreement is terminated. No the OMA despite the agreement is terminated. No renewal of Agreement between PSALM and NPC.renewal of Agreement between PSALM and NPC.