GSIS hits back at MBC


By  Michael Punongbayan
Saturday, June 7, 2008

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The Government Service Insurance System (GSIS) called on the Makati Business Club (MBC) yesterday to stop “parroting” the Lopez line that the government is out to take control of the Manila Electric Co. (Meralco).

Estrella Elamparo, GSIS chief legal counsel and spokeswoman, said the MBC should be objective and impartial in looking at allegations of mismanagement in the Lopez-controlled power firm.

“In fact, the MBC should be speaking against the excesses being committed by the Lopezes in Meralco,” she said.

“These excesses, like charging consumers Meralco’s own electric consumption and P30 billion of its income tax from 1994 to 2002, are what’s driving up the cost of power.”

Elamparo said while Meralco shareholders are not getting returns from their investment, other Lopez companies dealing with Meralco had been posting record-setting incomes.

“A case in point is the Lopez-owned IPP Sta. Rita, which Meralco paid P13 billion in a 12-month period from 2000 to 2001 for delivering just over P3-billion worth of electricity,” she said.

“The MBC should not be seen by the public as coddling the Lopezes, under which Meralco did not declare dividends for its shareholders from 1990 to 1997.”

Elamparo said the GSIS and other government financial institutions, which hold shareholdings of about 33 percent in Meralco, are campaigning to bring back good corporate governance and transparency to bring down power rates.

One reason why foreign investors think twice before putting money in the Philippines is that it has the second most expensive electricity rate in Asia, next only to Japan.

“The MBC knows fully well that their members’ cost of production increases due to the high cost of electricity, reducing the competitiveness of their products in the world market,” she said.

Elamparo said while consumers pay for power that Sta. Rita did not provide, the Lopez IPP was able to more than double its P8-billion capitalization in less than two years.

“Likewise, the global downward trend in stocks is also contributing to the downswing in the value of Meralco shares,” she said.

Elamparo said the GSIS is not out to take over Meralco, but only wants to have a professional team to run the company.

“Meralco will become attractive anew to investors when it is freed from the stranglehold of the Lopezes,” she said.

“This is because Meralco will be better managed and will be fully accountable based on international good corporate practices.”

Salonga defends Lopezes

Former Senate president Jovito Salonga defended yesterday the Lopezes from allegations that they were responsible for Meralco’s high electricity rates.

In a statement, Salonga said as legal adviser of President Diosdado Macapagal, he helped draft the congratulatory letter to Eugenio Lopez Sr. after his group acquired Meralco from its American owners, General Public Utilities in 1962.

“They are a family of nationalistic entrepreneurs, best known for their investments in public service companies such as power, telecommunications and tollways,” he said.

“But because these businesses are heavily regulated, the Lopezes are vulnerable to public scrutiny, and even severe criticism, from time to time. They have also been victims of repression.

“As a consumer of electricity myself, I would like to see lower electricity rates despite the global phenomenon of skyrocketing oil prices. This will be good for the economy. How to reduce it remains to be the bone of contention.”

Salonga said Meralco, being a publicly listed company, is regularly subjected to internal and external audits.

“I also understand the Lopez family is philanthropic and is very much into corporate social responsibility,” he said.

“It gives back to society part of what it earns from its public businesses, for example, in education, arts and culture, the environment, poor communities, disaster victims and even abused children.

“In light of these, I find it difficult to fathom the accusations leveled against Meralco and the Lopez family given the low credibility of some of its critics.”

Salonga said it was unfair for Meralco to receive the brunt of the blame for high electricity rates when the state-owned National Power Corp. had also been inefficient.

“I await government’s response to questions regarding Napocor’s buying practices and production inefficiency that, in sum, result in higher generation charges than Meralco’s independent power producers,” he said.

“Also, I want to hear from the government about the steps it has taken to address the issue concerning royalties and taxes it imposes on indigenous sources of energy like natural gas that renders such unnecessarily expensive.

“I believe Meralco is in no position to misrepresent its actuations because its books and operations are open to scrutiny.

“I understand that it is not only regulated by the ERC (Energy Regulatory Commission) but also by the BIR (Bureau of Internal Revenue), COA (Commission on Audit), SEC (Securities and Exchange Commission) and the PSE (Philippine Stock Exchange).” –With Iris Gonzales, Aurea Calica(PStar)

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