I am pleased to announce that the IPP Interagency Review Committee, chaired by the Secretary of Finance and established by the EPIRA (Electric Power Industry Reform Act), has now completed their review of all thirty-five (35) IPP contracts with the presentation of their report to me yesterday.

Of the 35 contracts, the Committee found that –

1. six (6) contracts had passed their review with no legal or financial issues;
2. eleven (11) contracts, while passing the review, have some remedial financial issues that need to be addressed to assure that the government and the public are not being financially prejudiced;
3. two (2) of the contracts, while having some remedial policy issues, were found to be financially sound;
4. eleven (11) contracts have some financial issues that may require re-negotiation of the financial terms;
5. lastly, five (5) contracts were found to have both legal and financial issues that need to be referred for appropriate study, renegotiation and possible legal action.

On the latter (5) contracts, I have instructed the DOJ and PSALM to work together to formulate a plan of action.

For the twenty-two (22) contracts requiring the study or re-negotiation of certain financial terms, I have instructed the DOE and PSALM to initiate the necessary steps to arrive at an acceptable solution to the issues or work out a plan of action for the same.

For the two (2) contracts with remedial policy issues. I have instructed NEDA, in coordination with the DOJ to review these contracts.

I have given these agencies three months to take action on these contracts and come up with results.

President Gloria Macapagal-Arroyo today said that on July 15, she will assume the post of Secretary of Foreign Affairs in a concurrent capacity.

Addressing the 33^rd National Marketing Conference at the Westin Philippine Plaza, the President said that as such she will make sure to strengthen the international linkages not only to fight terrorism and uphold the law everywhere but to be able sell the country’s goods and services.

The President said there are eight realities of the regional and international environment which will guide her foreign policy. These are the following:

1. The paramount influence of China, Japan and the United States in the security and economic evolution of East Asia.
2. The growing context of the Association of Southeast Asian Nations (Asean) in global affairs.
3. The role of the international Islamic community.
4. The looming importance of inter-regional organizations.
5. The protection of the environment, natural resources and maritime territory.
6. The drive for foreign markets and foreign investments in which Europe is also a major source along with the US, Japan, China and Asean.
7. The importance of international tourism, and;
8. The crucial role of the overseas Filipinos in the socio economic stability.

The President said that these eight realities will shape the foreign policy of the Macapagal-Arroyo administration.

To make our country competitive and attractive to investors, the President said the country must be on the ball in world affairs.

President Gloria Macapagal-Arroyo today directed newly-appointed Transportation and Communications Secretary Leandro Mendoza to work with Metropolitan Manila Development Authority (MMDA) Chairman Bayani Fernando in solving the traffic problem in Metro Manila.

The Chief Executive issued the directive during the Philippine National Police (PNP) change of command, where Mendoza, as outgoing PNP Director General, handed over the PNP command to Deputy Director General Hermogenes Ebdane, Jr. in ceremonies held this morning at Camp Crame in Quezon City.

The President also tasked Mendoza to work with Customs Commissioner Antonio Bernardo "to cleanse the waterfronts all over the Philippines of smugglers and goons."

According to the President, Bernardo had informed her that unlike Internal Revenue Commissioner Rene Banez who has to deal with white-collared crooks, the Customs Bureau crooks are blue-collared cooks.

"They’re not only smugglers; they’re goons," she stressed.

This is the reason, the President said, why she decided to have a "top cop to help him there."

"I need a top cop in the streets of Metro Manila and the ports of the other cities. That is why Larry Mendoza is now the Secretary of Transportation (and Communications)," she added.

In her speech, the President also paid tribute to Mendoza for his stint as PNP chief.

She said Mendoza came well prepared for the top post of the PNP, adding that he is well prepared to be the top enforcer of the streets and waterfronts, carrying a diploma from the Philippine Military Academy, a round of assignments along the entire breadth of police duties, and two masteral degrees.

What makes Mendoza a cut above the rest, the President said, are his outstanding trustworthiness, steadfastness and a tenacious drive to perform his duties well. These, she stressed, are "qualities that came into public view in the tense days of Edsa 2 and also in the May 1 riot last year and in several other occasions that tested the inner strength of many police officers."

As a top cop, the President added, Mendoza led his men well. He also cared and loved the men and women of the PNP, she added.

The President announced during her speech that as Mendoza leaves his post in the PNP this month, the policemen and policewomen, including the police officers, "will feel their pay increases this July."

Specifically, the President said, a police master sergeant, starting July, will be receiving a higher pay than the salary of the military brigadier generals.

The President thanked the congressmen for having passed a law increasing the soldiers’ pay. "Incidentally, we will begin to phase in the implementation of that military salary increase at the end of the year," she said.

She recalled that during Mendoza’s term as PNP chief, she sought from him the further professionalization of the PNP.

"So, in order to increase police visibility and deter crime, especially kidnapping, during Larry’s term, he hired new policemen, all college graduates," the President said, adding that Mendoza had these policemen and policewomen, old and new, trained and retrained as needed.

The President expressed the belief that the salary increase and the professionalization of the PNP will make the PNP "an attractive force for our good elements in the community to join."

She also noted that the country’s crime solution efficiency index now stands at 90 percent in kidnap-for-ransom cases.

"The resolution rate was better in the year 2001, Larry’s year, than the year before, with 63 percent of the cases solved compared to 48 percent the year before. And this 63 percent solution rate is so far the highest solution efficiency for kidnap-for-ransom cases in the last five years," the President said.

At the same time, the President said the market for illegal drugs was significantly downgraded in the year 2001.

"We had our biggest haul in the drug trade last year. We confiscated 500 kilograms of shabu in Quezon province," she said.

In the case of the shabu raid in Quezon, the President praised the provincial director, Col. Roberto Rosales, and his men for resisting bribery, temptation and catching the biggest fish caught so far in the whole history of the country’s drug war.

President Gloria Macapagal-Arroyo today took more firm steps to rationalize the power industry and bring about lower electricity rates.

Following the receipt yesterday of the report of the Independent Power Producers (IPP) Interagency Review Committee which conducted a reappraisal of all 35 IPP contracts, the President issued a series of directives that are expected to further reduce the cost of electricity for the consumers while at the same time respecting the rule of law and the validity of legal contracts.

The review committee is headed by Finance Secretary Jose Isidro Camacho and includes Justice Secretary Hernando Perez among its members.

She ordered the Department of Justice (DOJ), Department of Energy (DOE), National Economic and Development Authority (NEDA) and Power Sector Assets and Liabilities Management (PSALM) to re-negotiate the contracts, institute policy remedies and take legal action within three months.

"I hope that now that you have a big decrease in your electricity bills, these actions will result with more decreases along the way," the President said.

Negotiations don’t happen overnight, the President said, adding that "at least there is something to look forward to over the long or short term, depending on how easy or how difficult the re-negotiations will be."

"We cannot unilaterally just change the rates," the President said. "Where there is a legal issue, we must go to court. Where there is no legal issue…negotiations."

Of the 35 contracts, six passed the review with no legal or financial issues, "so they can go and operate and the rates are more or less fair," the President said.

The six are the Limay (Bataan) Combined Cycle Gas Turbine A; the Navotas Gas Turbine Plant Unit 4; the Ambuklao Hydroelectric Plant; the Toledo Thermal Plant; and the Paragua Diesel Plant.

The President also said 11 contracts passed the legal review but have some financial issues that need to be addressed to assure that the government and the public are not financially prejudiced.

"Maybe in this review, we might be able to find room for some more centavos decrease," the President added.

The 11 contracts involve the Pagbilao Coal-Fired Plant; the Panamucan Diesel Power Plant; the Leyte-Cebu Geothermal Plant; the Naga Power Plant Complex; the Leyte-Luzon Geothermal Plant; the Mindanao I Geothermal Plant; Malaya Thermal; Zamboanga Bunker-C Fired Diesel Plant; Gen. San. Bunker-C Fired Diesel Plant; Bakun Hydroelectric Plant; and the Mindanao Coal-Fired Thermal Plant.

Two of the contracts reviewed by the committee, while having some remedial policy issues, were found to be financially sound. These are the Benguet Mini-Hydro Plant and the Caliraya-Botocan Kalayaan Project.

"Probably we cannot squeeze any blood anymore from those stones," the President said.

The President added that 11 other contracts have some financial issues that may require renegotiation of financial terms. "Maybe these renegotiations might bring about some bigger decreases in power rates," the President said.

The contracts involve the Navotas Gas Turbine Plant Plant Units 1-3; Mindanao Power Barges; Ormat Binary Cycle Geothermal Plant; Bunker C-fired Diesel Generating Plant Iligan I; Bunker C-fired Diesel Generating Plant Iligan II; Subic Bunker-fired Diesel Plant; Bauang Diesel Plant; Bataan EPZA Power Plant; San Pascual Cogeneration Facility; Iligan Natural Gas; and the Mindanao II Geothermal Plant.

Five contracts, according to the President, were found to be both legal and financial issues that have to be referred for appropriate study, whether re-negotiations or possible legal actions, or both.

The five involve the Binga Hydroelectric Plant; the Cavite EPZA Diresel Plant; the Sual Coal-Fired Thermal Plant; the Casecnan Multipurpose Project; and the San Roque Multipurpose project.

Of the five contracts that are both legally and financially problematic, two are not operating, the President said. "So, even if we renegotiate and file legal actions, they won’t result in lower rates," she added.

The President ordered the DOJ and PSALM to work together to formulate a plan of action on the five contracts.

For the 22 contracts requiring study or renegotiation, she instructed the DOE and PSALM initiate the necessary steps to arrive at an acceptable re-negotiation of the issues.