GSIS-run Meralco, why not?

EDITORIAL

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05/11/2008

If Winston Garcia can have his way, in the same manner that he had his way in the Government Service Insurance System (GSIS), the thought of him taking over from the Lopezes in running the affairs at Meralco may not be all that unpalatable.

The power firm can benefit from the eagle-eyed investments that the GSIS gained, during Garcia’s watch.

He was able to sell GSIS shares in San Miguel Corp. (SMC) at a 10 percent premium, earning for the fund some P14 billion.

GSIS also raised P8.29 billion from the sale of its entire 12.4 percent interest in Equitable PCI Bank at a price of P92 each when the buyer Banco de Oro was offering nearly half the price.

The shrewd aggressiveness of Garcia was typified by his immediate offer to negotiate to buy out the Lopezes from the power firm the moment the family’s patriarch, Oscar Lopez, told media that the government can buy out the family since he was sick and tired of the business.

Garcia, upon hearing the exasperated cry of Lopez, said he was willing to sit down and discuss the terms of the buyout.

Garcia had built up his bragging rights over at the GSIS, the funds of which had reached unchartered heights since he took over.

When Rep. Roilo Golez suggested that the GSIS diversify from Meralco, Garcia was quick to open the GSIS wallet to show a list of vastly diversified investments, in which Meralco was but a small portion.

He flashed $5 billion in investible funds to Golez, which was obviously meant more to bedazzle the Lopezes.

Oscar Lopez made a mistake in putting what was likely a bluff on the table with Garcia intently watching.

Now Lopez is seemingly making an about face, rephrasing his exasperated tongue as saying he was sick and tired of Garcia and the government hounding Meralco and not of the business.

“I am sick and tired of being used as a convenient ploy to divert attention from other pressing problems of government,” was how Oscar Lopez deciphered what he said a day earlier, although he also said he stands by what he said, which was also tempered with a statement that this was his personal view.

Garcia obviously would badger Lopez about his earlier statement offering to sell out to the GSIS, which was why he tried to set up an early meeting with the Lopezes, to discuss terms and conditions.

The stockholders of Meralco and the public may rest easy if Garcia, in case of a GSIS takeover, would handle Meralco the way he put the state pension fund into a stream of liquidity.

The huge if is one that says only if Gloria would allow Garcia a free hand in Meralco which obviously will not be the case, as this will be yet be positions to be offered by Gloria for her transactional and patronage politics. There is a problem, however, will a GSIS-led Meralco be there to produce profits or a lowering of electric power prices? It can’t be both--especially if the systems losses will be carried by Meralco.

For a long time, Gloria has been salivating on a major catch that would constitute a jewel of a political reward for her and her cabal.

A few years ago, a similar attempt was made on SMC, in which Gloria through the Presidential Commission on Good Government (PCGG) made a lame attempt at wresting control of the management of the food firm from SMC chairman Eduardo Cojuangco. The attempt was soundly beaten at the vote, with stockholders not even willing to think about the PCGG taking over an already well-managed corporation that moreover switched from bleeding red to black.

Meralco is a different case, it is wide open for a takeover since it is perceived to be poorly managed.

The Lopezes said Meralco cannot make headway in the business because of overregulation, yet the company like the state firm National Power Corp. (Napocor) is a virtual monopoly in the electricity business.

Napocor is divesting and nearly 50 percent of power plants are in private hands.

The domination of Meralco in power distribution, at least in the most profitable areas of the country, however, seems to be unbounded until now.

It would be for stockholders of Meralco, however, to decide the fate of the company.

If ever GSIS takes over Meralco, one of the best legacy Garcia can leave is to break up the company and auction it off to remove its monopolistic control over power distribution.

That, if anything else, would pull down the astronomic costs of electricity in the country.

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