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By Euan Paulo C. Ańonuevo Reporter
The Lopez Group will not hand
over control of its giant utility Manila Electric Co. (Meralco) to
the government without a fight—or without first filling its
pockets full if it stands to lose the battle.
On the sidelines of the
Lopez-controlled First Gen Corp.’s annual stockholders’ meeting
Wednesday, Oscar Lopez, the group’s chairman, said he is leaving
it to Meralco shareholders to decide the fate of the utility amid
the reported threat of government takeover primarily over the
company’s exorbitant rates.
”They [government] can do
anything.” He said. “Of course, all we can say is there are laws
and we will fight by the law. It’s up to them.”
Lopez added that if the state
pension fund Government Service Insurance System (GSIS) headed by
Winston Garcia is interested in the Lopez Group’s stake in Meralco,
then Garcia should come up with an offer. “At the right price, we
can sell,” he said.
He clarified that a statement
that he made during an earlier interview he gave to media quoting
him as having dared Garcia to buy out the Lopez’s shares in
Meralco was said “partly in jest and partly out of frustration.”
Lopez, however, added that if any
group wants to make an offer for their shares in Meralco, it should
be done in a proper manner.
”I think sometime after the
shareholders’ meeting, we would probably get some investment
banker to take a look at this whole prospect of selling,” he said.
The rift between Garcia and the
Lopez clan, who controls 33.4 percent of Meralco, started when the
GSIS chief asked for copies of financial statements and commercial
transactions made by Meralco.
Garcia, who sits on the Meralco
board, was reported to have been soliciting proxy votes for the
incoming stockholders meeting of the company late this month to
wrest control of the company’s management from the Lopezes.
The Lopez Group’s control of
33.4 percent of Meralco is about the same stake as that of all
government-controlled institutions combined—including GSIS.
What should have been a slugfest
in the Meralco boardroom, however, has jumped over to Congress, with
state-owned National Power Corp. and militant and consumer groups
joining the fray against the company.
A proposal from those ganging up
on Meralco seeks to break up the franchise area of the country’s
biggest power distributor. The franchise area spans Metro Manila and
nearby provinces. The proposal seemed to have taken off from the way
the Metropolitan Waterworks and Sewerage System divided consumers’
water-service needs into two concession companies.
Lopez said the proposal is “an
interesting prospect” to which the company’s shareholders can
look up.
”That could be also
discussed,” he added. “But that requires a lot of legal
discussion on how to do it. But that depends on what happens at the
shareholders’ meeting.”
Lopez, however, said cutting up
the franchise area may not benefit consumers. He instead urged the
government to remove value-added tax (VAT) and royalties imposed on
power.
”It [break-up] is a big step in
bringing down the rates, particularly in making power plants that
use local fuel more competitive vis-a-vis old plants,” he said.
At present, natural gas from the
Malampaya field, the country’s largest petroleum reserve to date,
is levied royalties by the government. The field fuels three large
power plants, two of which are controlled by the Lopez family’s
First Gen.
Industry sources say that
removing the royalties as well as VAT on electricity will redound to
a reduction of P0.50 per kilowatt-hour and P0.75 per kilowatt-hour,
respectively, for a total of about P1.25-per kilowatt-hour cut in
consumers’ electricity bills.
Ghost delivery
Rep. Luis Villafuerte of
Camarines Sur also on Wednesday accused Meralco of “ghost
delivery” of electricity in alleged connivance with its sister
company, First Gas, which resulted in higher charges to its
customers.
In his 11-page privileged speech,
Villafuerte claimed that First Gas allegedly delivered 1,000
megawatts to Meralco despite the sister company having “only [its]
demonstrated capacity for the period July to November 2000 rounded
to about 300 megawatts.”
He said Meralco, within 30
months, earned P3.372 billion, which, he added, was made possible by
“padding.”
Senate salvos
In the Senate, Miriam Defensor
Santiago, the co-chairman of the Joint Congressional Power
Commission (PowerCom), also on Wednesday said the franchise of
Meralco would be canceled if it could be proved that the utility had
intentionally favored its own independent power producers, or IPPs,
at the expense of consumers. First Gas is an independent power
producer owned by the Lopezes.
“That would be management abuse
which could be a ground to cancel the Meralco franchise,” she
said.
Garcia charged at the PowerCom
hearing on Monday that Meralco had contracts worth P55 billion a
year with its sister companies, including the independent power
producers, for the supply of power, meters, distribution and power
transformers, ballasts, circuits and other electrical supplies.
He said these sister firms almost
doubled their income because of these contracts, while Meralco had
not declared any cash dividends from 2001 to 2007.
“It is virtually impossible
that Meralco managers did not know that their decisions would result
in unconscionable transfer of wealth from consumers to their own
pockets. Such alleged mismanagement is punishable,” Santiago said.
Meralco and the National Power
Corp. (Napocor) had blamed each other for the high power rates in
the country. Meralco claimed that Napocor power rates are higher
than Meralco’s power plants, while Napocor retorted that this was
so because Meralco was buying fuel from the Wholesale Electricity
Spot Market (WESM) during peak hours when the prices were high, and
from its independent power producers during off-peak hours.
Garcia had also questioned why
Meralco was charging its customers higher generation costs than
power distributors in Cebu, Davao, Bataan, when Meralco had more
than 20 times their customers and generation costs are equal in the
Visayas and Mindanao.
“The first order of the day is
to determine the price paid to the IPPs of both Meralco and Napocor,”
Santiago said.
She explained that what Meralco
and Napocor pay their respective power plants sets the reference
rate for the power rates paid by consumers.
“We have to put closure on this
IPP issue, otherwise our power rates will be high forever,”
Santiago said.
She had directed Jesus Francisco,
Meralco president, to submit to PowerCom within 15 days its criteria
in determining the lowest cost in the supply scheduling and
dispatching process and the results of Meralco hourly purchases from
independent power producers, Meralco and the spot market.
Santiago had also ordered the
Energy Regulatory Commission to explain why it did not dismiss an
agreement between Meralco and Napocor to pass on to customers the
P14.5 billion being billed by Napocor from the utility firm
for terminating their power supply contract.
She also asked Napocor to explain
why it passed on to the customers the “weighted average time of
use” charges, “which appears to be highly irregular and devoid
of legal basis.” The senator noted reports that Napocor is buying
more of its coal requirements from the spot market rather than
through bilateral contracts.
Santiago, though, conceded that
the issues involved are highly technical or “labyrinthian” so
she had sought the help of group of experts from the University of
the Philippines to help her decide on who is lying.
Meralco, Napocor and the Energy
Regulatory Commission are required to submit the required documents
within 15 days or be cited in contempt, fined up to P500,000 and
jailed for up to six years, according to Santiago.
Meanwhile, a GSIS spokesman
denied in a press statement that Garcia had served as legal counsel
of the Visayan Electric Co. (Veco), Meralco’s counterpart in Cebu
whose power rates he said are lower than those charged by the
Meralco.
GSIS spokesman and lawyer
Estrelita Elamparo said Meralco people are peddling lies because
their source of endless funds is being threatened.
--With Sammy Martin, Efren L. Danao And Angelo S. Samonte
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