Find a plot of gold

Hardly anybody noticed that another landslide had killed possibly scores of people in a gold rush mountain area in Mindanao. The accident happened supposedly just a couple of weeks ago during the heavy monsoon rains.

According to our sources who hailed from Davao Oriental, the province where the accident happened, the tunneled gold-rush site is in a remote area in the mountains without any road. People had to hike across tortuous terrain to get there. That inaccessible!

Thus the mine site had only makeshift tunnels without the benefit of modern mining engineering technology. Word has it that the gold rush already drew thousands of small-scale miners to Davao Oriental.

Sure—one item came out in the news, quoting an official of a small city in Davao Oriental, Mati City Mayor Michelle Rabat, who reported that at least seven people died in the landslide.

But word goes around in the organized mining industry that hundreds actually died in the small-scale mining disaster. It was just that some government officials wanted to shush the entire accident, particularly in media, for fear that our leader, Benigno Simeon (aka BS), would give an order to shut down the gold mine.

The closure order surely would have to be implemented by the Department of Environment and Natural Resources, or the DENR, which has been known to be favoring small-scale mining over large-scale companies.

According to our sources, like all other gold-rush places in the country, the crude mine in Davao Oriental lacked the necessary government permits. Only the DENR, therefore, would have the authority and the wherewithal to shut down the illegal mine site. The LGUs must be presumed to be in cahoots with the group controlling the mine site.

From what I gathered, some big-time businessmen and government officials were also involved in the illegal gold-mining activity in Davao Oriental. The miners who risked their lives going into the crude tunnels might have been poor small-scale miners, but the mine was actually controlled by a small group of influential people—well, politically influential people. It seems that the influential group hatched the plot to shush the landslide incident to keep their control over the rich gold mine.

Despite all the illegal small-scale gold mining activities in the country, according to reports, the Bangko Sentral ng Pilipinas, or the BSP, hardly gets to buy any of the gold production from these gold-rush areas.

Under the law, the entire gold production in the country—whether coming from large-scale or small-scale mines—must be sold to the BSP, which for so many years played its role as a monopsony so well that it has accumulated for the country some $10 billion in gold reserves.

Then came out a ruling from the Bureau of Internal Revenue, our beloved BIR, that imposed all sorts of taxes on the sellers of gold to the BSP. The legitimate large-scale mining companies of course had no way to avoid the punitive tax, unlike the small-scale miners who were able to smuggle their gold production out of the country.

According to one estimate, the volume of gold sold to the BSP already dropped by more than 90 percent in the first semester of 2012. Presumably the country’s gold production has gone to the black market, mostly to big buyers in Hong Kong.

Because of the rampant smuggling, the BIR could not collect the revenues that it thought would come from the tax imposition on gold sold to the BSP. The government did not gain anything from the BIR measure. Worse, the BSP lost its constant yearly supply of gold for the country’s foreign exchange reserves. It was not only a useless tax imposition but it was also detrimental.

To top it all, neither the police nor the Bureau of Customs has caught anybody smuggling the gold out of the country. Reports quoting BoC officials, albeit unnamed, said that most of the smuggled gold was done by individuals traveling abroad, particularly to Hong Kong. In short, hand-carried!

The BoC officials supposedly complained that the customs in Hong Kong never checked airline passengers from the Philippines for hand-carried gold. Well and good. The Philippine government had no control whatsoever over how Hong Kong authorities conduct their customs inspections.

But here is the thing: What is the BoC doing here at the point of departure? Remember our own authorities at the airport—either in Clark or in Naia—never caught anybody trying to slip precious gold out the country. Something is wrong here.

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We still have the highest power rates in Asia, and last month, our electric bills from Meralco went up again. The biggest mystery to the guys down here in my barangay was of course the cause of the increase.

Based on a study conducted by Dr. John Morris of the International Energy Consultants, or the IEC, which was a detailed survey and analysis of retail electricity tariffs in some 44 countries, our power rates (as reflected in our Meralco bills) were not the highest in Asia.

It is just that most other countries have subsidized power rates, according to the study. Although the Meralco rates—i.e., the retail rates —ranked 9th among the countries in the study, the power subsidies in our Asian neighbors accounted for about 75 percent of the difference.

Countries such as Indonesia, Thailand and Malaysia have rates lower than those in the Philippines because their governments subsidized power rates at some 36 percent to 54 percent of the retail rates.

The subsidies came in the form of frozen tariffs, sale of fuel to power-generating companies at below-market rates, or even large cash grants to power companies—both in power generation and in distribution sectors.

The IEC study also noted that power subsidies—which were still given in the Philippines as recently as the time of the cute administration of Gloriaetta—could not be sustained, leading to other bigger problems such as market distortion and strain on government finances.

In other words, what we are doing here may be sound economic policy, particularly since the IEC study considers the Meralco rates as true cost-reflective rates. The study even used the words “fair” and “reasonable.”

Meralco itself claimed that the company only got 16 centavos for every peso that we pay for electricity. The rest of the money went to power-generating company, which surely got the biggest chunk, and to transmission company National Grid Corp. of the Philippines.

Now, the government also controls the charges of the power plants and the NGCP.

In the past several months, power rates have gone up and down that, according to the power industry, were caused by several factors. Still, it was clear that electricity pricing in those months followed more or less the rates in the open market system known as Wholesale Electricity Spot Market, or the WESM.

And so the mystery remains—aside from the removal of government subsidy on power, what other factors account for the high power rates in the country? Well, for sure, one factor is the high rate of taxes imposed by the government on the different layers in the power sector. Still, the power-generation sector bears watching, particularly because of the reported shortage in power production. Low supply plus high demand of course can only be equal to high prices.