June 2007

Perry Diaz

Bataan Nuclear Power Plant

Located on a cliff overlooking the ocean in Morong, Bataan is one of the most — if not the most — expensive projects undertaken by the Philippine government.  The price tag to build the Bataan Nuclear Power Plant (BNPP) was originally $500 million for two 620-megawatt reactors.  Indeed, it would have been the biggest nuclear power plant in Southeast Asia at that time.  The project was started in 1976 and completed in 1984 at a cost of $2.3 billion!

Today, BNPP has not produced a single watt of electricity.  However, the government has been paying interest on the loan at a staggering amount of $155,000 a day.  That’s a lot of moolah! To put it in perspective, that’s enough money to build 50,000 Gawad Kalinga homes a year for 30 years, which would provide housing for more than 7,000,000 poor Filipinos.  That was just the interest.  You factor in the loan principal and another 10,000,000 poor Filipinos would have houses.  That’s 20% of the total population of the country.

What the hell happened?  After the Three-Mile nuclear accident in 1979, concerns were raised which prompted then President Marcos to create a commission to evaluate it.  The commission gave BNPP the thumbs-down and branded the nuclear power plant as unsafe to operate because it was in the middle of the Pacific “fire rim” earthquake zone and located at the foot of Mt. Pinatubo, an active volcano.  In spite of these red flags, the National Power Corporation (NPC) planned to operate it in 1985.  Public protests against its operation intensified.  When Marcos was deposed in 1986, the Aquino government mothballed BNPP.

Controversial project

From the beginning, the BNPP project was engulfed in controversy.  Two US companies — General Electric and Westinghouse — bid for the project.  Knowing that General Electric had past dealings with NPC, Westinghouse looked for someone to help them get the contract.  They found a hitherto unknown person named Herminio Disini. Disini’s credentials were “impressive.”  His wife was a cousin of Imelda Marcos and former governess of the Marcos children.  Disini was Marcos’ close friend, golfing partner, and  “business crony.”  Westinghouse allegedly offered Disini a 5% commission — or grease money — to secure the contract.  In 1974, General Electric submitted a bid for $600 million for two 600-megawatt reactors.  But NPC — in a stunning decision — revoked General Electric’s bid and awarded the contract to Westinghouse for $500 million for two reactors.  That’s a whopping $100 million in savings.  That’s a bargain.

The big problem, however, started in 1976 when Westinghouse adjusted the cost to $1.2 billion for each reactor.  In 1979, the cost increased again to $1.9 billion each.  Consequently, the second reactor was dropped from the contract.  By the time the nuclear power plant was completed in 1984, the total cost was $2.3 billion for a single 620-megawatt reactor.  Makes one wonder what really caused the cost of the project to skyrocket?  Most probably it was due to too many people dipping their hands in the cookie jar.  Disini, the consummate influence peddler — or “fixer” — would have earned $80 million in commission.  However, Westinghouse claimed that Disini was only paid $17.3 million in cash.  To avoid the risk of being charged of bribery under United States fraud laws, Westinghouse allegedly paid Disini through its subsidiary in Switzerland.

Disini’s “rags to riches” story topped the news in the 1970’s.  Within a period of six years, Disini’s Herdis Management & Investment Corp. was transformed into a business empire of 33 companies with assets of more than $200 million.  Disini started acquiring all kinds of businesses including textile manufacturing, oil exploration, charter air flights, and construction equipment sales.   But the BNPP fiasco became his Waterloo.  In 1982, feeling the heat from the public, Disini fled to Austria where he bought a castle and acquired an Austrian citizenship including a nobleman’s title.

In March 2005, the anti-graft court, Sandiganbayan, issued an arrest warrant against Disini.  However, nobody knew his whereabouts.

Government inaction

The apparent inaction of government’s anti-graft investigators in the past 25 years has caused a great deal of embarrassment for the government.  In December 2006, the Inquirer reported: “More than four million dollars in Swiss bank accounts allegedly to be part of the ill-gotten wealth of Marcos crony Herminio Disini will soon be freed from a 20-year freeze order unless the Presidential Commission on Good Government succeeds in securing a forfeiture order from the Sandiganbayan.”

Thereafter, Disini’s wife and daughter filed a request to lift the freeze order on the Swiss bank accounts before the Swiss Supreme Court.  On February 21, 2007, the Swiss high court granted the Disini’s motion to lift the freeze.  Since the bank deposits were under the names of Disini’s wife and children — who were not defendants in the graft case — they should not have any problem withdrawing the money.  Disini probably had it all figured out when he deposited the money in a Swiss bank 25 years ago.

In April 2007, the Philippine government finally paid off the loan.  The last payment was $15 million.  An official of the Bureau of Treasury declared that BNPP is “officially off the books.”  Not too fast, pal.  The government is maintaining the unused power plant at a cost of  $3.3 million a year!  Should the government decide to demolish this “white elephant,” the demolition cost would be quite expensive.  In other words BNPP is not completely off the books.

Meanwhile, Disini is nowhere to be found and his wife and children are free to withdraw his ill-gotten “commission” on the Westinghouse deal.  And more than likely, the Philippine government cannot do anything to bring Disini to justice.

There has been some discussion in government circles about converting BNPP into a tourist spot to generate some income.  Why not?  Call it “Disiniland.”