Joker cautions govt on Meralco takeover bid
Sunday, December 03, 2006
Manila Standard Today Online
Senator Joker Arroyo urged the government to take “cautious steps” in the effort to entice a giant Chinese power company to “control and manage” Manila Electric Co., the country’s largest power distribution utility.
In a radio interview over DWIZ, Arroyo called attention to the constitutional restriction on foreign ownership of public utilities.
Arroyo was reacting to recent reports that some advisers of President Gloria Macapagal Arroyo had urged China Light and Power “to buy equity in Meralco and eventually take over the management of the utility.”
The company supplies China with 4,080 megawatts of electricity. The invitation was made during Mrs. Arroyo’s visit to China last month.
China Light also operates a 1,900-mw nuclear power plant in the Guandong area.
The senator said there had been plans by the government to sell its stake in Meralco since the administration of former Presidents Corazon Aquino, Fidel Ramos and Joseph Estrada. The sell-off plan, however, had been unsuccessful, he said.
Arroyo said an amendment to the Constitution might be required before the government could succeed in its bid to hand over control of Meralco to the Chinese power firm.
Arroyo also expressed doubt if the takeover scheme was feasible. He said the government could only dispose of a total of 15 percent stake in Meralco.
Several sectors earlier expressed concern that a government handover to the Chinese company would have an adverse effect on power distribution rates. Observers noted that the current distribution rates “may be at artificially low levels and could be unacceptable to foreign investors.”
Foreign entities that plan to undertake due diligence on a prospective Meralco entry will likely seek an upward power rate adjustment to ensure viability and profitability on their investments.
posted by philpower @ 6:39 PM,
