Nongovernment Organizations and Civil Society

ADB Addresses Concerns of Philippine Protesters

ADB received issue briefs and statements from labor and civil society representatives protesting outside ADB Headquarters during the 36th Annual Meeting of the ADB Board of Governors on 30 June 2003.

Demonstrators voiced concerns about the impact of private sector involvement in Philippine public utilities on the poor, and other issues. ADB has been supporting the Government of the Philippines in its efforts to restructure the power sector and develop new water sources.

"ADB shares many of your concerns and we will study your materials very closely," said Richard Ondrik, Acting Country Director of ADB's Philippine Country Office, on receiving a package from Ana Maria Nemenzo, President, Freedom from Debt Coalition, one of the protest organizers.

"We are always open to dialogue with nongovernment organizations and would be happy to meet with you after the Annual Meeting," Mr. Ondrik added. The ADB official also met with another protest leader, Josua Mata, Secretary General, Alliance for Progressive Labor.

In a statement, ADB responded to the main issues raised, including the following:

ADB and privatization: ADB assists its developing member countries in privatizing public sector enterprises where such action is determined to be economically viable, technically and financially feasible, and socially desirable. When privatization is used, ADB policy calls for mitigation of the social costs involved and the protection of the interests of those directly affected by privatization.

Involvement of local residents and NGOs in ADB projects: ADB regularly consults with those residing in areas considered for a project before loans are approved. In many instances, ADB engages NGOs to serve as bridges between project authorities and local communities, provide structures for citizen participation, and help ensure the implementation of projects in ways that respond to local needs.

ADB is working closely with NGOs to clean up the Pasig River, support renewable energy development in Negros Occidental, and improve community infrastructure and basic services in 23 communities around Metro Manila. ADB has collaborated with community-based organizations to improve the living conditions of forest-dwellers, fisherfolk, and agrarian reform communities, and to create sustainable microcredit operations and microfinance institutions. ADB is proud to have developed a close working relationship with these grassroots organizations and looks upon them as key partners for ADB's future operations in the country.

ADB support to power sector reform: ADB's Power Sector Restructuring Program supports Government initiatives to create competitive electricity markets, initiatives that hopefully will lead to lower electricity prices for consumers, and restore the financial sustainability of the National Power Corporation (Napocor) prior to privatization. Any labor rationalization related to the sale of state-owned enterprises in the Philippines would be carried out in a way protecting the interests of workers. ADB's Power Sector Restructuring Program supports Government initiatives to create competitive electricity markets, initiatives that hopefully will lead to lower electricity prices for consumers, and restore the financial sustainability of the National Power Corporation (Napocor) prior to privatization.

Reform of the power sector is aimed at ensuring the quality, reliability, security, and affordability of the country's electricity supply. In order to create a competitive power supply market, a number of power generating plants owned by Napocor will be privatized so they can bid in the wholesale electricity spot market. The ownership of Napocor's transmission assets will remain in the public sector with a qualified private sector concessionaire as operator. These measures would help to lower electricity tariffs in the medium and long term and to expand electricity supply to rural areas.

Because the privatization process remains incomplete, consumers have not yet seen the benefits of competition. Current high prices may also be attributed in part to oversupply caused by the impact of the Asian financial crisis on power demand, and the subsequent economic slow down.

Water tariffs and future water demand: Manila's water sources can barely meet current demand, let alone connect additional customers. This requires the development of new water sources, which most likely cannot be accomplished with public resources alone given the Government's budgetary situation. Water provided from additional sources will not only ensure improved and sustainable service delivery for existing customers, but will also enable extension of service coverage, particularly benefiting the urban poor.

The Philippines' debt portfolio: The Philippines' present indebtedness to ADB is around $3.2 billion, equivalent to about just 6% of the country's total external debt. Although this share may be small, ADB has worked closely with the Government over the past 18 months in intensive efforts to streamline the portfolio. ADB's most recent joint portfolio review with the Government identified about $300 million for possible cancellation in 2003. See related story.