Meralco sale option open
Tuesday, November 28, 2006
By Alena Mae S. Flores
The Lopez group of companies said yesterday that divestment from Manila Electric Co., the biggest power distributor in the Philippines, remains an option if there are buyers willing to offer a good price.
Oscar Lopez, chairman of the Lopez group, told reporters during a forum sponsored by the Foreign Correspondents Association of the Philippines that his group was open to the possibility after unfavorable court decisions nearly ruined its finances.
“If the price is right, we will [divest our shares]. If there is a good offer, we will [sell],” Lopez said.
The Lopez family’s First Philippine Holdings Corp. and Union Fenosa of Spain jointly own 23 percent of Meralco through a joint venture. Union Fenosa individually owns 9 percent of Meralco.
The government controls about 25 percent of the utility, with the rest of the shares held by the public and other investors.
Lopez said Meralco had been severely affected by judicial issues, notably Supreme Court rulings. He cited a recent high court decision ordering Meralco to refund P30 billion to customers for alleged “excess charges,” which resulted in a huge drain to the company’s finances.
Union Fenosa in December last year expressed “strong disappointment” in its investment in Meralco and wanted to “sell out.” The Lopez group convinced its partner to stay put amid the financial challenges faced by Meralco.
Lopez said the group was also looking for a buyer for its telecom subsidiary, Bayan Telecommunications Inc.
He said Globe Telecom earlier looked at the prospect of buying the BayanTel but he declined to give details.
BayanTel incurred huge losses because of its mostly dollar-denominated loans that prompted it to file for corporate rehabilitation in 2003.
Lopez, meanwhile, said the high cost of electricity was driving away hundreds of foreign investors from the Philippines, leading to huge job losses and anemic economic growth.
He urged the government to slash taxes and royalties, and to plan well ahead for the needs of the next generation despite overcapacity that he said has plagued the sector since 1999.
Despite surplus generating capacity, the average industrial tariff in the Philippines is about double that of neighbors and foreign direct investment rivals Malaysia, Indonesia, Thailand and Vietnam, he said.
Lopez, also chief executive and chairman of Benpres Holdings Corp., said an outmoded royalties and tax regime kept power rates high and drives the industry toward imported energy supplies such as coal and oil. With AFP
posted by philpower @ 7:24 AM,
