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By Darwin G. Amojelar Reporter
A government takeover of Manila
Electric Co. (Meralco) may lower power rates, but it might make the
Philippines’ largest electric company debt-ridden like the
state-owned National Power Corp. (Napocor), economists warned on
Friday.
Meanwhile, the United Opposition
(UNO) charged that any government takeover of Meralco would start a
“takeover spree” of other vital firms, and turn them into
“milking cows” for administration “cronies.”
Peter Lee U, economics professor
at the University of Asia and the Pacific, conceded that the
government could lower power rates, once it runs Meralco, but at the
expense of the taxpayers.
“If they charge lower than the
cost, they will not be able to recover what they are charging and
somebody will pay for it,” U said.
He noted that Napocor incurred
losses for charging lower power rates and for not raising its rates
for over a decade. Napocor’s outstanding debt as of end-2007
amounted to $7.17 billion, of which, 92 percent are in foreign
currencies.
Former Budget Secretary Benjamin
Diokno, an economics professor at the University of the Philippines,
said state control of Meralco is a “giant step back.”
“A government that can’t even
manage traffic or collect garbage properly has no business running
Meralco,” Diokno added.
Diokno and U agreed that any
government takeover of Meralco would discourage foreign and local
investors.
The Lopez group, through First
Philippine Holdings Corp., holds a 33.4-percent stake in Meralco,
and the Government Service Insurance System, a 23-percent stake.
Other government entities such as PhilHealth, Land Bank of the
Philippines, Social Security System, and Pag-IBIG Fund hold a
combined 10-percent stake, bringing the government’s shares in
Meralco stock to 33 percent.
Same fate
UNO warned that more private
firms would be taken over by the government should Meralco fall
under state control.
Adel Tamano, UNO spokesman,
claimed that the Arroyo administration would not be satisfied in
taking over only Meralco and that more companies would suffer the
same fate.
“If the government takes over
Meralco, justifying it by lowering prices, why not take over oil
companies to lower gas prices, or food companies to lower prices of
basic goods as well? Pretty soon everything is going to be run and
controlled by this administration!” Tamano said.
The militant Bagong Alyansang
Makabayan (Bayan) said taxes levied by the government, not the
management of Meralco, were to blame for the high power rates in the
country.
It added that the Arroyo
government might have collected more than P6 billion in value-added
tax (VAT) on distribution charges from Meralco service areas.
“These are huge amounts
collected only in a span of two years. We challenge the government,
in the spirit of transparency, to disclose to the public how much
VAT it is collecting from power rates,” its official Renato Reyes
said.
Overall, industry sources
estimate that the government has collected more than P30 billion
from the generation, transmission, and distribution sectors of the
power industry in just two years. These expenses are passed on by
the power industry to consumers.
In a forum organized by the
Department of Energy last Thursday, Jesus Fransisco, Meralco
president, said the embattled Lopez-controlled firm was doing all
that it could to lower its power rates.
“Meralco has been spending
million of pesos to minimize its system losses, which are passed on
to consumers if it is within the cap pegged by regulators,” he
added.
System loss, or technically,
electrical system loss, is a measure of a utility’s efficiency. It
is the difference between the electricity purchased by such firms
from power suppliers and the electrical energy they supplied. In the
Philippines, the government’s system loss limit is pegged at 9.5
percent.
“Every percentage in system
loss over the cap would cost us probably billions at today’s cost
of power so it would be foolish of us not to go after pilferage.
That’s why we spend P300 million for that,” Francisco said.
He wondered why the government is
still imposing a VAT on system loss when it is already a loss.
Earlier, Sen. Francis Escudero urged the government to remove the
value added tax it charges on system loss to help reduce the
country’s expensive power rates. Escudero, the chairman of the
Senate Committee on Ways and Means, argued that VAT is supposed to
be a levy on tangible goods one receives and enjoys, “not on
imaginary things like electricity which has vaporized or been
vandalized.”
--Euan Paulo C. Anonuevo
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