" Fall of a Dictator " by Ron Centeno

In recent months, some lawmakers want to revisit the dormant nuclear power plant in Bataan. Without question, this mammoth project that never put to work was Marcos’s fattest single contract ever forged and perhaps the most wasted one.

Let us look inside the blueprint of this power plant and its eventual pitfall.

Found in the book, The Marcos Dynasty, by Sterling Seagrave, “The crony who engineered the deal for Ferdinand was Herminio Disini. Disini was part of the royal family, married to Inday Escolin, a first cousin of Imelda Marcos who also served as one of her physicians. Like Eduardo Cojuangco, Disini was twenty years Ferdinand’s junior.”

According to Seagrave, Disini’s biggest break came in early 1970s, when Ferdinand used him to take over the cigarette filter business in the islands-long dominated by a British-American firm called Filtrona Philippines, Inc. Both Disini and Marcos forced Filtrona out of business, leaving the former’s Philippine Tobacco Filters Corporation with a monopoly worth $1 million a month in profits. Disini then cut a deal with Marcos’s friend Lucio Tan, owner of Fortune Tobacco, selling Tan filters so cheap that his cigarettes could undercut rivals and drive competition out of the market. In return, Tan gave Marcos $11 million campaign contributions, plus $2.5 million a year. In the process, Tan got away with $50 million a year in taxes.

Having amassed large sum of money through these deals, Disini built Herdis Group, Inc., a conglomerate of fifty companies with $1 billion in assets. Disini, however, did not want to commit bigger portion of his capital, instead, he borrowed money using Philippine government guarantees that were irresistible to foreign bankers. Interestingly, Disini does not fit the qualification to build a nuclear plant. Moreover, the power plant sits on a jungle bluff in Bataan which is 5 miles from a dormant volcano, and only 25 miles from three geologic faults.

According to Seagrave, “It all began in 1973, when President Marcos ordered National Power to negotiate a deal to buy two 600-megawatt nuclear plants”. Early on, General Electric showed interest and began negotiating with National Power. On the one hand, Westinghouse was rather persuasive to have a piece of the contract by hiring a lobbyist close to Marcos. That lobbyist was Disini.

Quickly, Disini arranged for Westinghouse executives to discuss their proposal in private with Marcos. Westinghouse offered to supply a single plant with two 620-megawatt reactors at a price of $500 million. Additional charges for fuel, power transmission lines, and so forth raised the estimated total to around $650 million.

After the private meeting, Marcos ordered National Power to give the business to Westinghouse despite GE’s better proposal relative to costs and technical details. One official of the administration assembled a team of experts and found nearly every alternative made by GE was cheaper than its winning competitor. According to Seagrave, “whatever deal Ferdinand had struck with Westinghouse pleased him so much that he was not moved by any of these arguments.”

In the process, the reported cost of $500 million was beginning to grow. Soon, Westinghouse claimed that the cost assessment would now be over $1 billion.

According to Seagrave, “By the time a formal contract was signed in February 1976, the deal was hardly recognizable. The power plant would now have not two but only one 626-megawatt reactor. At the prices Westinghouse was now quoting, international banks would not give Manila a loan big enough to finance the second generator. Instead of getting two reactors for $650 million, the Philippines was getting one reactor, with half the power output, for $722 million. It would cost another $387 million for interest and escalation costs, bringing the total price to $1.1 billion.”

It was believed that the ever ballooning price of the project was attributed to Marcos’s demand for huge kickback in order to accommodate Disini and other cronies and anyone queued up.

When all was said and done and the financing has finally been arranged with the U. S. Export-Import Bank, Westinghouse needed a place to build the plant. Because the Marcos and Romualdez families had taken over large part of Bataan, hence, the plant should be built in Bataan as part of Marcos’s condition.

When the National Power, with the help from the U.N.’s International Atomic Energy Agency (IAEA), hired experts to test the safety of the site, they concluded that it was vulnerable to tidal waves and other natural calamities. Despite the unfavorable findings, the head of the Philippine Atomic Energy Commission, Librado Ibe, had to give in and issued the construction permit in April 1979 despite the Three Mile Island accident that occurred a week earlier.

When Marcos assembled his own experts several months later, they found that the design was unsafe and recommended changes to incorporate new safety features after the Three Mile Island. This proved to be rather costly when Westinghouse renegotiated the contract to meet the objections. The price rose to $1.8 billion - $55 million for added safety equipment, $645 million for higher interest costs and inflation, and finally, the eventual cost reached a whopping $2.2 billion. Work on the project was completed in 1984, which was about the same time Disini’s business empire suddenly collapsed.

According to Seagrave, “He (Disini) left the Philippines hastily for Austria, where he had taken the precaution of salting much of his wealth, and where he had purchased a palace outside Vienna.”

What a bastard!

Reference:

The Marcos Dynasty. 1988. Sterling Seagrave. Harper & Row, Publishers, Inc., 10 E 53rd Street, New York, N.Y. 10022