Meralco past, present, and future

You can catch yesterday’s episode of The Explainer over at YouTube. Something went wrong with the equipment so we had to deviate from the usual format. The original script will eventually appear on The Explainer blog.’s caption for the photo at left: A new witness provides this picture of President Gloria Macapagal-Arroyo and her husband Jose Miguel “Mike” Arroyo that he says was taken during a golf game at the Shenzhen Golf Club in Shenzhen, China on Nov. 2, 2006 followed by lunch with ZTE officials at the ZTE headquarters.

Old witness, now under oath: Lozada tells court Mike Defensor asked him to deny NBN scam . New witness, not yet under oath, but armed with a picture: New NBN-ZTE witness surfaces: Says Arroyo visited ZTE execs at headquarters. Same-same official response: Palace dares witness: So sue Arroyo in court.

Yesterday, I linked to two pre-martial law articles concerning Meralco that appeared in the Philippines Free Press (see Malacañang vs. Meralco and Political War and Martial Law? both circa 1971). This then brought up the question of the Marcos takeover of Meralco and the subsequent nullification of that takeover after the Edsa Revolution.

Senator Juan Ponce Enrile made fighting Meralco his campaign platform, and his latest broadside (see ‘Govt still owns Meralco’: Sen. Enrile says government can retake company) should be viewed in that context (as well as a residual loyalty to the propaganda justifying martial law and the conduct of the Marcos administration). It’s worth noting that Oscar Lopez published a full-page open letter addressed to the President in the papers today (see Lift taxes to lower power rates, Lopez tells Arroyo ). Previously, Lopez and Enrile exchanged open letters, although the Lopez one is no longer available on line.

Enrile’s assertion that the government can claim ownership of Meralco is distilled in an open letter dated October 4, 2002 and he provides links to supporting documents in an earlier open letter dated September 25, 2002. Of interest, as well, is a link to G.R. No. 95197. September 30, 1991, the Supreme Court’s decision to uphold the PCGG’s decision to lift its sequestration of Meralco shares, which I assume ratified the resumption of Lopez control over Meralco: and points to the ownership question having been determined in court.

What’s interesting is how, as Manuel Buencamino puts it, the government’s having a hard time mobilizing public support for what should be a cut-and-dried consumer interest case:

The Lopezes should have been an easy mark for a corrupt administration that is trying to look like it cares for the welfare of the masses. Unfortunately, the administration went into overkill. I guess Mrs. Arroyo didn’t think Winston Garcia could do it on his own, so she marshaled all her forces against the Lopezes. She even went to the extent of asking businessmen and the masses for help. Now, the Lopezes are underdogs.

Imagine that. One of the wealthiest, most powerful families in this class-warfare conscious society of ours has the sympathy of the public. Only the geniuses of Malacañang could have pulled off such a stunt.

Now, a public that has bitched but paid electric bills it never understood is learning that Manila Electric Co.’s (Meralco) portion of the bill is only for distribution of power. The bulk of the bill it pays goes to power generators like National Power Corp., transmission companies like you-know-whose, as well as value-added tax. So now, the public wants to know, why pick on Meralco when it’s the government that’s bleeding the public dry?

In Monday’s joint congressional committee hearing on the high cost of electricity, no one could give a straight answer to the question why electricity is so expensive and what can be done to bring down its cost.

Bong Austero bewails everyone’s inability to just get along and laments Congress getting into the act, and says a more problem-solving attitude behooves everyone concerned:

It doesn’t help, of course, that government has also been unclear about what its real agenda is – what it really wants and how, or up to what extent, it is willing to go to get what it wants on the issue around electricity rates. To complicate things further, people in government continue to sing in discordant voices. Is this really simply about lowering electricity rates, or is there more than meets the eye? Is a takeover of Meralco part of the plan? Is GSIS really acting on its own accord, or is the government behind the saber rattling? No one knows because no one is giving straight answers, which leads many people to suspect that it’s all a bluff.

It is also very tempting to picture Meralco as the proverbial big bad (greedy) wolf in this whole scheme of things. It is a profitable business enterprise, although, to be frank about it, not as profitable as it should be given its assets. It also happens to be one of the leaders in the industry in terms of compensation and benefits –  Meralco is renowned for having the lowest employee turnover rates in the country as hardly anyone resigns from the power firm because of its long history as a good provider for its employees.

But is Meralco passing on charges to its consumers in violation of legal and ethical rules? This is a valid question that Meralco refuses to answer in a straightforward manner. Meralco is preventing GSIS, which, together with other government agencies, owns 33 percent of the firm from taking a look at its books.

The truth is that Meralco has a lot of explaining to do to its stakeholders. It is benefiting from the generally low credibility of this administration, but there is a limit to how much it can shield itself by conjuring legal gobbledygook. At the end of the day, Meralco is answerable to consumers as a public corporation that thrives on its image as a responsible corporate citizen. It must aspire to be honorable even if others are not; even if the government is not.

All this talk about a takeover is really smoke-and-mirrors. Anyone out there who thinks a takeover is a viable option must be extremely naïve. The Lopezes may be sick and tired of all the regulatory restrictions that come with managing a public utility company, but aside from the fact that Meralco is a crown jewel in the family business empire, it also happens to be a firm that is closely tied in to the family’s history and legacy. Meralco is not just a business venture for the Lopezes. And anyone who thinks that the government can successfully conduct a corporate raid at a time when people – particularly businessmen – are edgy is out of his mind. It’s not going to happen.

So let’s keep the discussion focused on what is real, doable and relevant: Keeping electricity rates down. It’s an issue that is valid and which requires effective responses – both short-term and long-term.

I haven’t seen the hearings although one colleague ventured the opinion that it was a relief to see the Senators being relatively sober and buckling down to work for a change -and how the handling by Rep. Mikey Arroyo of his committee was not exactly inspiring. My colleague said that Meralco was tripped up by the revelation that it passes on its own electricity costs (i.e., the power consumption of Meralco as a corporation) to consumers; but that the larger revelation was that at every step of the generation and transmission process, the government keeps stepping and levying taxes, which bloats consumers’ bills.

For additional information, The Business Mirror‘s published 10 reasons why electricity bills are high, a primer prepared by the Freedom from Debt Coalition. Basically, companies that generate power and distribute it are in a cozy relationship, thanks to Ramos-era emergency legislation, but the result is this:

We pay for capacity we don’t use, and this is such a heavy burden on consumers that we economize on our use of electricity even further. However, the less we consume of electricity, the more we have to pay of unused capacity. This is a vicious cycle similar to a debt trap. Industries cannot survive such a setup. Poor consumers, even less so.

A vicious cycle indeed!

As At Midfield points out, what’s pissed off the public most, is having to pay for electricity they don’t consume.

In other news, the Inquirer editorial looks at the President and Esperon in Reward and punishment.

Overseas, in A Drastic Remedy Anne Applebaum lays out the case for international intervention in Burma. And in Dynasties gone nasty , Dan Kennedy (no relation to the subjects of his piece) looks at the parting of ways between the Kennedys and the Clintons.

Blogger-turned MP Jeff Ooi points to lobbying, Malaysian-style, in The Lobby Lobbyists.

Hans Kung, the noted theologian, asks whether lying should be considered an integral part of politics in The truth, the whole truth and nothing but the truth. Arianna Huffington engages in Probing a Political Paradox: Why the Discredited Right Still Sets the Agenda and Dominates the Debate.

In the blogopshere, James Fallows on Earthquake accounts from foreigners in Chengdu. See Slate’s Disaster in China for a roundup of how the online world came to grips with the news. RConversation appeals to bloggers to donate to earthquake relief and discusses her sources of online information on the China quake. And since 5.3 magnitude quake jolts Isabela , it’s time to review Philippines Earthquake Information. looks at the proliferation of rice varieties in Thailand: aside from their advances in rice varieties, the manner in which Thai agriculture’s advanced by leaps and bounds points to the lack of innovation and imagination here at home, where coconut milk we buy locally comes from Thailand (which also edged us out in the case of products such as tamarinds, jackfruits, and a non-stinky variety of

Manuel L. Quezon III.

59 thoughts on “Meralco past, present, and future

  1. The most interesting point in this “MERALCO issue” is the revelation of truth on what’s behind the electric bill. There is no excuse, Meralco are liable for all things it did to its consumer. Meralco must not just pass-on their problems to the public. Garcia has the point in bringing this issue.

  2. Who controls the chepest source of energy in running generation plants.

    The Lopez family – they have bought up hydro plants, the geothermal plants and own natural gas fired power plants. Once NAPOCOR is fully privatized then they will probably become a fully integrated generation and distribution company and have a big stick to wield versus Transco since they will be the largest user of Transco. The transmissions costs will drop.

    Plus they own the largest distribution company in the country. They would love to get permission to build a nuclear plant. You can’t do that without state support. Do they have long term aspirations? Not likely….

    Their private equity groups will be making dividends for them into the next generation. First Philippine Holdings, Benpres etc. Their foreign strategic partners are rock solid.
    Who is snapping at their heels? Who owns Transco?

    They will probably sell out to foreign interests if and when the constitution is amended to allow foreign ownership of these industries whole and solely.

    To make a market valuation of their net asset valuations into the future would be complicated as the cross ownership issues have to be brought out but with a private deal it would be all secret anyway.

    Garcia of GSIS can cry wolf all he wants but the Lopez family have big allies in foreign governments to back them up.

    When one talks of market systems to promote efficiency it should come with state interventionist philosophy in a national exchange rate policy, fiscal policy that encourages savings, competition policy and a bankruptcy policy in case of market failure.

    But that would presuppose a mature political environment with policies of inclusive economic development and not exclusive. Damned this thing called governance keeps coming back into the picture.

    The difference with private selfish interests is they will plan for the future.

    For the public sector here in the Philippines it about elections and planning for it to make money. For the crooks it is always about short term horizons.

    Thomson Financial
    First Posted 10:48:00 05/14/2008

    “MANILA, Philippines — Power producer First Gen Corp. said its net profit in the first quarter dropped 52 percent as a hefty rise in revenue was offset by expenses related to its purchase of a controlling stake in geothermal power producer PNOC-Energy Development Corp. (PNOC-EDC).”

    You gotta hand it to these Lopez boys. They don’t need to play golf with the Chinese. Please note that the minority partners in Transco (40%) are the Chinese government.

    While most of the startegic partners of the lopez boys are the Brits, Americans and the Europeans.

    Talaga the proxy economic war retold.

  3. “About the new witness? I’m sick and tired of that. Political circus is no longer funny.”

    OK. We can rest. And the circus is not funny, actually.
    But come to think of it, can we sustain that kind of attitude.
    I noticed that those who are calling on the public to ignore the Senate ZTE “circus” are immensely enjoying the ongoing Senate “Meralco” issue.
    Selective ba talaga ang labanan sa Pilipinas. Saan kaya tayo pupulutin.
    People, let’s have at least unanimity in treating the shenananigans in our society. Hindi yung pag kakampi ok.

  4. Hay naku Manong Enrile, surely the state also OWNS the ill-gotten wealth of your company…pare-pareho lang naman…

  5. Enrile is obviously jumping on the hate-Meralco bandwagon.


    And the Pinoy, true to form, will not have the brain bandwidth to see through this quaint stunt.

    Kawawang Pinoy. Always the victim of clever marketing. 😀

  6. There should be an investigation as to the real ownership of Meralco. It is wrong to say that because it is Enrile talking, there is nothing to it or because it was Marcos, it must have been through coercion. Nothing of that sort will make things clearer. If the sale was indeed coerced, well and good for Meralco. Otherwise, we’re being screwed and that is bad because it would mean that that which should go to the national coffers is enriching some private individuals.

  7. The fact remains that only the Lopez side about Meralco’s supposed “extortion” was taken into account by the Aquino administration when it handed Meralco to the Lopezes for free.

    This is not to say that the Lopezes could not claim Meralco back. But under more transparent circumstances, the Lopezes would have had to make their case in court to prove that there actually was extortion. But it seems that there is no evidence of extortion (nothing declared in a court of law). And, from what the Manila Times article says, Joker Arroyo, who was then Executive Secretary, says that the transfer of Meralco to the Lopezes was “done verbally”. “There was no documentation on the return of Meralco to the Lopezes, with the administration simply swallowing, hook, line and sinker, the Lopez story that Meralco “was yielded under duress”.

    There are always two or more sides to a story. The Lopezes can make their case, but evidence has to be presented. Nothing was presented. And these were extremely strategic enterprises that were given to them on a silver platter. Was this a reward for supporting and bankrolling politicians opposed to Marcos? Is this a glaring example of the spoils system among politicians? It certainly looks like it unless the Lopezes can prove otherwise in a lawful and transparent manner. And the fact that this magnificent conveyance was executed with indecent haste, makes it even more suspect.

    Mr. Quezon tries to make the case that the Lopezes would have been tied up in court had the Aquino administration not acted like a thief in the night to hastily bestow Meralco and ABS-CBN to the Lopezes. Well, if that is what transparency entails, so be it. Why is Mr. Quezon so concerned about the welfare of the Lopezes? Is he beholden to them? Are they fellow travelers in his privileged class?

  8. Finger pointing! Garcia disturbed the beehive. The bandwagon now points at the owners and officers as the culprit. What did Garcia do as an officer of MERALCO in the first place? Or he never bothered. Omission, perhaps.

  9. jude, review the two links above. it is of interest because the assertion was made that no review or scrutiny of the return of control took place. apparently, that claim is false. there’s a supreme court decision. pascual argues its one of several cases, and that furthermore, it’s misleading to assert, as has been asserted, that the return of control was accomplished with subterfuge and on a whim. apparently, also a false assertion. all of us were operating on false assumptions -that the return of control was done arbitrarily, and without subsequent review.

    that being said, i still think arbitrarily restoring their assets would have been justified, and that a wholesale return of assets for parties dispossed during martial law was called for. at stake is the principle of private property which is of interest to anyone who believes in the concept that private property confers certain rights on the owner.

  10. “You gotta hand it to these Lopez boys. They don’t need to play golf with the Chinese. Please note that the minority partners in Transco (40%) are the Chinese government.

    While most of the startegic partners of the lopez boys are the Brits, Americans and the Europeans.

    Talaga the proxy economic war retold.”

    60-40 foreign/local ownership ratio
    we don’t need charter change to go around that , the anti-dummy law is just for show.

    proxy wars indeed, when two forces use dummies, i mean third parties to fight their wars.

    I reconfigure my stand, that it is Razon who has Transco and Psalm on the palm of his hand.

  11. Good for you and your kind, Mr. Quezon. There were many thousands killed in the mountains and in the streets who were never given any kind of restitution. But they never sought that because, for them and their families, they didn’t fight the dictatorship for financial benefit or restitution. The struggle was its own reward, unlike the oligarchs who colluded with one another to divide the spoils. That is why it will be very difficult to find a credible alternative to any government while the ruling classes keep sticking their fingers into the pie. Any struggle becomes a farce because it’s simply a game of musical chairs.

  12. jude, are you arguing those who filed the cases for the marcos wealth to be divvied up among victims of human rights violations, are doing so not because they fought the good fight?

  13. That is nothing compared to what the Lopezes were rewarded. And that so-called Marcos wealth, which are just crumbs to appease the masses, is not even a done thing yet. And, the truth is, it’s not that important to those who actually risked their lives, right here. In the streets and in the mountains. The Lopezes, like many other oligarchs were safely ensconced in their mansions in the U.S. In the case of the Lopezes, in swanky Hillsborough by San Francisco Bay. Yes, the poor oppressed “fighters” (steak commandos, according to the late Doroy Valencia) who lived the good life and didn’t fight the good fight. Their children and grandchildren could even afford the most expensive sports cars and do boutique drugs, while the rest of the other Filipinos did their daily toil under the dictatorship.

  14. @ MLQ3

    Ok, MLQ3, I see the point there in the hyperlink you placed…

    It answers the question of the Lopezes stake at Meralco. My only basis for thinking that the Meralco was given in a silver platter, was from my Politics and Governance Professor. [I mean, I was merely a young toddler at the time these things happened. :)]


    “Enrile is obviously jumping on the hate-Meralco bandwagon.


    And the Pinoy, true to form, will not have the brain bandwidth to see through this quaint stunt.

    Kawawang Pinoy. Always the victim of clever marketing. :D”

    Unfortunately, some people are buying it because they’re being drawn into the Meralco Issue from ZTE, while others do not because of his role during Martial Law.

    That’s how the cookie crumbles for some of us…

  15. Federico Pascual:

    Don Eugenio was widely regarded as a kingmaker. Anybody who wanted to become president must win his good graces. While Marcos played ball with the Lopezes — taking Fernando Lopez as his vice president in his last term before martial law — he had resented his having to pay obeisance to them.

    The Filipino people should resent that a family should have the power to be making or unmaking a President!! The people at large should have that power. Good argument for breaking up the Lopez empire, if you ask me.

    The Meralco Foundation Inc. is alleged to be a dummy of Marcos and Romualdez. It could be but I do not see where in the decision of the SC did it establish this allegation to be true.

  16. That SC decision was done after the fact. The decision wasn’t done before the freebie to the Lopezes was granted. Lots of things could have transpired. The fact is, there wasn’t any transparency. Joker Arroyo himself said nothing was written and that everything was done on the basis of the Lopezes’ say-so. More one-sided than that, you couldn’t get.

    C’mon, Mr. Quezon, the Aquino administratio bent over backward, nay, did backflips for the Lopezes. Why? Partners in crime? Fellow travellers? Utang na loob?

    Victors’ justice? Bullshit! More like victors’ spoils! Victors’ booty! While it was the ordinary Filipinos who were cannon fodder.

  17. The issue is who owns the Meralco Foundation Inc. That it was a dummy corporation of Romuladez and Marcos is yet to be established. Precisely, this was the contention of the Sandiganbayan.

    But the second condition imposed by PCGG hold Us back. The reason is that the condition and/or compliance therewith by MFI assume that the 14 million MERALCO shares fully paid by MFI to FPHC are really illegal wealth of the defendants, particularly Romualdez, and that MFI is their dummy holding the shares for them. Whether the assumption is correct or not is precisely a crucial issue in this case to be resolved with binding effect and finality not by PCGG and/or MFI, but by the Sandiganbayan, in the first instance, and the Supreme Court, on appeal. Undoubtedly, until we shall have determined the question in the affirmative after hearing the parties concerned in the trial on the merits, it would be premature and unfair to request the defendants, particularly Romualdez, and MFI, their alleged dummy, to divest themselves of the 14 million fully paid MERALCO shares and cede them to the plaintiff.

    The Lopezes want the shares of MFI reconveyed to them because the sale was “coerced”. In the decision, this claim remained unestablished. But the Lopezes say, hey,who cares, no one’s contesting it anyway.

    But focus on “14 million fully paid Meralco shares”. Trace back the payments made by MFI starting from the P204,000,000 downpayment. What do we make of it?

    It would make sense if indeed the Lopezes were intimidated to selling their shares to fatten the treasury of the Marcoses and the Romualdezes.

    Still, it is dangerous for any society that such vast resources be in the hands of one family so that it could be a sovereign power on its own.

  18. it seems to me that in fphc vs. sandiganbayan, the sc merely affirmed the cory government’s prerogative to enter into a “compromise” with the the lopez group. the court makes no specific legal conclusion that the lopez interests in meralco were “confiscated” or “extorted” by marcos. on the contrary, the highest court opines that by entering into such a compromise, the government implicitly concedes that the shares were not “ill-gotten”.

    the question now on the table (as raised by jude) concerns the moral or political propriety of the aquino administration’s “lack of transparency” and “haste” in handing back to the lopezes the meralco shares “in a silver platter”. stated another way, while the cory government had the right to compromise, whether its exercise was for the best interest of the filipino people, then and now.

  19. another lozada-type nbn-zte “witness” has come out of the woodwork, this time armed with alleged photos of the first couple at a golf course in china. surprise, surprise. abs-cbn, in its usual hysterical style of reporting, presents yet another ‘bombshell’ complete with mischievous twinkle in the eye of rolex suplico and digital-mouth alan cayetano.

    maybe this johnny-come-lately lozada wannabee has the real goods. my initial gut feeling, though, tells me that this is just another ‘gaya-gaya’ out for a possible 10 minutes of fame, or some pocket money (if he’s lucky).

  20. Monopoly of the few oligarchic families of most of this nation’s resources is our curse, the root cause of almost everything that is wrong in this country. Marcos was breaking it up. Unfortunately, he couldn’t escape allegations he was doing it for his own selfish ends, that all those foundations like MFI are dummies to fatten his private treasury and his cronies’. Well,how could one really know the real motives? We judge presidents on apparent motivations like money and power not on the wisdom of what ought to be accomplished, even as it may indeed be secondary.

    But how could one do it painlessly, I wouldn’t know.

  21. mlq3, on oscar lopez’ paid ad “urging” government to give up evat and other taxes on electricity, among others, i see it as a political propaganda ploy to deflect popular demand for meralco to stop the practice of passing on its losses to the end users, on top of ever-increasing rates partly due to mismanagement.

    it appears that what lopez wants is for the government – and therefore, the people – to subsidize such losses through a simplistic ruse of eliminating taxes so meralco can issue lower electric bills without reducing its own profit. if this is not a classic illustration of how the oligarchs “ginagago ang bayan”, i don’t know what is.

    taxes, including evat, are necessary evils that are usually unpopular especially to the common juan de la cruz. this is the primary source of government’s revenue without which it might as well close shop. all government services, debts and interests on them, public works, national security, law enforcements, among many other public responsibilities, are paid for through taxes. taxation is one of the most potent engines that drive the nation’s economy that must be imposed uniformly and equitably across all segments of society.

    lopez’ demand for the government to subsidize its losses through tax exemption is just an oblique way of perpetuating what it is now doing – passing management losses (including pilferage) to the hapless consumers. as some wag said, it’s the same banana.

  22. bencard, personally the way i see it is the ultimate question is whether power generation and distribution are properly activities that should be operated as private businesses for a profit, or whether they are better operated as public utilities, publicly owned, without the profit motive.

    whether government has run these industries badly in the past isn’t really the point, because that can always be improved if the public demands it and exacts accountability. if we believe that electricity generation and distribution oughtn’t to be enriching individuals then we should nationalize the power industry, return the napocor generation monopoly, and keep transco a state owned firm.

    but if the consensus is for private enterprise, which should allow for profit but be tempered by regulation, then at the very least those who generate power shouldn’t be in the business of power distribution. then the middle ground at the very least is requiring the lopezes to divest from power generation.

    another main issue is the permissible percentage of systems losses the distribution companies can charge consumers, which essentially serves as a subsidy. the public objects to systems loss charges but does that mean, then, the public objects to subsidies in principle or only as the subsidy’s being applied?

    then the issue of why each step of the electrical system’s individually taxed, resulting in a much larger combined tax.

    and finally, the reality that the law probably allows for all sorts of cozy arrangements between power producers and distributors and the state in exacting more taxes than it should, leaving the public in the lurch. it is in the nature of industries to try to influence governments to pass laws and institute regulations beneficial to the firms and at the expense of the public; but at least it’s clear how lobbying was done and by whom, and the various lobbies are obviously there to influence the government. we passed legislation providing for lobbyists in the 1950s but like so many laws it’s been forgotten.

  23. btw, oscar lopez’ ad is a moronic application of the classic con game rule “tails i win, heads you lose”, ha ha ha!

  24. The conglomerates should be broken up. A law similar to anti-trust laws in the U.S. should have a lot of valid rationale… bad for competition, monopolistic practices, etc… Too bad these conglomerates also own the most important media institutions.

  25. What Meralco can expect to get from the Philippines is a function of their contract.

    A cost-plus contract, more accurately termed a Cost Reimbursement Contract, is a contract framed in such a way that when the contractor finishes the agreed-upon work (which can be delivering a certain amount/volume of of rifles, trucks, or kilowatt-hours), they receive compensation equal to their expenses plus a profit. Cost reimbursement contracts contrast with fixed-price contract, in which the contractor is paid a negotiated amount regardless of incurred expenses.

    Then, there are rate-guarantee contracts. This contract can be for power transmission companies. The transmission-company’s service is to transmit to the consumers (through the company’s power-lines, etcetera) the power which the company buys from “other sources – power-generating companies”.

  26. Truth is, MERALCO admitted irregularities by passing on to consumers, their system losses (internal inefficiencies) and the company’s own electric consumption(double deduction if already claimed as operating costs deducted from revenues).

    Whether or not NAPOCOR has its own irregularities, this should be punished. And it goes beyond whether one is pro-or anti-Marcos or GMA.

  27. mlq3, i’m no economist but i personally believe that both power generation and power distribution should remain in private hands with minimal government regulations but always subject to government takeover in times of, and as required by, national emergencies as allowed by the constitution. i think the real evil is monopoly, whether public or private.

    as any other commodity, power or electricity must be a subject of free and untrammeled enterprise, rather than lodged in the hands of a favored individual or entity. over regulation by government may stifle the growth of an industry, but there’s no substitute to fair competition in a free market for the improvement of services, stabilizing the cost, improving efficiency, and generally helping the nation’s economy.

    i remember in the 60’s when pldt was a monopoly and it was next to impossible to get a private residential phone connection. it took my family almost 20 years to get connected (with party line) and we were living in quezon city. i heard of people and small businesses buying lines for a fortune. not until pldt was broken up during martial law that phone services improved through competition among various providers. of course, advance technology also had something to do with it.

    btw, existing anti-trust laws and regulations against combinations in restraint of trade must be enforced to their fullest extent without fear or favor. officials who look the other way for unjust reasons thereby tolerating the illegal practices, must be charged for malfeasance, dismissed and prosecuted criminally.

  28. “Was this a reward for supporting and bankrolling politicians opposed to Marcos? Is this a glaring example of the spoils system among politicians? It certainly looks like it unless the Lopezes can prove otherwise in a lawful and transparent manner. ”

    when marcos went to exile, our country almost went bankcrupt. we don’t have the capital to maintain and invest because our debts were so high.
    it was probably a proposal to delegate the task to the lopez, not just because of “favor” or business connections. Cory had more bigger problems to deal with like how to borrow money from world bank.
    The lopezes invested their talents, skills and entrepeurial experience to grow Meralco. It’s not free because if the government simply hired the Lopez and paid them labor as employees to manage Meralco, it might have been more expensive and the incentives to the people may not be clarified ( because it will be run by government with lots of debts)

    Nothing is for free in this world. Any talent, any skills and any experience must be compensated.

  29. Public Utilities either be government owned or controlled or privately run can be just as successful if they are properly regulated. Our own Electricity, Government owned and distributed. Generated by the wholly Provincially owned Corporation, Hydro One and Locally distributed by city’s profit mandated company still provide reasonably cheap and very efficient service. Same thing with our water system, wholly government run and owned and also cheap, but the telephone and cable which are privately run and deregulated are among the most expensive in the West.

    Another one that is better Government owned and run and taxes supported (assuming that Government is somehow free from endemic corruptions) is the Public Mass Transit…

  30. nationalization is not just a mere opposite of privatization in terms of serving public interest.
    The thing is both of them failed the public interest at one point in time.As Mlq3 pointed out,it is immaterial.
    Many say it’s transparency,benign0 says it’s trust,ako kahit ano as long as public interest is really served.
    from trust,we go to anti-trust,did it have an impact,when Microsoft was the point of contention? maybe it did or else puro microsft na lang ang office software natin,ang os ng mga computer natin,pati internet browser natin,but for me the impact was so minimal.

    Dito sa pinas yes PLDT never achieved zero backlog,when bayantel and other players went to the picture,hindi pa din,so what’s the governments solution telepono ng bayan, even with us being the texting capital at that time,it still pushed through because ang hirap mag backout sa plantsadong project.

    I don’t want to call it comedy of errors.

    In Manila port area (South Harbor), it was ran by a few rich guys before, they merged and eventually Dubai Ports took over, It inheritted an anti-dummy law suit from its previous owner,but who wants to lock horns with Dubai. Now, people want it to be run by different operators again(including micp and north harbor, where is the money? Show me the money!

    Just look at our railways, forget corruption for a while, in a perfect world, kaya ba nating patuloy na nationalized ito.
    Historically a part of our railways was a result of one of the first Build Operate and transfer thingy in the country, the british won,then the americans took over then PNR was born,OK we cannot put corruption out of the equation afterall,ngayon because of Trust issues The north rail and Southrail might not even push through.

    I better stop now,as Bencard says , a little knowledge is always dangerous.

  31. “Nothing is for free in this world. Any talent, any skills and any experience must be compensated.” – leytenian

    Compensation is fine. But it has to be on a proper perspective. In this case, unless proven otherwise, there was humongous overcompensation. It’s not like Meralco and ABS-CBN were falling apart, far from it. There was continuos expansion and upgrading of facilities. As a matter of fact, these enterprises were possibly better-run than during the tenure of the Lopezes. Meralco was generating revenue and had enough cash reserves.It didn’t need “the capital to maintain and invest”. Channel 2 was top rated and was upgraded by the Benedictos.

    It is absolutely ridiculous to say that the Lopezes “invested their talents, skills and entrepeurial experience to grow Meralco. It’s not free because if the government simply hired the Lopez and paid them labor as employees to manage Meralco, it might have been more expensive and the incentives to the people may not be clarified.” Wow! Billions for hired labor? That’s one for the books!

    As a matter fact, any number of groups can run Meralco as well, if not better, than the Lopezes. They don’t have a monopoly on talent. The Lopezes major talent is using government to corner business, preferably monopolies. They have failed miserably when faced with competiton.

     Witness how they sank Maynilad and cost the government billions when they had to give up the franchise because it was sinking their flagship as well. They needed a sweetheart deal from government to keep Maynilad afloat and may well have gotten it had Erap not been removed from power. After all, they married off one of their scions to Erap’s daughter just to rescue the venture.

     Witness how Bayantel has been clobbered by Globe and Smart and has remained a minor player in telecommunications, even surpassed by Gokongwei’s Digitel (Sun).

     Witness the lousy programming of Sky Cable and how it’s lost ground to Dream, Destiny and other competitors.

    And going after Meralco isn’t necessarily nationalization. It’s just government flexing its muscles to get its rightful share and advantage because it has been taken for a ride by the Lopezes all these years. People can say what they want about Winston Garcia, but he proved the big shots wrong when he waged a proxy war with the owners of PCI Equitable Bank, the powerful Go family. Garcia was much-maligned and accused of a lot of things. Garcia also had the temerity, and got much flack for it, when he turned down Henry Sy of Shoemart for the Sy family’s measly offer to buy the bank. In the end, Garcia earned the government a huge amount of money when Sy turned around and raised his offer considerably. The tremendous loss that loomed from accommodating Erap’s crony, George Go, suddenly became a gain for government.

  32. Sky Cable,

    sa ngayon naaasar ako di ko napanood kung pano nanalo ang celtics,nakinig na lang ako sa streaming audio pero iba pa din ang nakikita mo eh.

    at di ko rin makikita ang spurs hornets

    PI talaga oh.

  33. GSIS, SSS, PhilHealth and Pag-Ibig invested in Meralco shares precisely to make money, either by way of dividends, or share price appreciation, or both. They did not invest in Meralco to lose money.

    As a corporation whose 80,000 shares ( over 30% is owned by government entities) are traded by the investing public on the PSE, Meralco’s board of directors has a clear mandate to produce gains for shareholders. Theoretically, the entire board can be removed for not making enough money for shareholders. Any corporation has to guarantee a minimum rate of return to its investors.

    Meralco’s profitability or lack of it depends in a big way on REGULATORY ACTION.There is nothing wrong with Meralco making money, provided it is based on a reasonable rate of return. And this is where regulators are supposed to come in and tell everyone whether Meralco’s current rates reflect a fair rate of return for the firm, or an excessive return.

    This is the function of regulators. They should be in a position to categorically say whether Meralco rates are fair or unreasonably high.

    The government should just leave the business people to grow their businesses and allow them to expand on other industries to employ more of our people. In my own opinion, our government’s action in terms of balancing investments between public and private , is turning off many investors that can potentially employ more of our people.

    In the meantime, the government should focus on renegotiating and mitigating our nationals debts to world bank ( IMF) , to lower monthly debt payments by decreasing interest rates ( contract must be fixed for 50 years) or pay principal instead of interest. This is a very short window of opportunity for our current admin to take advantage of the money crisis. If this is negotiated properly then we might face a brighter future (without corruption). Once the dollar start edging upward, we will have the advantage of lower payments and an increase of overseas remittances.

  34. Di pala spurs hornets,lakers vs Jazz pala,
    ganun pa din,What the F

    is this all because of the fight over Pacquiao,nadamay NBA

  35. KB,

    hahaha, basta ako, i will watch arnel pineda in tampa. sorry to hear about your game..I’m for Magic..

  36. Leytenian,

    eliminated na Magic.

    It’s KG, as in Karl Garcia,not KB

    if scalia called me Kevin Garnett once, are you calling me Kobe Bryant ok lang kung ganun,MVP naman, pero kung may ibang dahilan,bukod sa typo,wag mo nang sabihin kung bakit.

    Your critique of HVRDS on Bankruptcy, was sorry to say sablay na naman. HVRDS was quoting “The Wealth of Nations” a book published in 1776,tapos babanatan mo ng world bank,way off the mark.

    and then that delegation to the Lopezes because of our national debts was off the mark as well,pati na din yung labor compensation of talents.

    Naalala ko nung sinabi mo ke benign0 na continue with your research, you are getting there, I now say to you.

  37. From the horse’s mouth so to speak —-

    “Like all good things, this”Golden Age” of meralco and private power in general came to an end by the early 1970’s, as a consequence of the serious trade and balance payments deficits of the country.” (Please note deficits to mean national debts)

    “More importantly, in 1971, action taken by the OPEC (shortened), resulted in several dramtic increases in the international prices of petroleum products. From a level of $1.69/ a barrel in the 1960’s Meralco paid $4.68/barrel in 1973, $11.50/barrel in 1976 and $34/barrel in 1981.”

    “These factors-exchange rate, inflation,and fuel prices, sounded the death knell of the old era of private entrepreneurial power. The pendulum would now swing in the direction of public power.”

    “Henceforth, there would be no inexpensive new power generating capacity. The surge of peso-dollar exchange rates and local interest rates, meant that large, foreign currency denominated investments with long pay abck would fall increasingly out of reach of the private sector. Government would now begin to assume the leading role in major infrasstructural investments such as in power, steel and trasnportation, etc.”
    Oscar Lopez –Capo de Tuti Capi de Familia Lopez.May 14, 2008
    So starting in 1968 when President Johnson withdrew from the Gold Exchange in London the gold exchange standard was informally no longer to be the basis for international trade. The Arabs then warned in 1970/71 that they would be increasing the price of oil to compensate. Inflation was eating away at oil revenues.

    When Marcos came to power it was a foregone conclusion that the debt picture of Meralco had wiped out most of the equity of the Lopez clan. What did Marcos clan and the Romualdez clan then steal from the Lopez clan. Not much…..

    Unfortunately for Juan de la Cruz this form of family based statism was exclusive for a few and not inclusive for the collective good. Sadly the claim of Enrile is true.

    But to say that the Lopez’s were due the return of their property is surely a stretch. But once again there must be a way out of this mess.

    Joker Arroyo has a problem with accounting fundamentals. Most especially when the name Marcos is mentioned. He should have also remembered that the second order of the then revolutionary president was for her clan the Sumulongs to take over the South Harbor from the Razon family. (the port services) The first was the PCGG. They were also kinda biased versus anything that smelt Marcos and Romualdez.

    How can all of this historical facts now simply be discounted by the claim of stealing by a ruthless dictator when there was surely almost nothing left to steal.

    The state had to step in but the state then was Imelda and Ferdinand.

  38. Another gem from Oscar Lopez’s letter of May 14th. That is being totally ignored by all…

    Kasi mahirap at mabigat bangain ang Shell at Chevron.

    “Another major reason is that the selling price of Camago-Malampaya gas in indexed to crude oil prices. When we signed with Shell and Occidental petroleum back in 1998, crude oil prices were only at US$/15 a barrel. Today the oil price has gone up to more than 8 times. Yet, I do not think that the costs of producing Malampaya have increased by anywhere close to the same multiples. So I invite you to draw your own conclusions as to the size of that windfall being reaped by the Camago-Malampaya gas sellers, especially since these gas sellers have completely paid off the Malampaya project cost as of last year. This is an area where the president can exert her influence to have as sellers reduce their price of natural gas in order to benefit the electricity consumers in this country. Alternately, government can impose a windfall profit tax and use the proceeds to subsidize low income consumers.”

    The Lopez’s are good at getting the message they want out there. Frederico Lopez speaks for Meralco and he is the President of First Gen. The IPP’s belonging to Meralco also got tax breaks and access to multilateral and bilateral financing. Once again Juan de la Cruz is the guarantor. They also have their guarantees of take or pay.

    Not once did you hear from their lips on TV the issue of windfall profits by the transnational oil companies.

    Do you think we could use Abalos to talk to Shell and Chevron on our behalf. Give him a part of the taxes as an incentive. Magaling siya diyan.

    And on the subject of long term supply contracts. Her is an interesting tidbit from a column in the Star:

    “Today, however, due to a change in Aramco’s strategic focus, the oil giant has recommended Ashmore to take over its shares in the emerging Philippine market in order ad of to sustain growth in this industry. Furthermore, the alliance between Petron and Ashmore assures the country of a steady supply of petroleum for decades to come with a new Far East Crude Oil Supply Agreement (COSA) unlike the existing COSA which expires in 2014.” Domini M. Torrevillas Thursday, May 15, 2008, Philippine Star

    Will Juan de la Cruz ever get to know the prices in both long term supply agreements that determine the cost of fuel products in the country? Not likely. Will the public get to know all these secret long term supply contracts in the delivery of strategic raw materials for strategic industries in the country? Is this how a market is supposed to work?

    Why is everyone going after royalties? Alaska charges royalties for the oil taken from Alaskan soil. This goes to their own National Wealth Fund that is invested with dividends given to all residents of Alaska. Here we want to consume our royalties instead of investing for the future. How can the country be so shortsighted. Those in government could’nt care less in preparation for 2010. Binaon na tayo ng malaking utang ng expertong economista na nasa palasyo at tila uulitin niya ulit.

    Can you see the mindset of the merchant/banker Oscar Lopez. Ganyan din ang mga tao sa gobeirno. Populist demagoguery.

    Why does’nt MLQ3 interview the guys of Shell/Chevron on their windfalls or DOE head Reyes and ask him about the long term supply contracts of Petron which is under the PNOC. To get proper enlightenment you need to ask the right questions.

    Also ask Frederico Lopez of First Gen about the issue of carbon credits since they have hydro plants, geothermal and natural gas plants that do not emit harmful carbons. How much will they make on it.

  39. I don’t want to take sides on this corporate drama .

    But as an ordinary customer of Meralco,I was so shocked to know that MERALCO is charging much higher power rates versus the Visayan Electric Co. (VECO), Cebu Electric Co. (CEBECO) or Davao Light.

    Apparently, electricity is cheaper outside the Meralco franchise area!

    To highlight his case, Winston Garcia cited electricity rates being imposed by the Visayas Electric Company to residents of Cebu province.

    He said the Visayan power distributor’s rate is only P6.19 per kilowatt-hour compared to Meralco’s P10 per kwh. “Why is it that electricity is cheaper in Cebu compared to Metro Manila?”

    Further, Meralco is passing on the costs of its SYSTEM LOSS to its customers!

    I strongly believe that consumers should only be required to pay for actual consumption, while industry players should shoulder the risk costs in every business venture.

  40. Talked to my brother in Manila last night about the rate of electricity and how much he is paying monthly for total usage…and here was his reply:

    approximate usage of 360 kwh per 30 days at around 10 pesos total cost per kwh inclusive and that would be close to 5000 pesos or little more for water and electricity on average and I told him even if converted to pesos we are paying less:

    Here is the breakdown of electricity bill and at the typical 1000 kwh usage excluding paying off past debts and capital investments added to the bill and another increase due to Conservation (yes, the City Electric Conservation campaign to subsidize replacement of old high energy consuming air con, incandescent light bulbs, free cloth lines for drying clothes and many more reduced The Hydro Utility Revenue by $10 millions which will be added back to the bills this year) and the total will come to Only $50 per 30 days for 1000 kwh and 6 Cents per kwh after 1000..add to that the water bill which is even lower.

    Costs collected for transmission and operating the provincial grid are passed on, without mark-up, to Hydro One.(Hydro One is the Generator of Electricity and is Provincially wholly owned Corporation).

  41. As a corporation whose 80,000 shares ( over 30% is owned by government entities) are traded by the investing public on the PSE, Meralco’s board of directors has a clear mandate to produce gains for shareholders.

    What 80,000 shares are you talking about? Stockholders already number about 62 k.


    In 1991, Meralco common shares of stock were publicly listed at the Philippine Stock Exchange. Since that time, Meralco remains a publicly listed blue chip company. As of June 30, 2007, Meralco has outstanding shares of 1,006,347,663 common stock held by 62,820 stockholders.

    As of December 31, 2007, Meralco has outstanding shares of 1,114,815,310 common stock held by 59,984 stockholders.

    1. PCD Nominee Corporation
    2. First Philippine Union Fenosa, Inc.
    3. PCD Nominee Corporation
    4. Meralco Pension Fund
    5. Republic of the Philippines
    6. First Philippine Holdings Corporation
    7. Social Security System
    8. Land Bank of the Philippines TA #03-141 (Asset Privatization Trust)
    9. Landbank Phils. FAO PCGG ITF MFI
    10. Board of Administrator – ESOP


  42. it’s now becoming more and more obvious that the lopezes have been living in fragile glass houses but have the temerity to throw stones at others. one could only marvel at how they lock horns with the arroyo government, flirting with critical scrutiny. through their media conglomerates, they manage to wage a propaganda war that only succeeds in making life more difficult for the incumbent while continuously failing in their ultimate objective – cut short her presidency.

    it now appears that while engaged in a ‘battle royale’ with the president, the lopez group has been involved in questionable business practices detrimental to the consuming public. it took a world-wide crisis in the price of commodities to awaken an apathetic populace, and to infuse a dose of political will on the government to take a long hard look at the situation.

    here’s hoping that whatever dirt is found, after all is said and done, will not be swept under the rug and let the guilty parties go on their merry ways.

  43. “it took a world-wide crisis in the price of commodities to awaken an apathetic populace, and to infuse a dose of political will on the government to take a long hard look at the situation.”

    very good point.

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