GOTCHA By Jarius Bondoc, The Philippine Star, Monday, May 12, 2008
Malacañang has turned around on its old stand. In a move that could bankrupt RP’s biggest electric distributor, it is now opposing a P55-bilion write-off of Meralco’s debts to state-owned Napocor.
The admin’s new stand formally was manifested Thursday by Solicitor General Agnes Devanadera at the Energy Regulatory Commission. Invoking public interest, the government lawyer asked ERC to trash a July 2003 settlement that frees Meralco of a P27-billion obligation to Napocor and collect instead from consumers.
If ERC accedes, Meralco would have to pay Napocor not only the P27-billion principal but also P28 billion in interest and surcharge, for a total of P55 billion. The power firm grossed P150 billion last year. But a Napocor source admits that squeezing Meralco of the P55 billion might sink it to insolvency.
Ironically the government also owns stakes in Meralco, through Land Bank. With state-run provident funds GSIS, SSS, Philhealth and Pag-IBIG, it holds 33-percent shares. The Lopez clan controls operations with 33.4 percent.
GSIS chief Winston Garcia, representing the government bloc in the Meralco board, has been seeking transparency from the Lopezes. His men said last week that Lopez-owned power producers have been charging Meralco up to P150 billion a year for generated electricity. Malacañang alternately has been distancing itself from and avidly backing Garcia’s demand for open books.
Devanadera’s unexpected intervention to collect the P55 billion is viewed as Malacañang’s way of strengthening Garcia’s position. A Palace source said that Commission on Higher Education head Romulo Neri, once economic planning secretary, has been advising President Gloria Arroyo on moves against the Lopezes. Devanadera’s opposition to the Napocor-Meralco settlement supposedly was made on Neri’s prodding.
The Napocor-Meralco settlement came after a two year-dispute starting 2002. That year Meralco unilaterally rescinded its 10-year contract to buy a minimum amount of electricity from Napocor from 1995 to 2004. Napocor cried bad faith. Consumerists said Meralco reneged because in 2002 and 2003 it began buying electricity from new plants owned by the Lopezes — Sta. Rita and
At first Napocor insisted that Meralco pay just the same P37.4 billion in electricity it had committed but failed to buy in the last three years, 2002 to 2004. Meralco counterclaimed that the unconsumed electricity amounted to only P27.5 billion. It also asked that Napocor recompense it P5.9 billion for delays in setting up transmission lines to the new Lopez plants. Plus, it demanded another P1.6 billion in income lost when Napocor directly connected factories that should have been Meralco customers in its franchise area.
Napocor and Meralco both wanted to avoid costly court proceedings. In 2003 the parties tapped two negotiators, former justice secretary Sedfrey Ordoñez and Antonio del Rosario. Three major points were made:
• Meralco would pay Napocor only P27.5 billion in unused power, but minus the P7.5 billion in Napocor’s transmission delays and direct connections;
• Meralco is to pay the net of P20 billion over five years; and
• Meralco is to collect the P20 billion from its customers, so Napocor must join it in petitioning ERC for a rate hike.
Napocor and Meralco filed the joint petition in March 2004. The National Association of Electric Consumers for Reforms (Nasecore) and Freedom from Debt Coalition opposed them.
Nasecore head Pete Ilagan said that the rate hike, if granted, would burden Meralco’s four million customers with additional 21 centavos per kilowatt-hour over five years. Napocor under the ten-year supply contract was under no obligation from Meralco to connect the Sta. Rita and
A high Napocor source placed Meralco’s debt at P55.13 billion, including P13.8 billion in interest and P4 billion in foregone transmission revenues.
Apart from a few hearings, ERC has not acted on the Napocor-Meralco petition since 2004. But things started to speed up upon Devanadera’s intervention on May 8. A hearing immediately was set for tomorrow afternoon.
Devanadera stated four reasons for opposing the settlement:
(1) Napocor did not submit it for review by the Office of the Solicitor General. She cited the laws that created the OSG, which represents the legal interests of the government and citizens, and Napocor, which must let the OSG handle its litigations.
(2) The Napocor board overstepped its authority in waiving claims, in prejudice of government interest. She said the board (which incidentally included Neri at the time) had no authority to grant a compromise.
(3) The provision to pass on the Meralco debt to consumers is “contrary to law, morals, public interest, and public policy.” (There was no recommendation for criminal prosecution, however.)
(4) The settlement is “grossly disadvantageous and prejudicial to the government.” (This is one of the legal definitions of graft, but no charges were recommended against any Napocor director, who are mostly Cabinet members.
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