House passes bill allowing foreign ownership of public services

THE House of Representatives, voting 136-43 with one abstention on Tuesday, March 10, approved on third and final reading a bill seeking to allow 100 percent foreign ownership of power generation, transport and communications companies in the country.

House Bill No. 78 proposes to amend the 84-year-old Public Service Law, Commonwealth Act No. 146, and limit the term “public utility” to the electricity distribution and transmission sector and the water pipeline and sewerage pipeline system.

The bill, authored by Albay Representative Joey Salceda and consolidated with six other similar bills, seeks to promote competition and provide the public with “more choices, better services and lower prices.”

The bill seeks to differentiate between “public service” and “public utility”. Under the 1987 Constitution, foreign equity participation in a public utility is limited to 40 percent.

In his explanatory note, Salceda noted that the term “public utility” is often used interchangeably with “public service”. Foreign investment is, thus, limited also in companies that offer public services.

“The key to fixing this problem is to develop a clear statutory definition of a public utility by amending the Public Service Act,” he said.

He said the law was crafted in 1936 yet and no longer sufficiently addresses the changes in the economic framework brought about by globalization and rapid technological innovation.

Under HB 78, public utility refers to a person that operates, manages and controls for public use the distribution of electricity, transmission of electricity, and water pipeline distribution or sewerage pipeline system.

The bill also prescribes a 12 percent cap on rate of return to attract investments into a public utility and updates the applicable penalties and fees for public services as well as strengthens the enforcement remedies of administrative agencies. (MVI/SunStar Philippines)