A pox on both houses!

FRONTLINE

Ninez Cacho-Olivares

05/12/2008

Quite frankly, taken in general terms, the Filipino people don’t care one way or another which party takes over the Manila Electric Co. management. No doubt, not even the small, individual shareholders of Meralco — those who play the stockmarket — truly care about the power play being waged by two different sets of boardroom players.

Stockmarket players in and out of the market are only interested in making a quick profit.

Shareholders, big and small, only care about profits. But power consumers, while not interested in either bloc in Meralco, just want a drastic drop in their electricity bills.

The question then is: Can a leadership change — by way of a new management and a new board, bring down drastically the power rates?

Malacañang and its allies are quick to claim that all they want is a lowering of electric rates, which is highly suspect, given the fact that all the poison is being fed to the Lopez group, while virtually absolving the National Power Corp. (Napocor) and glossing over the issue of high taxes and generation and distribution costs.

A joint probe is underway, with Palace allies bent on directing all attention on the system loss costs plus the Lopez-owned Independent Power Producers (IPPs) charges, along with the allegation that Meralco has been overcharging the consumers all these years by tens of billions, for which it hasn’t quite been treturned to consumers.

There is too, that threat from Gloria’s attack dog, Justice Secretary Raul Gonzalez, who says he is ready to slap Meralco with estafa raps, for its non-refund of electric meters that consumers are billed.

The Lopez-controlled management, for its part, lays all blame for the high consumer rates on the eVAT and the natural gas taxes, plus the high distribution and generating costs being charged by Napocor.

Meralco recently came out with a full page ad broadly hinting that the Lopez controlled board and management do not engage in the now infamous “tongpats” or overpricing, and that it is Napocor that does.

So why aren’t Malacañang and its allies in the House and the Senate zeroing in on this issue too? Why are the Lopezes the focal point of the probe? Neither one is generally seen as squeaky clean in their dealings with the public, which probably explains the difficulty of either bloc to generate massive support from the public.

But the question remains: Will whoever wins in this Meralco boardroom game be able to bring down dramatically the electric rates?

If it is the Lopez group that wins the game, by virtue of the proxy votes when the annual stockholders meet occurs, there will hardly be a change of management and from what can be gleaned from the Lopez management group, there can’t be a reduction in electric rates unless the eVAT and natural gas royalty tax are eliminated. As a matter of fact, Meralco is seeking an increase from the Energy Regulatory board, which will naturally raise the rates it passes on to the consumers.

If the government group, through proxy votes, takes on Meralco and creates a new board, along with a new management, how will this new management bring down the power rates, if these taxes and distribution and transmission costs remain?

Gloria and her aides have already stated that the eVAT is not going to be touched. Neither are they willing to do anything to stop the Napocor shenanigans. It is doubted that once government takes control of Meralco, which is likely to happen, if the government bloc in Meralco gets the votes and effects a management change, Malacañang is not going to suddenly cut off the eVAT and other costs.

So Malacañang and the government bloc in Meralco claim that the systems loss suffered by Meralco should not be passed on to the consumers, which really shouldn’t be done. But the reality is that if this is not done, then Meralco may start going into the red.

Red means a loss of profits, which means the government bloc, will be losing money on its investment.

But say the new management does as promised and rates are reduced. How long can this be maintained without Meralco losing money?

What is likely to happen is what happened in 2004 when Gloria, in a bid to earn media points and votes for her presidential candidacy, made Napocor drop its rates, but brought in high prices again with a vengeance as the debts grew bigger.

That’s what always happens when politics is in the picture.

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