Collateral damage

EDITORIAL

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05/08/2008

Gloria Arroyo and her aides deny that the government wants a takeover of the management of Manila Electric Co. (Meralco). What they want, or so they say, is a lowering of electric rates and that this can be done with a change of management.

But how in heaven’s name can there be a lowering of electric rates even with a change of management?

Say there is a new management to take control of Meralco. Is that new management now willing to do away with the so-called systems losses that Meralco charges consumers? Will a new management now start paying off what Arroyo aides say is the debt in the billions incurred by Meralco from consumers, through its overbilling?

It is fact Gloria is insisting that Meralco, through its current management, should not be granted the increase it seeks from the Energy Regulatory Board. Fine, all consumers want that. Chances are, with Gloria having spoken, the Energy Regulatory Commission will reject the Meralco petition. But for how long?

It is almost certain that, with a new board and government-appointed management through a takeover, Meralco will still have to again go to the ERC to seek a rate increase, and it is just as certain that the ERC, now facing a government’s management-controlled Meralco, will then be granted the rate increase it will be seeking. So what is likely to change, except new faces in the Meralco board and management, since basically, the higher electricity rates are, for the most part, attributable to higher oil prices, on which many of the country’s power generators are run, by virtue of then President Fidel Ramos freely purchasing sovereign guaranteed Independent Power Producers (IPP) like it was going out of style.

Meralco is basically a distributor and it is the National Power Corp. (Napocor) that has to lower the rates if the price of electricity is to go down drastically.

This was already resorted to by Gloria, during the 2004 polls, to win the votes, but at the cost of Napocor incurring an even bigger debt, for which the Filipinos have to now pay and in the many years to come.

It is probably accurate to state that Meralco has entered into some kind of a long-term IPP contract with the Lopez-owned IPPs, which government accuses Meralco of purchasing power at peak hours and pay higher rates to the Lopez-owned IPPs. But unless that contract is junked, which may prove to be a legal problem should it reach the courts, that contract continues, save perhaps that under a new management, Meralco will now be purchasing more fuel from other IPPs, or at the most, purchase this from the Lopez-owned IPPs but not at peak prices.

Still, this is hardly going to really bring the electric rates down considerably as the fundamental problem is still higher oil prices and the debt-ridden Napocor rates. Then too, what about all those taxes and fees that are constantly added up to the consumers’ electric bill? Will a new management, backed up by Gloria, do away with these taxes and fees?

With a new management, the rates may go down initially. And Gloria will again demand that Napocor bring down its rates even at the cost of incurring even more debts, but it is certain that given a little more time, the rates will again zoom.

Moreover, if transparency is the real issue, then there must also be a demand from Gloria for Napocor to be transparent. Everybody and his uncle know that Napocor executives have been raking it in and with it going to their private pockets. So why isn’t Gloria zeroing on this, to bring down the power rates?

As for transparency, what is the guarantee that Meralco under a new management, will be any more “transparent” with the stockholders as the Lopez board claims it is?

This is not to say that a new management should, or should not come about. That will have to be decided on only by the Meralco stockholders when its shareholders’ annual meeting is scheduled.

Right now, there is no one bloc of the big stockholders that has majority control of shares. If the Lopez group succeeds in getting the proxy votes of majority of stockholders, the Lopez group retains control. If it is the GSIS bloc that gets the proxy, then a new management and board will have to emerge. It is as simple as that.

But the presidential pressure is definitely on and Gloria’s target is the Lopez-controlled board and management.

If she can’t get the Lopezes out, there is still its IPPs, which she now says she will investigate.

But which IPPs will be exempt from the probe? The Impsa IPP and all the other IPPs contracted by Ramos, who made possible the very high electricity prices being suffered by the Filipino people?

The fight is between Gloria and the Lopezes, but the Filipinos will, as usual, become the collateral damage in that fight. They always are.

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