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By Efren L. Danao, Senior Reporter
Sen. Miriam Defensor Santiago, the chairman of
the joint oversight committee Power Commission, on Tuesday said
Congress is compelled by law to back government control of Meralco
should it result in cheaper power costs.
Santiago noted that the mandate of the Electric
Power Industry Reform Act (EPIRA) is the lowering of electricity
prices in the Philippines, which are among the highest in Asia. If
state control of the utility will lead to lower electricity costs,
she said, the legislative is bound by law to support such move.
The Government Service Insurance System has
initiated moves to gain majority control of Meralco. The pension
fund has invested in Meralco and has four board seats in the power
firm. Its chairman, Winston Garcia, has been trying to get documents
from the utility to see if it has been charging consumers correctly.
Chances of unseating the current board of
Meralco this year are remote, according to Credit Suisse.
“We believe that it is unlikely that the
current management of Meralco would be ousted [in 2008] as
nominations for a new set of board of directors have lapsed and the
Lopez group has the numbers to veto GSIS,” it said. The group
controls the utility.
Besides, Credit Suisse said, “a potential
government takeover [of] the company is expected to further dampen
sentiment in the stock market.”
It has advised shareholders in Meralco to
withdraw their investments, citing the allegedly “heightened”
political pressure to control electricity prices.
In a note to clients, Credit Suisse downgraded
the utility’s rating to underperforming from neutral over
President Gloria Arroyo’s call for support for the government’s
“tough legal fight” with Meralco over the high costs of
electricity.
Santiago said the minimum involvement of
government in private business is preferred in a capitalist system
unless government’s entry would benefit consumers.
“We shall allow matters with respect to
electricity rates to be decided by the private sector based on good
corporate management practices,” she said.
Santiago recalled that the Supreme Court had
ruled that Meralco had overbilled its consumers. She said Malacañang
should ensure that the overbilling does not recur.
The Senate also on Tuesday started debates on
the proposed amendments to EPIRA.
Sen. Juan Ponce Enrile, principal sponsor of
Senate Bill 2121, said he is confident that the amendment would help
lower power rates. A provision prohibits industry participants from
passing on their stranded costs to consumers. The stranded costs
refer to the excess of the contracted costs of electricity under
eligible contracts over the actual selling price of the contracted
energy output of such contracts in the market.
“In order to reflect the true costs of power
and to avoid additional burden to the consumers, there shall
henceforth be no recovery of stranded debts and contract costs for
the National Power Corp. [Napocor], PSALM [Power Sector Assets and
Liabilities Management Corp.], generation companies, and
distribution utilities,” according to the bill. Meralco sources
the electricity it distributes from the state-owned corporation, the
spot market, and its own independent power producers, or IPPs.
President Arroyo also on Tuesday said she wants
a review of all such power producers to lower government’s
expenditures, according to Gov. Jose Salceda of Albay.
Salceda, also the President’s economic
adviser, quoted Mrs. Arroyo as saying that she is “not after
Meralco” and that the review “should be done in a proper
process.”
The Enrile bill empowers the President to reduce
royalties of the national government for the exploitation of all
indigenous sources of energy whenever public interest requires.
For the first three months of 2008, Meralco
reported that it posted a 23.2-percent growth in net income to P655
million year on year.
The profit report apparently has fueled efforts
of the government to make Meralco open its books.
Refusal could mean penalty and imprisonment for
its officials, Sergio Apostol, chief presidential legal counsel,
said.
He added that the government has “no interest
to take over Meralco and will leave it to GSIS [if it wants to do
so] because the government has an aggressive privatization
policy.”
-- Chino S. Leyco, Angelo S. Samonte and Rhaydz B. Barcia
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