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Lopez meet okay, but GSIS bid non-negotiable, says Gloria

By Sherwin C. Olaes

05/18/2008

President Arroyo said she is willing to meet with a representative of the Lopez family for a likely truce over the trade of barbs between Malacañang and the family that controls power giant Manila Electric Co. (Meralco).

President Arroyo issued the feeler after Manuel Lopez made the suggestion on television but she gave advance notice that she will not intervene in the attempts of the Government Service Insurance System (GSIS) to wrest control of the power distributing firm against the family in the shareholders’ stock meeting on May 27.

The Palace made the statement after Lopez in a televised interview last Friday stood pat on not selling the Lopez-held shares equivalent to a 33.4-percent stake

in Meralco saying moves to sell it will have to be decided by the entire clan.

The GSIS along with other government agencies holds an equivalent 33 percent of Meralco, which depending on the proxy votes that the group led by the GSIS can muster in the May 27 stockholders meeting can lead to the ouster of the Lopezes in the Meralco management.

GSIS president Winston Garcia, however, said the equation is now 32 percent stake belonging to the Lopezes, while 35 percent is owned by various government agencies.

“If its just a question of trying to bring down power rates, we are with the government in wanting to bring down the power rates…we would like to explain our side. We are not hiding anything, contrary to what is being said that we are keeping some of our records confidential. Its not true at all,” Manuel Lopez said.

He added would like to explain this before the president in a meeting he wanted to arrange as soon as possible.

The meeting of Lopez and Mrs. Arroyo may happen during a Cabinet meeting in Panglao Island, Bohol that would focus on the electricity industry and possible government actions to bring down high power rates.

In a radio interview over dzRB, deputy presidential spokesman Anthony Golez said Mrs. Arroyo is open to dialogue with the Lopezes but he pointed out actions being taken by GSIS and other government agencies which hold stakes in Meralco to unseat the Lopez family out of the company’s management, will not be in the agenda.

“That matter between the GSIS and the Meralco is between them, but if the objective of the talk is about lowering down the rates, then the president very much welcomes a talk with the Lopezes,” he said.

“First of all, the main objective of the president is to bring down power rates for the benefit of our people. That is the number one objective of our president, now what ever their (Lopezes) intention in the proposed meeting with the president, we don’t know yet. But as I said before the president would not intervene in the GSIS’ affairs,” he said.

As both sides, GSIS and Meralco were racing to get the support of other shareholders in preparation for the May 27 stockholders meeting, the patriarch, Oscar Lopez had said the Lopez flagship company First Philippines Holdings Corp., which owns the family’s biggest exposure in Meralco is already soliciting support of other shareholders to stop the GSIS campaign to take over the management of the power firm.

GSIS is reportedly is moving on its own to acquire proxy votes. “Both sides are getting proxies,” Lopez said in reference to Garcia’s alleged actions luring other shareholders to add up their numbers and effect leadership change. Francis Giles Puno, FPHC. senior vice-president and treasurer, said the Lopezes are confident of stockholders’ support.

“The support is expected because there is still that notion that private companies like us are more efficient than government entities in running businesses,” he said in an interview.

Garcia had said the government was merely trying to “solidify the government bloc. “We just want to solidify the block so we can have a stronger voice in Meralco,” he said in a phone interview.

The GSIS owns 25 percent of Meralco, and another 10 percent belongs to other state firms. The Lopez family holds 32 percent.

Meralco is being blamed by critics for high power rates and has been accused of charging fees it was not supposed to have collected from customers. But Energy Regulatory Commission Executive Director Francis Juan said Meralco’s charges are aboveboard. “All their rates were approved by the ERC,” he added. Meralco is the country’s largest power distributor, with a franchise area of 9,337 square kilometers in 25 cities and 86 municipalities as of 2007.

Camarines Sur Rep.Luis Villafuerte, meanwhile, brought out new evidence over his allegations that Meralco included in electricity bills some P12.9 billion worth of unused power under a deal between Meralco and its affiliate First Gas, which owns power plants running on natural gas supplied from the Malampaya field.

“Documents don’t lie. Especially if they are filed before the Securities and Exchange Commission and the Energy Regulatory Commission and are official records of Meralco and First Gas. And no amount of misleading print advertisements can alter the truth of Meralco and First Gas’ shenanigans that cost consumers P12.9 billion in pass on charge, Villafuerte said in a press statement.

Villafuerte accused Meralco in his privilege speech last Wednesday of paying First Gas Php 12.99 Billion from Dec 2000 to Nov 2001 without delivery of electricity to Meralco.

Villafuerte said he will confront Meralco and First Gas with documentary evidence once the officials of Meralco and First Gas are called to testify under oath in the congressional hearings next week.

In support of his accusations, Villafuerte cited the following :

* The contract that First Gas made with Siemens is to install a 1000 megawatts (MW) capacity in natural gas divided into two blocks of 500 mw each. In the year 2000, the first block of 500 mw was installed but the generated output was only roughly 300 MW but Meralco paid for 1000 MW, which is in excess by 700 MW of the deliverable capacity of First Gas in 2001. In 2001, even if it is assumed that Siemens had installed the second block of 500 mw to complete the 1000 mw contracted for, First Gas, due to some technical problems, shut down the plant and therefore there was NO power that could be delivered at all to Meralco. Whatever power that Meralco received was sourced not from First Gas during that period but Meralco nevertheless paid first Gas the equivalent of 1000 mw of electric power which I described as payment for ghost deliveries. Clearly, this is zero delivery from First Gas to Meralco and therefore non-existent power paid for by Meralco to First Gas.

* Meralco is misleading the public when it said in its full page ad that 1000 mw was always available since August 2000 when documents submitted by First Gas to the Securities and Exchange Commission stated that on September 2000, Firsty Gas accepted from Siemens only the completion of one block of 500 mw therefore belying Meralco’s claim that as August 2000, 1000 mw was already available.

* Meralco also aggravated its deception by using such phrases in the ad as “available capacity” without clearly clarifying that that capacity is less than 1000 mw and the output of what was then available was only less than 300 mw.

As I accused Meralco in my privilege speech, I said in the year 2000, Meralco paid First Gas from August to December the equivalent of 1000 mw when First Gas never delivered such total mw power to Meralco.

But the ad peddled the big lie which from Meralco’s own documents showed payment to First Gas without delivery of the full 1000 mw for that year, Villafuerte said.

* In 2001, even as First gas had installed capacity of only 500 mw, First Gas

Shut down the plant because of technical problems and could not deliver any single kilowatt hour to Meralco.

But again, Meralco paid First Gas for zero power that was never delivered from December 2000 to November 2001.

In fact Gas corporate records show that as of October 2001 they just started testing and commissioning their plants on natural gas.

He said ther deliberate falsehoods that Meralco purveys to innocent consumers included Meralco admitting that it could not dispatch the electricity to Meralco by making state firm National Power Corp. (Napocor) the scapegoat on the excuse that the transmission lines were not available.

Therefore, even if for the sake of argument that First Gas has deliverable capacity of 1000 mw which in truth and in fact they did not dispatch the full capacity required.

But again, there was also an admission that from December 2000 to November 2001, or a period of twelve months, First Gas was paid, according to Meralco’s own admission, Php 9.58 B for capacity fees and fixed operation and maintenance fees, and Php 3.34 billion for fuel, taxes and other vartiable charges or a total amount of Php 12.9 Billion for power that First Gas did not deliver since the provider of such power that was actually delivered and received by Meralco is from other sources and NOT from First Gas.

“This is scandalous because the power came from Napocor which Meralco bought at an average price P3.50 per kwh compared to the payment that Meralco paid to First Gas for undelivered power of an average P5 per kwh,” he said.

Still another despicable lie of Meralco is the frivolous excuse that it is not only Meralco that pays for power that is not delivered because other power plants have what is called a “take or pay” provision, he said.

But what Meralco conveniently omits to mislead the consumers, is that under “a take or pay provision”, the public utility distributor must pay the generating company if they have demonstrated capacity to deliver but if the distribution company does not want to take such delivery it must therefore nevertheless pay, he added.