Meralco reviewing anew refund mode for industry
Thursday, December 09, 2004
By JENNEE GRACE U. RUBRICO, Senior Reporter
Lopez-controlled distribution utility Manila Electric Co. (Meralco) is looking at other ways of servicing the refund for its big clients in line with the Energy Regulatory Commission's (ERC) directive to make the costs for the fourth phase of the refund manageable.
Rosario Torres, Meralco refund management task force project manager, told BusinessWorld the utility is evaluating the feasibility of servicing the fourth phase of the refund through the use of debt instruments other than the refund notes it had proposed.
Under the earlier proposal, Meralco wanted to service the refund for its large industrial and commercial clients through the issuance of refund notes, which are zero coupon notes which clients could either hold until their maturity or sell at the secondary market for prices lower than their actual value.
The refund notes were supposed to have a five-year maturity.
"We're evaluating other options with features which are similar to the refund notes. We are looking for debt instruments which will give the clients liquidity," Ms. Torres said.
She declined to say what kind of debt instruments Meralco is evaluating, saying only that financial institutions have submitted several proposals, which the distribution utility is now studying.
She said the instrument will still be liquid and will still be non-interest bearing.
Asked if Meralco is again considering the possibility of issuing shares of stock to big clients, Ms. Torres said the option has already been discarded.
"Stocks are not debt instruments. It doesn't fall under cash or credit to future bills, which was the criteria of the Supreme Court ruling for the refund," she said.
Ms. Torres said Meralco was compelled to look at other options for servicing the refund for large customers because the ERC required the firm to make sure the instrument would not be costly.
"Cost is a major consideration here. The ERC itself said that we have to make sure that the costs are managed," Ms. Torres said.
It was earlier reported that if Meralco pushes through with the fourth phase of the refund through the issuance of the refund notes, it may be required to register the debt instruments with the Securities and Exchange Commission. Should it be required to register the debt instruments, Meralco will have to pay a registration fee with the regulator which will be computed based on the amount of the refund it will service through the notes.
Ms. Torres said Meralco is still doing the computations for the costs of issuing refund notes, as well as for the costs of servicing the refund through other kinds of debt instruments. The computation, she said, will be submitted to the ERC.
"They are asking for a quotation on how much would be spent for doing the refund notes and for the other options hopefully, before yearend we will be able to submit it," she said.
Ms. Torres said the possible change in the refund scheme for the large customers will not affect the timetable of the firm for servicing the refund.
"We are still on track. The refund for the large industrial and commercial customers is scheduled for July. If we submit the requirements to the ERC before yearend, we will still be on target," she said.
She said the first part of the refund for phase four customers will be implemented in January. The first part of the fourth phase of the refund will be for small industrial and commercial customers.
The fourth phase of the refund is part of a PhP30-billion repayment ordered by the Supreme Court after it barred the utility from including income taxes in operating costs which are in turn passed on to consumers.
The Supreme Court ordered the firm to return overcharges from 1994 to 2003.
Meralco has completed phase one and two of the refund, which covered residential customers that used up to 300 kilowatt-hours based on their April 2003 billing.
It is now servicing the third phase, which covers residential customers using more than 300 kilowatt-hours based on their April 2003 billing.
The third phase, which is scheduled to be completed by yearend, is expected to cost the firm PhP4.5 billion.
The fourth phase of the refund is expected to cost P20 billion.
Ms. Torres said as of Nov. 30, Meralco had serviced P10.5 billion worth of refunds, covering 96.5% of its client base
posted by philpower @ 3:09 PM,
