GSIS members hurt as Meralco shares fall
SHARES DROP: It is ironic that the attack on the Manila Electric Co. (Meralco) management by the boss of the Government Service Insurance System, a major stockholder, has reaped paper losses for the GSIS itself and other Meralco owners.
The GSIS-led and government-sanctioned attack against the power firm has unsettled not only consumers but also foreign businessmen now jittery over ever-changing investment policies.
The market was disturbed by reports that the GSIS attack on Meralco has caused its shares to dive from P80 to just P60 in one month — or a whopping P4.5 billion (20 percent) loss.
Government workers who contributed to the insurance and pension system may want to ask President Gloria Arroyo and GSIS president and general manager Winston Garcia how they propose to recover the losses.
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FOREIGN CHAMBERS: Unable to hold back, the influential Joint Foreign Chambers (JFC) of the Philippines joined the chorus of big business in criticizing the government campaign to capture Meralco management using the GSIS as battering ram.
Malacanang has used as an excuse for attacking the Lopez management of Meralco the avowed desire of President Arroyo to lower electricity rates, as if the Lopezes were the sole culprit for bloated rates.
In a letter to the President last May 27, the JFC said: “Many of the unwarranted accusations being raised by legislators and GoCs appear to be questioning bedrock principles that are sound and, in fact, practiced by many progressive power industries around the world.”
The JFC suggested to Ms Arroyo to implement instead the Electric Power Industry Reform Act (EPIRA), which it said would result in lower electricity rates.
The letter was signed by Rick Santos, president, American Chamber of Commerce of the Philippines Inc.; Richard Barclay, president, Australian-New Zealand Chamber of Commerce (Phils.) Inc.; Stewart Hall, president, Canadian Chamber of Commerce of the Phils. Inc.; Hubert d’Aboville, president, European Chamber of Commerce of the Phils. Inc.; Toshifumi Inami, president, Japanese Chamber of Commerce & Industry of the Phils. Inc.; Jae J. Jang, president, Korean Chamber of Commerce of the Phil. Inc.; and Shameem Qurashi, president, Philippine Association of Multinational Companies Regional Headquarters Inc.
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SENATE REACTS: But some senators rejected what they said was the meddling of foreigners in local politics.
In a privilege speech, Sen. Juan Ponce-Enrile said foreign investors, whom he called “carpetbaggers, predators, and buccaneers,” have no right to intervene in the country’s political process.
“To them, I say, the hell with you, get out of this country,” he said. “If you want to do business under the system with us, to those who are lecturing to us, enough is enough. It is not right for foreigners to be meddling in our affairs, meddling in the workings of government, duties of duly elected representatives of the people.”
Senate President Manuel Villar Jr. said he would call a caucus to thresh out issues regarding EPIRA amendments that had been on the plenary level but derailed after senators who had reserved time to interpellate did not show up.
Sen. Miriam Defensor-Santiago, co-chair of the Joint Congressional Power Commission, said JFC officials would be invited to the Powercom hearing on Friday. As chair of the Senate energy committee, she has delegated to Enrile the bill amending EPIRA.
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DAMPENER: The JFC said that amending EPIRA would dampen the confidence of foreign and local investors and even drive them away at a time when power shortages already plague the Visayas and are expected on Luzon in the next three years.
The JFC said amending EPIRA would result in a highly unstable legal framework for the industry and investors. It added: “We appeal to the Executive and Legislative branches to instead focus on implementing EPIRA in a timely fashion.”
Yet the foreign chambers remained upbeat, noting that the initially slow Napocor privatization has picked up, as three of the five conditions required to begin retail competition and open access have been met.
The remaining two provisions require government to privatize at least 70 percent of Napocor’s assets as well as 70 percent of Napocor-IPP contracts. The administration expects these two conditions could be met by the fourth quarter of 2008.
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COMPETITION: The JFC supported organizations, including the Semi-conductors and Electronics Industry of the Philippines Inc. (the biggest electricity consumer group), in batting for the early and open access for customers with at least one megawatt consumption.
The proposal should jumpstart competition among power generators that are within the mandated cap of EPIRA. End-users with at least 1-mw consumption would be allowed to choose their electricity suppliers, encouraging competition.
This action, according to JFC, will not contradict the spirit of EPIRA. It said this “will bring us closer to the power reforms’ primary objective of providing a truly transparent, competitive and vibrant electricity industry market.”
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OPEN ACCESS: Meanwhile, Ernesto B. Pantangco, president of the Philippine Independent Power Producers Association (PIPPA), volunteered his group to file the petition for interim open access before the Energy Regulatory Commission.
“This will level the playing field and ensure that there is no dominant player that can exercise undue advantage,” he said.
He raised the same point in a brief presentation before President Arroyo during the recent Cabinet meeting on Panglao island, Bohol. He focused on the need to lower electricity rates through interim open access, which the President reportedly endorsed.