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Government pensioners will find themselves at the
losing end if the battle between the government and the Manila
Electric Co. (Meralco) for ownership of the country’s biggest
power distributor continues.
Since the fight that erupted
early this month between the Government Service Insurance System (GSIS)
and the Lopez-owned Meralco escalated, its shares at the Philippine
Stock Exchange have plummeted. From a month-high closing of P81 per
share on May 2, the shares of the country’s largest utility closed
at P69.5 per share on Thursday. The nosedive will cause a loss of
about P1.2 billion for the 10-percent stake in Meralco that the GSIS
acquired at the start of the year.
Despite decreasing value of its
shares in Meralco, a source from the GSIS told The Manila Times also
on Thursday, the state pension fund still sees Meralco as a gold
mine. The government itself banked on the utility to boost its
revenues by unloading its remaining shares in Meralco this year.
“The GSIS still believes it [Meralco]
is a good investment and still has potential to improve its
profitability but a change in management [in the power distributor]
or its direction is needed,” the source said.
At the start of May, GSIS
President Winston Garcia’s rift with the Lopez Group that began in
the Meralco boardroom found new battlegrounds—media, Congress and
even the power industry itself.
Garcia’s battlecry is for “a
new management so we can lower the cost of electricity.”
The GSIS originally held around
8-percent stake in Meralco but has since jacked this up to about 23
percent after the state pension fund bought the government’s
10-percent stake in the power distributor and further bought shares
from the market.
The stake that the government
unloaded in the GSIS in January was bought by the state pension fund
for P8.9 billion or at P80.9 per share—a premium over the market
price of P71.5 for a Meralco share at the time.
Another source from GSIS said the
pension fund’s investment in Meralco “is the biggest among all
the firms we have invested in.”
The Times tried to get details on
other shares of the GSIS in Meralco but was rebuffed by fund
officials. Ironically, Garcia himself has been calling for
transparency in Meralco’s management.
The GSIS acquired government
shares after divesting its holdings in San Miguel Corp. for P14
billion.
For the long-term, GSIS is
placing its investments in the energy sector, which it deems as also
“profitable.” Garcia cited the utility’s “60-percent
distribution network.”
During this period, the GSIS
president said, they expect better returns from expanding their
shares in Meralco.
“Most of the GSIS investments
are in the energy sector, but not in the distribution of power,
that’s why we bought additional [shares] in Meralco,” he added.
Garcia said he is not even
considering to sell the government pension fund’s Meralco shares
as a form of future investment.
A GSIS report said the pension
fund’s local investments fueled its revenue growth in the first
nine months of 2007.
Net operating revenues grew 20
percent to P35 billion, year on year, as of end-September last year.
The GSIS has been an active
participant in the local-equities and bond markets.
Sales of stocks recorded gains of
P10.4 billion as of end-September 2007, from P756.3 million during
the same period of 2006. Among the blue-chip stocks that the GSIS
has divested itself of this year included those from San Miguel
Corp., Philippine Long Distance Telephone Co. and Ayala Corp.
The GSIS has started to explore
investment opportunities in the international front by awarding
mandates for its $1-billion Global Investment Program (GIP) to ING
Investment Management and Credit Agricole Asset Management
(Singapore) Ltd., while Citibank, NA was named as global custodian
of the funds.
The GSIS had used the proceeds
from selling its San Miguel shares in increasing its stake in
Meralco. By investing P9 billion, it raised its stake in Meralco 25
percent, from 8 percent, making it as one of the utility’s major
shareholders.
The Lopez Group’s First
Philippine Holdings Corp. has a 33-percent share in Meralco.
During a separate interview, an
official of the Social Security System (SSS) said it is shifting
investments to fixed-income securities as the private pension fund
is bringing down its loan portfolio.
It has a total of P242 billion in
investments in 2007 and has less than 3-percent equity share in
Meralco.
“We’re improving our
nonperforming assets by bringing down our portfolio in housing and
salary loans and shift to private securities,” Luz Genoroso, SSS
Loans Program assistant vice president, said. Such move, she added,
will assure returns.
--Euan Paulo C. Añonuevo And Maricel E. Burgonio
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