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SPOKESMEN of the GSIS and the government have denied that either
wants to take over the Manila Electric Company (Meralco).
Considering that the Arroyo administration has displayed a penchant
for saying one thing and doing another, we feel it our duty to
remind officials that taking control of the Philippines’ biggest
and oldest electricity distributor is ill-advised.
State-sponsored efforts to acquire Manila
Electric Co. ostensibly are inspired by the public outcry over the
surge in electricity bills in the utility’s franchise area, which
accounts for 70 percent of the Luzon grid’s demand. This includes
the bulk of the country’s electronics exporters, on whose hands
lie our ability to generate ample dollars to cushion us from the
adverse impact of a recession in our largest market, the US.
This is a big constituency for an administration
badly in need of political capital to finish its remaining three
years in office, and put in place long-delayed economic and
governance reforms.
Moving into the homestretch, President Arroyo
has been beset with allegations of corruption, ranging from
questions surrounding her election to office in 2004 to suspicions
about her family’s involvement in a botched telecom deal with a
Beijing-based company.
The only good thing going for her administration
has been the economy’s stellar performance, having expanded by a
three-decade high of 7.3 percent last year. Faced with a US
recession, the domestic economy is likely to take a hit. So any
effort to make it easier for businesses to adjust to America’s
slowdown would bolster this administration’s reputation, and
ensure its hold on power until the end of its term.
The high cost of electricity in this
country—second only to Japan in Asia—has been the biggest pain
for companies operating here. Unfortunately for Meralco, many
people, including key players in the energy sector, are blaming it
for the recent jump in electricity bills, an insult added to the
injury caused by a slowing economy. In short, the premise has been
laid for some change at the country’s largest electricity
distributor.
However, the attempt to wrest control of Meralco
from the Lopezes, who have led the utility for about three quarters
of the past century, smacks of an administration ploy to pander to
the gallery while snatching a business that offers its owners huge
monopoly profits.
Remember the Washington Consensus?
A government takeover of the utility would stall
nearly two decades of privatization—a tack endorsed by the
country’s creditors to put the economy on a firmer footing. The
so-called Washington Consensus of getting governments out of
enterprises best run by the private sector was the answer to years
of runaway budget deficits and ballooning debts in developing
countries like the Philippines.
Our country’s experience with state-run
corporations has shown that playing both hands—regulating an
industry in which the government is also a key player—has led to
moral hazard situations and much waste.
Take the case of the state-led rural lending
business of the 1970s to 1980s. Beneficiaries treated the government
like a bottomless well, taking out loans without paying for them.
When asked why they refused to pay up, people said they had a right
to the money since it came from the government anyway. But
government resources are limited.
We fear this attitude of obliging government to
provide for its citizen’s every need has stood the test of time.
So a government-owned Meralco would only run the utility to the
ground. As it is, sections of the poor already tap into the
utility’s network illegally, leading to foregone revenues for the
distributor.
We doubt whether any government would have the
political will to crack down on syndicates that thrive on the
poor’s lack of access to electricity. We need only look at the
experience of two state-owned firms, Metropolitan Waterworks and
Sewerage System (MWSS) and National Power Corp. (Napocor) to prove
our point.
Napocor has lost money on account of rigged bids
in its procurement, contributing to the company’s huge debt—an
obligation every Filipino is paying for. That is why the government,
upon its creditors’ recommendation, is selling off Napocor’s
generating assets to the private sector.
In the case of MWSS, huge losses arising from
pilferage and corruption also caused the agency to incur a huge
debt, forcing the government to privatize its operations. Until now,
the two concessionaires running MWSS’ east and west zones are
trying to cut down on so-called non-revenue water and bring
corruption and inefficiency to heel.
Say ‘Goodbye’ to balanced budget
A state takeover of Meralco therefore would only
reverse recent gains made on the fiscal front, as government’s own
brand of corruption and inefficiency would result in the utility
incurring losses and drowning in debt. Even without Meralco, the
government is already struggling to meet its fiscal targets, as it
cranks up spending to cushion any adverse impact from the US
recession and rising domestic inflation.
Acquiring the electricity distributor therefore
would only compound the government’s fiscal woes. With that, the
Arroyo administration might as well give up its much coveted quest
of balancing its budget as early as this year.
Finally, we would like to point out that the
last time a Philippine government took over the utility, the country
was under a dictatorship. Given persistent protests about the
present administration’s violation of human rights—and we
don’t mean simply people’s political rights of
self-expression—it is unnerving that this government, through its
lackeys, is flaunting its supposed option to take over Meralco.
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