RP parliamentarians petition cancellation of Austrian incinerator loan

October 1, 2008

RP PARLIAMENTARIANS PETITION CANCELLATION OF AUSTRIAN INCINERATOR LOAN

Representatives Edcel C. Lagman and Risa Hontiveros-Baraquel today launched a Parliamentarian Petition calling on the Austrian government to cancel the loan that financed the 1996 Austrian Medical Waste Incinerator Loan Project, branding it obsolete, illegitimate and unscrupulous and enjoining colleagues in both the Senate and the House of Representatives to sign the petition.

The petition is part of the Stop Toxic Debt Campaign of the Eco Waste Coalition, Freedom from Debt Coalition and Health Care Without Harm (HCWH)-Southeast Asia.

The 1996 loan agreement worth Php503.65 million involves the acquisition of 26 medical waste incinerators from Austria for use of government-run hospitals in the Philippines.

The petition which was launched during a press conference in Quezon City aims to gather signatures of Philippine lawmakers before it is presented to the Austrian parliament.

According to Lagman and Hontiveros-Baraquel, they will enjoin their colleagues in Congress to sign the petition as well as remind them of their previous decision to suspend interest payments for the said loan agreement in the 2008 Budget.

The 14th Congress passing the 2008 Budget provided a special provision suspending interest payments amounting to P 5 billion for loans challenged as fraudulent, wasteful and/or useless. The Austrian Medical Waste Incinerator Project was included in the list.

However, President Gloria Macapagal-Arroyo vetoed the said provision. In the proposed P 1.41 trillion 2009 Budget, payment for said project is reportedly pegged at $ 2.2 million or P 100 million.

First world inequity

Manny Calonzo of Eco-Waste Coalition said that this is another case of a “1st world country waste thrown to a 3rd world like the Philippines” citing that the incinerators were of poor quality, having failed to pass the emission levels guaranteed by the supplier and the emission tests conducted by the Department of Health (DOH), the Department of Environment and Natural Resources (DENR) and the World Health Organization (WHO).

In a 2003 emission test conducted by the WHO and the DOH, the dioxin emission of one incinerator tested was eight hundred times the limit set by the Philippine Clean Air Act.

He added that in contravention of European Union (EU) environmental standards, the incinerators exceeded the EU limits on emission. An EU-member country is supposed to accept, enforce and implement EU standards into its national law.

When Austria and RP entered the agreement, there is an EU Council Directive concerning the incineration of hazardous waste, which regulates among other pollutants, dioxins and furans.

According to Calonzo the directive was “obviously missed out” in the Austria-PR loan agreement because the government is still paying for 26 highly polluting incinerators.

Third world blind conformity

Merci Ferrer of HCWH-SEA added that the worst part is “we are paying for incinerators that are no longer in use.”

The 26 incinerators were decommissioned following the approval of the Clean Air Act of 1999 banning the use of technologies harmful to the environment such as the medical waste incinerators. Although the Act has been passed in 1999, the use of medical waste incinerators was extended to July 23, 2003.

According to Ferrer the loan payment started in 2002 and now amounts to US$2 million a year. “If our Congress will not push for this petition, our government will continue to pay until 2014 and this is a huge burden not just for the national pocket but for the majority of Filipinos who are already foregoing hospital care and visits,” she added.

Repayment scheme is divided into 24 equal semi-annual installments with an interest rate of 4 per cent every year. Ferrer added that paying for this loan is simply “blind conformity.”

Debt cancellation at its best

For her Part, Lidy Nacpil, Vice President of the Freedom from Debt Coalition (FDC) emphasized that this is not the first time an onerous loan or a third world debt will be cancelled or will be demanded for cancellation.

Nacpil said the Government of Norway in 2006 unilaterally and without any conditions cancelled US$80 million in debts owed by five countries: Egypt, Ecuador, Peru, Jamaica and Sierra Leone concerning the controversial Norwegian Ship Export Campaign which operated from 1976 to 1980.

A failed development policy lacking in proper needs assessment and a proper risk analysis were used as pretexts for the cancellation. The action was widely seen as an international precedent of a creditor country not only admitting responsibility of its flawed projects but also of the cancellation of loan agreements it provided which only undermine a nation and its people’s interest.