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A
reprise of the takeover by the government of the Manila
Electric Co., or Meralco, the country’s biggest
electricity distributor, following the declaration of
martial law in 1972 looms in the horizon.
This
time, a government takeover could occur not under the
shadow of bayonets, as before, but rather through voting
in the corporate boardroom, on Meralco’s May 27 annual
stockholders’ meeting.
The
firm’s owners, the Lopez family, with five seats in the
11-member board of directors, are up against the
Government Service Insurance System, or GSIS, which
leads a few other government-owned corporations and
government financing institutions with a total of four
seats.
The
Lopezes regained ownership of Meralco in the aftermath
of Edsa 1 in 1986. The family’s power and infrastructure
conglomerate, First Philippine Holdings Corp., or FPHC,
spent P2 billion last year to acquire an additional 22.7
percent of Meralco. The year earlier, FPHC had also
acquired Meralco Pension Fund’s 6.6-percent stake in the
utility. Through FPHC, the Lopez family is now the
single- biggest shareholder in Meralco with a
33.4-percent stake.
On the
other hand, the government through the GSIS now holds
about 33 percent of Meralco shares along with other
government entities like PhilHealth, LandBank, Social
Security System and Pag-Ibig Fund.
The
remaining shareholdings, comprising 36 percent, are
owned by public investors. The May 27 annual
stockholders’ meeting, therefore, promises to be a
showdown between the Lopezes and the government to win
over thousands of public investors to their side.
On the
face of it, the showdown is simply the logical outcome
of a battle for control of a vital public-utility firm
between the private sector and government-owned
corporations. But there’s more than meets the eye to
this corporate tussle.
Is it
true that if the government manages to take over control
of Meralco from the Lopez family, it is the state-run
National Power Corp. (Napocor) that will run the show?
If this
happens, can Napocor hack it, given its record of
incurring huge debts, failed privatization, inefficient
management and questionable disposition of its assets
and anomalous procurement of coal for its power plants?
In fact,
the steep increase in Meralco’s electricity rates
starting April is due to the high cost of procurement by
Napocor of coal, which accounts for a third of Luzon’s
power requirements.
Prominent economists such as former budget secretary
Benjamin Diokno frown on the government doing business,
and argue persuasively in favor of privatization. So why
would the state-run Napocor want to take over a
private-utilities firm like Meralco?
One
possible reason for floating the idea of a government
takeover of Meralco is to prevent the Energy Regulatory
Commission (ERC) from approving the Settlement Agreement
(SA) between Napocor and Meralco on issues arising from
the Contract of Sale of Electricity (CSE). It is bandied
about that the SA is fraudulent because Meralco
supposedly owes Napocor P50 billion instead of P14.3
billion, in accordance with the terms and conditions of
the agreement. What Napocor apparently wants is to have
the agreement abrogated. But that’s an uphill climb
since it has no legal basis whatsoever. Some quarters in
the Napocor Mafia want the state-run firm to insist that
Meralco owes P50 billion and that this amount should be
converted into equity in Meralco. It would not be
surprising if the same people in Napocor are already
trying to link up with the government firms that already
own shares in Meralco to pursue the government-takeover
bid.
While at
this, it is good that concerned citizens are maintaining
their vigilance and want Napocor to cease and desist
from manipulating trading at the Wholesale Electricity
Spot Market (WESM) and causing a spike in power prices.
The
groups People Opposed to Warrantless Electricity Rates,
AGHAM, Gabriela and the Bagong Alyansang Makabayan
recently filed with the Office of the Ombudsman a
complaint against Napocor for price manipulation from
August to November 2006. The complaint cited a
memorandum from Napocor chief Cyril del Callar asking
his subordinates to recover losses incurred by Napocor
during the first two months of trading at the WESM. The
groups asserted Napocor committed abuse of market power
when three of its plants colluded to offer electricity
at much higher rates, ranging from P10 to P20 per
kilowatt-hour.
This is
already the second case filed by consumer groups against
Napocor. The first involved alleged overpricing of
emergency coal purchases that they said contributed to
higher generation rates.
Given
Napocor’s less than savory record in power generation,
shouldn’t we be all concerned that it may one day be in
charge of power distribution, as well? |
