Corporate drama

I. On Meralco


Blogger village idiot savant says the administration’s been “taking a cue from professional wrestling:

In professional wrestling parlance, it’s called “generating heat.” Being the scripted entertainment that it is, wrestlers rely less on their physical prowess than on various gimmicks to stay in the fans’ visibility. And so, if a wrestler wants to rise in popularity, the trick is simple: pick a fight. It doesn’t matter with whom. Anyone will do. Just pick a fight.

That seems to be the overall stratagem of the Arroyo administration of late. In the absence of any issue of substance, it’s resorted to cheap gimmicks to generate heat. Just a few weeks back, Gloria Macapagal-Arroyo vowed to go after rice hoarders, and for a while, the front pages were rife with inspections and arrests. Around the same time, Gen. Angelo Reyes called for an energy summit and demanded to know why fuel prices were so high.

And so the public relations offensive continues: GSIS bigwig Winston Garcia is taking Meralco to task for high energy costs and “lack of transparency”; and over in Congress, Prospero Nograles has floated the idea of free text messaging. It’s gearing up to be a big battle royale : the government in one corner and big business — the oil companies, the telcos, and the Lopez utility-media empire — in the other.

In a match like this, there’s little doubt as to who’s the face and who’s the heel. The cards are lined up so that we know who it is we’re supposed to be cheering for. And yet, why do the bleachers seem awfully quiet?

Answer: we’re not marks. We know that, for all the amusing antics, it’s fake. It’s all fake.

A similar view’s expressed by The Philippine Experience. Over at Arbet Loggins @ Multiply, there’s a point-by-point critique of Winston Garcia:

One: Garcia is barking up the wrong tree. Meralco cannot impose rate increases unless it is approved by the Energy Regulatory Commission, which is headed by a Gloria Arroyo ally, Rodolfo Albano. Garcia should instead petition ERC to reduce Meralco’s rates. This regime keeps on asking us to follow the rule of law, yet one of its lackeys keeps on ventilating on the wrong forum. “Bring it to the courts” is a favorite line by this regime, and it should walk the talk.

Two: Garcia’s allegation that the Meralco management is withholding important documents. As a board director, he should know what is happening to the company. And if he thinks the Meralco management is indeed withholding the documents that he needs, he should ask the courts to compel Meralco to produce these documents.

Three: The issue on systems loss is actually not a legal issue, but a moral one. The law allows Meralco to pass to its customers up to 9.5% its system losses. So if Meralco charges us 9.5%, it is not illegal. It can be immoral, but rule of law prevails.

Four: Meralco passing on to its customers its electricity expense. This is allowed by the law; heck, all businesses factor in electricity expense in the pricing of their products and services. Singling out Meralco is unfair, I think.

Five: Knowing that it can actually lower rates by petitioning ERC and removing/reducing VAT on electricity, this regime has chosen to do what it says the opposition does – trial by publicity.

To be sure, there are those rather gleeful about the showdown (see maexstayo; on a related note see Dan Mariano who takes a look at how the p.r. war’s been fought out by the Garcia camp), or actively hostile to it (see Adventures of an Exiled Aristocrat who is overseas, ). But in general, what’s remarkable is the ambivalence of the public. This is something I observed in my column yesterday, Get-rich-quick Garcia .

You may want to read the following: What Meralco has been charging its customers and Meralco swamped with refund claims. Concerning some points raised in my column, you may want to refer to Meralco Refund for the Period 1994 TO 2002 in (and how party list representatives have it right: Leftist solons to petition ERC for Meralco refund); the Energy Regulatory Commission website; the Temasek Holdings website; and What is a Corporate Raider?

A more accurate representation of (informed) public opinion might be Pinoy Observer:

In truth, I’m not supporting Meralco. My stand is to carve it out into different franchises to encourage competition. However, I am not supporting government bid to takeover Meralco now since we know for sure that the utility firm will just be given to Gloria’s allies, namely, the Aboitizes, Garcias and the Alcantaras. Surely, this crown jewel of the Lopezes deserve nothing more than a clean bidding process. It should be managed by groups with the national interest at heart. It’s okey for them to recover their investments, yet, there should be more consideration on the public’s consumer rights than business interests. And the Lopezes want nothing of this sort.

Personally, I believe that if any problem exists, then the problem is one of scale. Meralco’s gotten too big. It’s gigantic franchise area happens to include both the most productive parts of the country (commercial areas), some of the most lucrative (residential areas of the middle and upper classes), and extremely large black holes -the areas in which the very poor live- all of whom have to be served but not all of whom are paying customers or who can afford to pay full rates. Comparisons with costs in Cebu, etc., then aren’t fair ones to make because other areas do not have the problem of large swathes of the population living on the border of the poverty line at best. These areas essentially have to be subsidized, both for poor but paying customers and those who derive their electricity from pilferage. The government tried to mobilize public support by basically playing off the middle class against the poor, portraying the systems loss charge as an unfair subsidy.

Tongue In, Anew asks, Should We Pay Meralco’s Systems Loss Charge? and defines systems loss simply:

To make things simple, systems loss is the difference BETWEEN the total power generated by the plants AND the sum of all the power ACCOUNTED FOR in the residential, commercial and industrial electricity bills. Not all is stolen, though.

Someone who manages buildings told me something similar. A systems loss occurs even in buildings, according to the manager. You know, through the building meter, that a certain amount of electricity is brought in; if you meter your tenants and then your common areas, you also know how much electricity your tenants consumed and the common areas used up. But somehow, even if you meter as much as possible, there’s simply a certain amount that simply vanishes, apparently consumed but not by anyone, specifically.

Anyway, Tongue In, Anew goes on to put systems losses in perspective and proposes a novel solution:

It’s standard practice worldwide that distributors are ALLOWED a certain amount of systems loss since there are no perfect machines, so transformers and conductors are not an exemption to this. The amount of energy leaving the power plant will always be bigger than the energy that the distributor will collect based on the meters.

Therefore, technical losses are inherent to the system thus, we can allow Meralco or whoever runs distribution to pass this on to the consumers wholly.

Some may argue that technical losses can be minimized. That’s true but in the case of transformers, oversizing is the only way to improve efficiency, but that will also increase capital machinery cost and the bottom line is it will just be reflected on the Return On Rate Base (RORB)- a percentage of profit the government’s regulating agency like ERC, or a law like EPIRA, may fix for utility companies. No gain there. Conductors? Copper is the cheapest material presently known to man that serves the purpose. Improving systems loss on conductors by installing silver or gold cables will definitely be a bigger headache later.

Pilferage, the last time I checked is already a crime. Going after criminals is whose business, Meralco? Of course Meralco will be needed to identify and prove pilferage, but excuse me, I have yet to see PNP Chief Razon or Sir Raul O. Gonzales who heads NBI ordering their men to investigate wide scale pilferage in many squatters’ areas in the Metropolis. Or a systems loss investigation for whole cities and provinces.

To ensure Meralco will participate in apprehending and prosecuting pilferers, a reward system is necessary even if just to reimburse Meralco for its expenses and effort.

In this case, I say charge systems losses from pilferage to government This government wants to earn taxes without doing its job? By charging it to government, they will be forced to protect the paying consumers and ensure that the distributors will be rewarded. The present system only encourages thieves and punishes honest consumers. Do I hear a lawyer saying it’s unconstitutional?

So back to my view…

The question then is whether, and how, government should go about cutting up the Meralco franchise area? Winston Garcia’s basically proposed to do it by means of a boardroom coup. But his past record, at this point, becomes relevant. He’s a corporate raider, not an entrepreneur. His abilities lie in swooping in on a company and then making a tidy profit from his barging in and breaking its existing ownership structure. This is why he changed tactics mid-way: the perhaps more sensible goal of breaking up Meralco came later, and not initially when he began his attack (note to self: servants of the present dispensation are amazingly selective; what is sauce for the senatorial goose is obviously not sauce for the administration gander; to mix my metaphors even more, no fishing expedition’s reprehensible if undertaken by the government).

Over at ANC I told my producer that personally I felt that it would be healthier for the Lopezes to be made to decide between transmission or generation but not both; better still, for them to divest from energy and focus on media. I have no confidence that forcing a separation between the two interests of the family will serve the public good at this point. I have a hunch -but only a hunch, based in large part from what Maria Ressa’s revealed about tensions within the Lopez family– that this will be the way things will develop eventually, but only after the generation of Oscar and Manolo Lopez passes from the scene. One branch may continue in energy while another focuses on media, but the era of the regimented family corporation will have passed. As much a function of the business scene getting more sophisticated than any actual wisdom on the family’s part.

Meanwhile, as the Business Mirror editorial yesterday counseled, what government can do is go great guns for Open Access:

The National Economic and Development Authority (Neda) explains it this way: Industrial and commercial consumers, including malls, factories and five-star hotels, who use up at least 1 megawatt of power during peak hours can deal directly with independent power producers, or IPPs. The interim open-access scheme, which will be proposed by the IPPs to the Energy Regulatory Commission (ERC), removes distribution and system-loss charges being charged by power-distribution companies, including Meralco.

The interim open-access scheme, according to Neda, is a stop-gap measure to allow consumers to directly deal with IPPs even if the government has yet to privatize most of its power-generation assets.

The advantages of open access are obvious. One, it will allow end-consumers to choose the electricity supplier that offers lower rates. And two, it will create competition and ensure a level playing field where no dominant player can exercise undue advantage, thereby leading to lower power rates.

Apart from open access, various groups are also calling on the government to remove the value-added taxes on fuel and even on the system losses and royalties on indigenously produced natural gas. These are sound proposals that we think should be seriously considered by the government.

The elimination of royalties for gas and oil used domestically is a subsidy, and apparently one practiced in places like Malaysia and Indonesia.

As for the ongoing drama, the way it’s playing out can only set back efforts to entice investments unless the investors’ idea of a good business environment is being cozy with a particular administration, which means they’re in it only for the short term. On the eve of the meeting, it seemed that GSIS execs concede defeat. But it seems that’s before the SEC was brought in -or the so-called concession was actually a ruse.

If this report is correct -see Analyst: SEC intervention in company stockholders meet unprecedented – then corporate types are getting nervous. No coincidence that the President has had to make soothing noises: Arroyo vows ‘friendly environment’ for business. She’s skating on pretty thin ice (see last Sunday’s Inquirer editorial).

As it stands, after a truly unedifying exhibition of corporate groupthink (see Boos, pro-Lopez chants greet GSIS chief at Meralco), the stockholder’s meeting quickly stalled (see Reuter’s Fight for control roils Meralco meeting ) but has now resumed: ABS-CBN says Meralco board election to push through after halt and ‘Meralco meet has quorum, election to push through’ . Looks like this may end up in court, as as Marichu Lambino explores in her blog:

Based on the news report, the grounds of the CDO are: the SEC acquired jurisdiction over the complaint filed by board director Winston Garcia and there was a “finding” that the proxy validation process was “fraudulent” or that some of the proxies were “manufactured” (i don’t have a copy of the order, i’m paraphrasing). The grounds of the majority board are: the CDO is invalid for being issued by just one commissioner and not by the Commission en banc and it is undated.

What happens next?

It depends. (And, not having a copy of the order, i won’t give my own opinion, just scenarios). In the face of an “order” from the SEC or an SEC commissioner to cease and desist, the majority board can successfully maintain its defiance if it is able to successfully show it was correct in its theory on the jurisdictional “issues”. Remember the oft-quoted principle, “Jurisdiction is conferred by law”? If the order was issued without jurisdiction, it is void. No amount of words and paper can confer jurisdiction, it is given by law. On the other hand, if the order was issued with jurisdiction, while it cannot retroact once elections are held, or while it cannot turn back the hands of time, to be metaphorical, because the matter had become moot and academic, the SEC can issue ANOTHER CDO preventing or stopping the newly elected board from exercising functions. Then the SEC will hold hearings on the allegations regarding the proxy votes. Pending that, the SEC can appoint a temporary management committee. And then later on, the SEC can nullify the elections held today.

The latter scenario: if the SEC or the SEC commissioner HAD jurisdiction in issuing the order and the majority board defied a valid order: (i will use my Keanu Reeves voice for that): Dude, that scenario is messy. But if the SEC or SEC commissioner did NOT have jurisdiction in issuing the order, then GSIS chair Winston Garcia has to go the long route of litigation and pending that, the newly elected board takes over, that’s temporary smooth-sailing for MERALCO pending litigation, but either way, the value of the stocks might continue to go down because of the uncertainty.

II. On the Lakas-Kampi Merger


(forgot where I looted the screencap above)

In his blog, Mon Casiple says there are signs the administration has decided to throw in the towel, as far as perpetuating itself in power is concerned:

The GMA administration, it seems, has already left behind its obsession to stay in power. It may have failed to get the critical political mass to push it through the various obstacles to such a scenario. Its moves in the past week or so has been to satisfy loyalists, ensure their transition, and blunt opposition. These point to a 2010 election scenario.

Obviously, presidentiables are waiting in the wings for this. We can expect a more active effort on their part to get the Malacañang quiet endorsement without unduly exposing themselves to an anti-GMA voting public. The ruling coalition may not escape unscathed — it will be subjected to severe pressure from all sides and will be hard-pressed to unify behind one candidate. It does not have a viable candidate at the moment.

Casiple points out that all this is taking place without the electorate really figuring in the picture. I’ve heard that various components of what will, hopefully, emerge as a Reform Constituency are starting exploratory talks with each other, even as the Lakas-Kampi merger‘s apparently hit a temporary snag.

A review of an HBO film, “Recount,” about the controversial Florida vote in 2000, brings to mind the kind of argumentation the present administration’s perfected:

In the end, Baker and company best Klain’s team. The film leans in the direction of the Gore camp — they are the underdogs after all — but as Baker points out about the Bush team, “We won every single recount. The system worked. No tanks on the street. Peaceful transfer of power. The strength of the constitution and the rule of law.”

He says this, but in one of the strongest sequences in the film, you see the Miami-Dade canvassing board being intimidated into shutting down the hand recount by a mob that’s allowed to go into the building and storm the hallway. Those protesters were orchestrated and financed by the Bush campaign. Those tactics, including turning the recount atmosphere into a circus with grown men dressed like babies, holding signs that say Gore is whining like a baby, and kids in tee-shirts that said “Gore lies,” undermined the process. It was right out of the Nixon dirty tricks playbook. You don’t see anything like that from the Gore side. The Gore camp is all about strategy, turning the law inside out to get the votes counted. Their cause is not to give Gore the win, but the count the votes. The Bush camp simply wants the win they think they’ve already won…

And as for the votes, in a scene that evokes Raiders of the Lost Ark, Roach shows us the boxes and boxes of ballots in a Florida warehouse. Still there, still uncounted. Who the hell really won that election after all?

Like a chad, the question’s still hanging.

III. On Crispin Beltran

The passing of Rep. Crispin Beltran of Anakpawis, a true patriot according to Uniffors, and whose death had the Justice Secretary commemorating it by pissing on his grave (I agree), has been eloquently marked in two entries by Achieving Happiness, see her Crispin ‘Ka Bel’ Beltran, mahal kong boss at Kasama and Hay naku, Ka Bel! . She also takes the Catholic Church to task in Kato-liko.

Concerning the Catholic Church, the response of the hierarchy in Beltran’s native province points to how the alliance between people of Beltran’s political persuasion and the clergy dating back to martial law, has essentially been abrogated. A new generation of bishops and even priests is on the scene, and their views can no longer be viewed as sympathetic to leaders in Beltran’s mold.

As for me, he was a man loyal to his class, faithful to his principles, and the point is not whether I disagreed with some of those principles, but rather, that he served those principles dutifully and well. I took pride in shaking his hand on the Session Floor of the House after his release; his detention was a scandal and that few so-called democratically-inclined Filipinos took that scandal to heart was a scandal in itself.

He was, through Felixberto Olalia, Sr., his former mentor, directly in the line of true labor leaders like Crisanto Evangelista -and what could be said of Evangelista, and in turn, Olalia, could be said of Beltran. He served incorruptibly and ably.

IV. On the RCBC tragedy

While Touched by an Angel focused on the human dimension of the grisly bank robbery, her husband, The Warrior Lawyer, delved into what was particularly horrifying about the crime, which was the methodical liquidation of witnesses. He says the loot must have been so vast that the robbers could afford to leave behind a small fortune because the banknotes were soiled with the blood of their victims. He also points to the murder, the week before, of Alfred Dy (see Geronimo Sy’s tribute to his murdered friend; Sy says Dy had been held up once before, leaving the same bank branch). The Warrior Lawyer says of the two crimes that,

Both incidents seem to indicate an “inside job”, as a tipster from inside the bank seems to have alerted the robbers in the killing of Atty. Dy, while there was no sign of forcible entry in the RCBC robbery. In fact, probers surmise that the RCBC victims were killed precisely because they knew or could identify some of the perpetrators.

Blogger At Midfield describes the ongoing “investigation” as something like bad movie rerun, and The Warrior Lawyer, so to speak, returned to the scene of the crime: read his review of the cops’ handling of the investigation and why it’s so troubling (either pure bungling or a cover-up, simply and disturbingly put: see The Paradoxical Ley Line, too ), but I’d like to focus on the question Warrior Lawyer raises (see also Don Sausa):

Next, the question on a lot of people’s minds is why the crime was vicious in the extreme. The obvious answer seems to be that the robbers wanted no witnesses. But the diabolical, execution-style killings upped the ante on the lengths criminals are willing to go to escape prosecution. They will kill with impunity and without remorse.

But what could push them to such inhuman ferociousness ? Poverty is often cited as a factor. But that’s only part of the story. The Philippines literally has millions of people living in destitution, but they don’t turn into mass murderers. Otherwise, we’d all be dead.

I think Conrad De Quiros was correct when he wrote that the execution of the RCBC bank employees should be seen in the context of the widespread violence being perpetrated by the present administration all over the country…

Indeed, why would the RCBC robbers have any compunction about killing when the first to break the laws of God and man are those sworn to uphold them in the first place ?

To take Mr. De Quiros’ argument further , it’s not just a question of state violence, but also of unbridled corruption that goes all the way to the top. Why should the Cabuyao killers not steal millions at gunpoint when our national leaders routinely steal twenty, fifty, a hundred times over with the stroke of a pen, after a few secret meetings ?

…I fear that the RCBC robbery has now become the template for future acts of a like nature. Almost surely, we’ll be seeing more bank robberies in the near future, simply because, as bank robber Willie Sutton supposedly answered when asked why he robbed banks, “that’s where the money is”.

Incidentally, the Warrior Lawyer also points to a remarkable follow-up to the crime:

A final note on the gruesome photographs of the RCBC murder victims now circulating on the internet. They could only have been taken by police investigators at the crime scene and it’s reasonable to assume that someone in authority deliberately leaked them. I’m of two minds about it. It would certainly be painful for the victims’ families to have their loved ones’ grisly deaths exhibited in so public a manner. A valid argument for desecration of the dead can also be made. At the same time, the graphic and compelling nature of the images ensures that the crime will not easily be forgotten. Viewing it brings about an almost uncontrollable gut-feeling of deep anger and moral outrage. Owing to its viral nature, it has also reached far more people than what would normally be possible through news reports alone. Maybe it’s just what we need to spur us into action to battle these and other, more insidious, forms of evil so prevalent in Philippine society. No sane person can be neutral about it after seeing the pictures. As a the old adage goes, a picture is worth a thousand words.

Unlike the Warrior Lawyer, I’m not so sure this is something that can be pinned on a general deterioration of society because of the negative example of the administration. It might be more accurate to say that it reflects the low regard the perpetrators have for a specific institution, the Philippine National Police, and for the specific command holding the reins of command at present: the influence of the administration may be in that it attempted a kidnapping and liquidation and was caught, and police officials were left twisting in the wind when the Senate investigated the Lozada abduction -and the cops accepted the humiliation inflicted upon them by the Palace.

That, and the vulnerability of the civilian population in institutions like banks and in the provinces, which breeds a feeling of impunity on the part of robbers.

Indeed, I think we should be alert to whether we will start seeing more of these sort of crimes. There was an element of terrorism in this crime. The scuttlebutt among bankers, according to a colleague, is that bank robberies spike in May because tuition’s due.

For a background on the rising cost of education -and remember, the rule of thumb is business in general is slow in May, as families scrape together tuition expenses- see Filipino families and government spending less on education. The government’s response? Arroyo halts college tuition hikes. I am skeptical of trying to solve problems by basically decreeing that the law of supply and demand be suspended. A good education costs money. That money can come directly from parents or the state can step in and subsidize education. The President’s solution helps parents short-term, but at the expense of students, long-term.

Returning to the RCBC tragedy, The Unlawyer pointed to the tragedy being part of a series of shocking crimes and how it’s revived the debate on the death penalty.

But there’s something else I’d like to point out. Just a hunch. It’s that the moneybags are building up their reserves. Syndicates are flexing their muscles.

Before elections, there’s a noticeable increase in bank robberies and an escalation in instances of general mayhem, from snatchings to drug deals gone sour, etc. See Sheila Coronel on gambling money and elections. As for drug money, this has been nagging at the back of my mind ever since I encountered what Third Wave blogged about it back in February: it’s a factor no one wants to factor in when it comes to elections. And refer to what Alex Magno told me and which I blogged on March 9, 2007:

The reason businessmen can afford to ignore and actually evade the politicians is that they are no longer at the mercy of the politicians they way they used to be. The era of currency controls is long gone; and the old sugar bloc (divided into the faction of planters and millers) is long gone. Instead, the columnist (Alex Magno) told me, politicians are really in a lose-lose situation: elections are getting even more expensive, but there simply isn’t enough money coming in to finance them. So, he says, the real kingpins in politics are those with illegal funds who now play the role the big businessmen used to play:

!. Drug money

2. Gambling Money

3. Quotas on Customs and the BIR

4. The Philippine National Police

Whether these dots can be connected to RCBC remains to be seen. But think about it.

V. Other matters

Overseas, in the Asia Sentinel, The Dollar’s Dead Cat Bounce has Peter Schiff advising people to dump their US dollars, while Peter Bowring looks at how Asian Fuel Subsidies Distort the Energy Market.

On China’s earthquake, the Economist writes approvingly of how China helps itself.

And Pico Iyer writes of the Dalai Lama that Behind the Saffron Robes, a Savvy Politician.

In the blogosphere, PrOsTiTuTeD_LiBeRaTiOn in Cebu takes a look at whether it’s really the administration’s heartland, and tries to take a nuanced approach to the problem of fighting for accountability while avoiding throwing the baby out with the bath water:

Public dissent in Cebu, however, does not manifest in every means that of Metro Manila does. Rallies are very unpopular here. What is apparent to an observer who is not in Cebu is the disposition of its top politicians, the church- or the head of the church- and the media. They try to speak, and act, in behalf of the people but often, they fail- deliberately or not.

I am convinced that the general sentiment of the Cebuano people over the NBN-ZTE scandal, for example, is disgust. Our politicians, however, continue to proclaim allegiance to the president but I don’t think that it is because the people who voted for Arroyo do not call for accountability and do not see her culpability. I think that we are highly misrepresented.

The cab I was riding on my way to work some time last month was tuned into a local AM radio program, and I was fascinated with the comments sent, thru SMS, by the listeners on the issue of household rice hoarding which they conscientiously lambasted as a big stupidity. This government, they suggested, and I agree, is as thick-faced as to blame the people for the current crisis. One of these days, they said, the same government will accuse us of corruption- of stealing our own, taxpayers’ money. I think that the message of its sarcasm borders on the truth that anything is possible with the government that we have- anyone, and anything, is a potential scapegoat. That explains why the Lozada noise was suppressed by the rice crisis, and why Meralco takeover is cooking. I understand that these two issues deserve the people’s attention but see how nice and dirty the administration plays?

Very little has been said about Cebuanos who feel and think the same way that I do. This is not to claim that I think differently. My point is that I get dismayed with the lack and oftentimes, the absence of mobilisation in the local media. The perceived indifference is one, a failure of the media to get into the bottom of the people’s sentiment and rouse the people from stupor even as necessary; two, a failure of the local government to liberate itself from the shadow of the President and three, the obsession of some Cebuanos to be called “different,” specifically, being different from Metro Manila. I noticed how some people would deliberately ignore issues that call for collective action- Northern Imperialism is overrated.

I am glad that the third factor I proposed invited some friends to speak out. I was told by one that it’s a matter of efficacy- what can a rally in Cebu do to oust Arroyo? Pretty much nothing- just a potential investor who changes his mind about putting up his business in the city. Another friend told me over coffee that, yes, we are naturally regionalistic but that it is just a matter of preserving the momentum our economy has gained in the last five years- are we willing to sacrifice all these?

Being in the BPO industry, I can come from a call center boom perspective. Honestly, I think that outsourcing will still be with us in the next ten years regardless of whose administration we have. I want to think that the economic growth in the past months is not a cancer but a cure. When I come to juxtapose the value of the peso and the pinch of inflation, I start to think again. The abuses of the administration is a very expensive price to pay so I wonder if we can ever concretise what it is that we are sacrificing our moral imperatives for. I gloat, and gleefully, at that, when I scan the paper and see the peso plunging from 40 to 41 or 41 to 42. No, that I have dollars to exchange for pesos but that I see the foreign exchange as the administration’s talisman- like nothing can touch it as long as the peso is strong.

I still beg to disagree, with all due respect, that another People Power revolution is the next bold step to make. I was in Fuente Circle along with the hundreds of students who protested against the suppression of truth in not opening the “second envelope” in the heights of former President Joseph Estrada’s impeachment. I was there and I cheered (aged 19 and oblivious to the dangers of the game) as the names of the generals withdrawing support from the government were being announced. How far have we gone after that? Ours is a vicious cycle- the president we install after the revolution owes the military (and only the military) the debt of gratitude. The same president would only want to keep the military to stay in office. Much has been said about the excesses of the military in Arroyo’s presidency, I am tired of it- a president surely knows whose loyalty he should keep.

This article is not an attempt to justify the perceived indifference. This is an attempt to give voice to the Cebuanos who have given Arroyo a chance but have been disillusioned– the taxi driver who tells me he has always tuned into the NBN-ZTE hearings and believes the truth Neri is hiding is right under our nose, the newspaper vendor who insists it is the president’s husband who is screwing up her office and the officemate who can’t explain how the prices of even non-petroleum products and less-processed foods rocket– I am one of them.

The views expressed above, I think belongs to a significant group which hasn’t had its concerns addressed by the various opposition groups over the past few years. We will see if efforts to ramp up the impeachment in October finally manages to inspire such people to get involved, politically.

And the last word on the debate on The Canon of Philippine Literature, courtesy of ExpectoRants:

I think Sassy’s basic error in her questioning and line of defense is that she was criticizing something she didn’t bother to study in-depth, thus she came off “philistinic,” in the words of Exie Abola. Trouncing a critically acclaimed work just because one didn’t understand it because it’s too hard indeed smacked of something unswallowable. No wonder the academic and literati types were up in arms, what with all that intricately hard work of theirs brushed aside in such a cavalier fashion. As Angela Stuart-Santiago wrote, Sassy would’ve made a better argument had she claimed, for instance, that Amado Hernandez’s work is a piece of leftist propaganda; she could’ve made a more passable argument and spurred a more interesting exchange.


Manuel L. Quezon III.

117 thoughts on “Corporate drama

  1. For the uninitiated the depreciation cost of IPP’s are couched in the charges known as capacity fees for BOT contracts.

    They charge NAPOCOR in dollars.

    While is is entirely fashonable today to talk about buying physical forward contracts in coal and oil since we are in the middle of a bull market in commodity futures, these markets can turn too. Who would like to be th head of procurement when these things happen.

    That is the problem when you buy futures in the physical markets you have to commit to buy regardless of price.

    That means you must have access to dollars and a strong balance sheet.

    So place your bets. – oil at $ 200 by 2010 of around $80 or lower by then. What would the forex rate be? What would the short term interest rate be in pesos and/or in dollars?

  2. TonGue, the Transmission loss is mostly due to enormous size of the Province of Ontario and Large percentage of of it is in The Rural Distribution..The 9.2 was the system loss way back in 2004, may have been reduced due to massive upgrading of facilities and material, but could also offset by pilferage for massive grow-ops of Marijuana, which police estimated in thousands all over the Province. They (police)are raiding numerous ops regularly, but there is Big profit on the business and Power can easily be stolen for the operations..Hydrophonics Grow-Ops mostly operated by organized Crime compounded by recreational basements operators are one contributors to System Loss, yet considering these, our bill for a typical 1000 kWh consumption is total $106 average monthly, which I believe still cheap by our standard..

  3. Hydrophonics Grow-Ops mostly operated by organized Crime… – Vic

    Looks like even Canadian organized crime are productive members of Society 🙂

  4. I see vic, that explains why the contribution of tranmission and distribution lines to the losses are the biggest in your case.

    Pilferage, even in developed countries, has been and will always be big consumer headaches. Americans recognized the problem as early as the time Jose Rizal and his buddies were planning the revolution, have they solved it yet?

    One consolation for Canada is that it has confirmed huge oil reserves. But news of Brazil’s recent discovery of another offshore site sitting on trillions of barrels has not put a dent in the spiralling prices. The world has realized black gold is a finite resource and these shifting paradigms are not about to reverse themselves soon. I just hope I am right, and I think many here too, in believing that sanity will return once Americans get their politics and economy in shape and take their money out of commodities and back into more diverse portfolio.

    I would like to bet blindly on hvrds’ $80 but damn, from most indications it could go the other way!

  5. This probably could help enlighten what price could be competitive post-1997 (article was written in 2000):

    Obviously, to its developers, the San Roque dam project is a profitable venture. Interviewed in the online “Engineering News-Record,” project manager Robert Resch, maintains that it is “a high-profile, attractive project,” the world’s largest “ever undertaken in an epic, turnkey, fixed-price contract.”

    Such confidence is unusual in an industry whose associated high risks have made its projects generally regarded as unattractive investments. If at all, it suggests “a strong likelihood of a high rate of return on money invested,” which the Berne Declaration study says is what dam suppliers need to make headway.

    Critics suspect the same of the power purchase agreement between NPC and SRPC. They argue that the PPA has ensured profitability of the project to its developers at government’s expense by not subjecting it to market disciplines. An analysis of the agreement, in fact, shows it to be economically viable only to SRPC, with guaranteed earnings from the $400 million transfer from the NPC and later fees that are set by contract, which include payment under scenarios wherein no power is produced.

    As a study made by Dr. Wayne White of the U.S. based consultancy firm Foresight Associates reveals, the project is not a low cost provider of electricity. A competitive project, White says, should provide electricity at approximately P2 per kWh or less. But sample calculations of monthly billings included in the PPA range from P13 to P21 per kWh…

    Link ->

  6. and cjv guess who are the biggest customers of the produce of our system loss?? one guees, you can’t go wrong…with the world’s longest unguarded borders, where else…

  7. Vic, i just had a weird discussion with one of the customers yesterday…something about 300 Spartans vs. 1 Million Muslims, that must be pretty potent stuff they’re cultivating.

  8. ROTFLOL @ cvj. Customers…

    I would now understand why Canadians won’t let you inside their toilets. Pot from Canada, per vic, is homegrown and may taste like shit.

  9. Losses are inherent to the distribution of electricity and cannot be eliminated.

    HELLO, eliminated is not similar to reduction.

    the technical loss dues to transformers can be reduced by checking if these transformers are really efficient.

    do you know how those big transformers are produced ? i do. i’ve worked in the transformers manufacturing business before.

  10. HELLO, eliminated is not similar to reduction

    That system loss does not concern transformers alone, check the whole reports by the Kinectric and their recommendations and how to further reduce transmission losses.. the reason why Hydro One Producing electricity from 17 Nulear Reactors and Coal Generators and distributing power the area larger than Western Europoe put together, commissioned the Study was to further reduce the TECHNICAL LOSS. and by the way Hydro One is the Province Wholly Owned Corporation..

  11. Thanks to the ever-prudent cvj, who read the whole thing and understood my point.

    If you are in the call center and is just reading the script for the solution of the problem, phoned in, or you are just a paper pusher in the organization, i will not push the issue. you will never understand the difference between technical loss elimination and technical loss reduction.

    The first is not possible. BUT OF COURSE, silly. Even in a well designed system, downtime is possible.

    the second is possible. whoever says that technical loss reduction is not possible believes that system design does not become obsolete with the passage of time, with the introduction of the new technology and with more customers to serve.

    Whoever says that technical loss reduction is not possible
    believes that the life of the machine is forever and does not know that decisions affecting major capital acquisitions consider the financial feasibility from the viewpoint of the investors.

    BTW, transferring the loss charges from the customer to the government is just like moving the crap from one pocket to another of the same person. if you do not understand that, get an arenola.

    If you are blogger who relies mostly on researches and links for what you use in the arguments and debates, please reseacrh further. There are a lot of technical papers on this topic about technical loss REDUCTION on power utilities.

  12. More From Hydro One Presentation regarding transmission Loss as presented to the Energy Board: Excerpt from above site: posted at 12:00PM

    The term “distribution line losses” refers to the difference between the amount of energy delivered to the distribution system from the transmission system and the amount of energy customers are billed. Distribution line losses are comprised of two types: technical and non-technical (the description of each type is presented in the sections below).

    It is important to know the magnitude and causality factors for line losses because the cost of energy lost is recovered from customers.

    As a result of the composition and scale of the Hydro One distribution system it is not economic to provide metering and the supporting processes capable of measuring line losses directly. Since energy meters do not total data for the same periods, and load varies over time, a direct measurement of actual losses is not feasible.

    Instead, Hydro One relies on studies which are designed to calculate the magnitude, composition and allocation of system losses based on annual aggregate metering information for energy purchases, energy sales and system modeling methods.

    These studies are conducted with the assistance of industry experts in this field to ensure appropriate scientific methods and modeling techniques are utilized in establishing the magnitude, composition and allocation of losses.

  13. Vic, Power system auditing companies are one of the fastest growing industries worldwide. Like here, there’s one not-so-small company doing it silently. They guarantee a 25% reduction in energy bills monthly for one year. Or you don’t pay. They do it silently cuz they don’t want to get the attention of would-be competitors in this lucrative business. For commercial clients, they must be paying the utility distributor at least P1M a month and industrial, P4M.

    All you need are a few professional engineers, laboratory-accuracy test equipment + analysis software and handsome/sexy sales people. Over here, decisions on electricity bills reduction are usually made by CFOs with engineers playing secondary roles during the pre-sales stage.

    These guys have found a niche, like they also did earlier when they brought MMORPG to the country.

  14. The cath:
    If you are in the call center and is just reading the script for the solution of the problem, phoned in, or you are just a paper pusher in the organization, i will not push the issue. you will never understand the difference between technical loss elimination and technical loss reduction.

    Hahaha. Read and comprehend. Then read again. Now post. Wait.

    You’re a disappointment. I used to be impressed by your comments here, even if may ere ng konti. C’mon, read the posts above.

    Or better, itulog mo muna. Lilipas din iyan.

  15. a non expert opinion:just a former paper pusher,just a former call center agent.

    flashback: why did the ipps mushroomed?

    To solve brownouts and to provide electricity to more industrial users in anticipation of economic development.
    The half day f____ing brownouts were put to a stop and those gen set sellers flew by the night.
    But 1997 happened we lost those industrial users to our neighbors like J and J to vietnam,for instance.

    That story for me is enough to explain why the IPPS price went up.
    Now aside from lopez, Marubueni is the only strong IPP left.

    Before when our electric bill was unbundled, what we did not know did not hurt.
    now we know that 50-60 % is generation charges

    we talked about heat in pro wretling parlance,what about in power plant parlance:

    The efficiency of electricity generating power plants is normally measured by the actual Heat Rate of its generating unit/s. Lower Heat Rate means higher efficiency which also means the generating unit is consuming lesser fuel to produce a unit of electric energy.

  16. Can someone post Winston Garcia’s CV please. How has he improved the GSIS and what is his plans for the GSIS (which is also leaking money…)??

    Moreover, what is Garcia’s track record? What has he done in the past and why should we give such a big franchise to him on a silver platter? Is he any better than the Lopez?


  17. Can someone post Winston Garcia’s CV please. How has he improved the GSIS and what are his plans for the GSIS (which is also leaking money…)??

    Moreover, what is Garcia’s track record? What has he done in the past and why should we give such a big franchise to him on a silver platter? Is he any better than the Lopez?


  18. KG,
    LOL, naalala ko tuloy yung matapobre kong kababata (girl) pag natatalo sa postcard (later, “teks”) yung D’ Longges Day at X-Men pa nun. Sabi niya pag naubos na yung kanya, “umalis na kayo sa bahay namin, puro naman kayo patay-gutom”. Hehehe.

  19. Technical,non technical loss, mag research daw e, e di nagresearch

    Here is what happened in Haryana,India:

    “The Commission is aware that technical loss reduction requires investment and time but does not agree with the argument that suggests inaction till such time investment is made. The Commission neither considers it appropriate to pass the burden of unjustified losses to the consumers, nor it would like to penalise the licensee for justifiable losses. It is the duty of the licensee to run its business efficiently and arrange for system improvements.

    With regard to petitioner’s claim that the targets are impractical and unattainable, the Commission observes that non-technical losses play a major role in the overall distribution losses and the Commission considers that such losses can be drastically reduced in a short period of time, without much investment. Reducing non-technical losses requires fixing accountability for energy purchased and sold within the organisational set up of the company, and taking steps such as disconnection of defaulting/unauthorised consumers, changing of defective meters and proper metering, billing and collection and checking of theft of power. After all, non-technical loss is a management problem and consumers cannot be penalised for the failure of the management to manage its business properly. Therefore, the Commission does not consider that the targets fixed by it are impractical or unattainable. “

  20. KG:”Before when our electric bill was unbundled, what we did not know did not hurt.
    now we know that 50-60 % is generation charges

    Exactly, the present Meralco Bill is as transparent as you can get. As I said on my blog, you don’t get the same breakdown on your water bill, or your gas receipt both of which also have systems losses, yet no one is complaining. But EPIRA was successful in hiding PPA, the former “curse” and potential troublemaker that disappeared from the bills the moment EPIRA took effect.

    Btw, some bloggers even believe I was the first to blog (or publish in a website) about Meralco’s systems losses. Might be true. Loss reduction like PPA elimination was my advocacy more than a decade before it became one of the hottest national issues. Back then, it was only Enrile who was vocal about it.

  21. Tongue,
    oks lang yan. alam ko mahirap di mapikon ,pero talo pikon.

    Nagkataon lang napareact ako dahil sakto sa profile ko yun.kahit na di ako yung pinagsasabihan nya.

    as if paper pushers and call center agents are BOBO or morons.

    pero sanay na ako,maybe that’s the advanatge of call center agents natututong kumapal ang mukha at tumibay ang sikmura,pero pikon pa din.
    sa floor: press mute then curse.

  22. “Btw, some bloggers even believe I was the first to blog (or publish in a website) about Meralco’s systems losses. Might be true. Loss reduction like PPA elimination was my advocacy more than a decade before it became one of the hottest national issues. Back then, it was only Enrile who was vocal about it”

    Good to know,tongue. Mabuhay ka!

  23. hvrds,
    “While is is entirely fashonable today to talk about buying physical forward contracts in coal and oil since we are in the middle of a bull market in commodity futures, these markets can turn too. Who would like to be th head of procurement when these things happen”

    agree but why is the government going after meralco out in the open. they can really talk about this behind close door. this winston garcia is risking people’s retirement money. he needs to zipped his mouth, perform his job or resign. he just lost his credibility. i will fire him in a heartbeat if i have the power.

  24. yeah, vic, and some “know-it-all” wikipedia-dependent pretender swallowed your not-too subtle allusion to the u.s., hook, line and sinker. evidently, the guy saw your comment as “proof” that every person in the u.s. is using your homegrown “produce”. be careful with what you say. there are one-track minded old kids hereabouts.

  25. hvrds confuses me in how he strung his words together; hvrds may be sending a mistaken notion about futures when he said :

    That is the problem when you buy futures in the physical markets you have to commit to buy regardless of price.

    That means you must have access to dollars and a strong balance sheet.

    95% or more of futures contracts are NOT exercised by taking physical delivery. People open (and close) contracts by trading the contracts. There are many with USD-$2Million net-worth (or even less) who participate in the futures market.

  26. to Tonge Twisted: I know that somebody said Ca t was a dean in one of the metro-Manila colleges.

    So Ca t flashes her savage claws often (in her own manner 😐 that speaks of self-confidence), but still, she already had a PhD even before she went “states-side”…. that’s pretty good!

  27. why dump it on winston garcia for blowing the whistle on meralco? he represents a major stockholder and it is not only his right but his duty to voice out his suspicions of abuse and mismanagement. whether or not garcia has some alleged mess to clean up, or explain, at the gsis, does not absolve meralco.

    it’s a classic pinoy defense. whenever somebody is accused of any wrongdoing, let’s say stealing, he would turn around and say, oh yeah, what about you – you stole such and such from so and so, didn’t you? as though by turning the tables around on the original accuser, the accused is thereby cleared and the charge is not true. childish!

  28. that every person in the u.s. is using your homegrown “produce”.

    bencard, can assure you that what ever leftover we export accross the border won’t even be enough to feed the more than 10 % of the “inhalers” down there, and dozens of my family members don’t even smoke, so worry not, it’s not as harmful as people think it is is even prescribe as “painkillers” here…

  29. Tongue:

    Canadians in NAPOCOR. Back then (1994), there was a group that wanted to install fiber optic wiring through the power lines (now owned by Transco). They had the foresight then, about power lines becoming the backbone of telecommunications.

    Now, with moves in the US to install wimax through the electric meters (the “last mile”), owning MERALCO and Transco could prove downright profitable.

  30. vic, me worry? why? are you, like your friend cvj, sure that i use marijuana? if so, i’m truly surprised because i believe presumptuousness is not one of your vices.

  31. WiMax on the electric meter is great news. This is like a Swiss knife. I can bring down my electricity consumption, get a wider internet coverage and better cell phone connection all at the same time. Imagine if MERALCO and other utilities bring this device to the Philippines and installs them in public schools and government buildings. No need for NBN and CyberEd.

  32. I am not so convinced about the actual competitive spirit of our big businessmen. it seems to me that if you have one biog player and let in two smaller players, for example, all three will find a way to end up cozily co-existing without really vigorously competing, they will form a cartel where there was once a monopoly.

    mlq3, i thought breaking up of pldt’s monopoly on telecom was a success. who knows, it might work as well with the energy sector. so why not go for open access? why not support it if it will benefit the public? of course it’s bad for the shareholders of meralco.

  33. bencard, i never presume anything on anyone, as i said the destination of grow-ops in Canada is mostly to the U.S. and I stand by that. whether you or anyone is a user is not my concern at all, and it was you who Presumed and alluded that cjv alluded that Everyone in the U.S. are marijuana users, which was father from the truth, which I also said that not one member of my family living there, and there are many, is a user…but if you are a user, enjoy it, but it is still maybe a felony over there so just be careful..whereas I could always get a prescription from my doc….

  34. vic, not to belabor on this nonesense but check out cvj’s @ 2:28 pm in response to yours at 2:06 and 12:46 above. you see, i was not “presuming”. i was deducing.

  35. “he represents a major stockholder”…..bencard

    sadly for the real shareholders (gsis members), winston garcia is JUST a political concession/appointee and a MEDIOCRE manager. maybe we should lump him with the other gma morons like siraulo gonzalez and mike defensor who score lots of pogi points…

  36. Vic, i just had a weird discussion with one of the customers yesterday…something about 300 Spartans vs. 1 Million Muslims, that must be pretty potent stuff they’re cultivating.

    If your referring to this comment, yes, I enjoyed your discussions about the 300 Spartans and the Persians, but that was between you and cjv and whatever anyone makeout of my comments as long as I believe Im not misleading anyone as to its contents, then as I said it is up to our Host to say if it is out of line.

  37. KG,
    Wrongly attributing statements to someone that inevitably leads to an erratic conclusion then wiggling out of the ugly spot and back to his/her comfort zone by presumptuously declaring “you’re not in my league” is the refuge of disdainful bigots and narrow-minded crackpots, however highly-educated they seem to be.

    Ditto my reply to KG.

    As I have blogged in the past per my comments here in manolo’s or at Ellen’s, Uniffors’, DJB’s etc., including my own entries (sorry, manolo, for the self-promotion) the lutong-makaw TRANSCO auction (re: La Costa’s pre-announced $6B bid and disqualification and the Mafia’s winning $3.95B bid) as complementary to NBN-ZTE; then side by side with their growing influence on new oil exploration deals, and now, the threats to both power distributors (Meralco’s franchise area breakup)and telecoms carriers (free text in perpetuity) is all but one ochestrated nefarious job-in-process to consolidate the energy, oil and telecoms industries under one economic-political syndicate.

    BPL (Broadband over Power Lines) and FTTH (Fiber to the Home) are communications protocols that can be easily deployed exclusively by TRANSCO’s new owners since the backbone is already available. That’s pretty much how the Zamora brothers expressed their agenda in seriously participating in that auction. It’s precisely what they had in mind – Supremo’s idea of wired and wireless data, HD cable and IPTV, fixed and mobile voice, while providing multi-purpose client terminals which need not be purely for energy consumption measurement – access provided for in every home, school, office and factory that uses electricity from the grid.

    That’s why I don’t buy the idea of breaking up the Meralco franchise now. Not while this very influential elite (uh-oh!) group of greedy cronies and dummy fronts are into fast-track M&A mode.

  38. bencard:
    “he represents a major stockholder and it is not only his right but his duty to voice out his suspicions of abuse and mismanagement”

    yes it is Winston Garcis’s duty to confront the government first just like your comment: “who authored that legislative shit and how come it has never been questioned all these years”

    What he’s doing is the reverse of good planning. If risk is highly probable because the government will now reversed the LAW and will not supplement system losses, this could mean meralco will incur loss of profit hereby affecting share price and dividends to all stockholders including GSIS shares.

    Selling GSIS shares and getting out of Meralco first should have been the priority of his decision making.
    Napocor remains in binding contract with Meralco.

  39. GSIS, as a major stockholder, has all the right to question Meralco’s management. On behalf of its members/planholders, that is. But to be government’s crusader against corporate mis-governance, is above Winston Garcia’s paygrade.

    If the government is serious, it should also go after corporate biggies involved in high crimes of big-time tax evasion and smuggling. The tax evasion cases of cigarette companies should be re-visited as they defraud the government of billions of pesos every year. The oil companies have been involved in offsetting fictitious tax credits. It has been reported that a high-end department store is involved in smuggling luxury goods. The list goes on and on.

  40. mlq3, i thought breaking up of pldt’s monopoly on telecom was a success. who knows, it might work as well with the energy sector. so why not go for open access? why not support it if it will benefit the public? of course it’s bad for the shareholders of meralco.

  41. leytenean, don’t blame garcia for not having a magic crystal ball. regardless of what he wants, it’s the government’s call whether or not to reverse that legislated rip-off. i wouldn’t second guess it as to how it would accomplish that without adverse consequences, both with respect to service and profit. it seems all that garcia wants now is the replacement of that “junta” now ruling meralco, and i don’t blame him – it’s about time!

  42. vic, i am not, and have not, suggested you are “out of line”. i just thought you bought into cvj’s presumption by “assuring” me not to worry about using it.

  43. KG,

    “about return beyond five or else look for another is purely for school environment. Sa totoong buhay you have to risk more than that.”

    Yes I am practicing Rule of 72 in reality. This is even below my expectations . 5-6 years is conservative to me but for the sake of Meralco’s profit expectations, i have to say it that way.
    In addition, i don’t do simple investing. I use OPM in real life. It’s even riskier but I trust my education, my skills and myself. If I can borrow money at 8% and make 30% , I win of which I think I did and will do the same. School is where you learn the theory and principle, real life investing requires more common sense, actual experience and understanding what drives the market. Yes …in reality I have risk more than what you think.

  44. KG,
    nakatulog na kasi ako kaya hindi ko nabasa lahat.
    “going back to your point, what can regional and city maps do in terms of competition. spread it out to isolate one, even then, where would the competion be?”

    in every business location location location is very important. competition? the business people will compete. and why it is advantageous? in every new business there’s always “EMPLOYMENT” involve whether they all will form like a cartel type of busines. let them be, it will not last for long term anyway. EMPLOYMENT will drive our economy.

  45. grd:”mlq3, i thought breaking up of pldt’s monopoly on telecom was a success. who knows, it might work as well with the energy sector. so why not go for open access? why not support it if it will benefit the public? of course it’s bad for the shareholders of meralco.

    Maybe not. If you were listening closely to the Lopezes and the Meralco spokesmen, they are now actually promoting open access. Why?

    1. FPHC’s First Gen has acquired controlling interest in PNOC-EDC which owns the largest geothermal assets in Leyte, Bicol, Negros, and North Cotabato. Roughly, the whole of the major island groups. PNOC-EDC boasts of the second biggest geothermal production in the world and the leader in wet steamfield technology. This expansion solidifies their presence and access to a bigger market. Its overall Geothermal capacity is at 1,150MW.

    2. First Gas also owns and operates the country’s two Natural gas-fed power plants, Sta. Rita and San Lorenzo running at 1500MW, the 225MW Pantabangan/Masiway Hydro complex, the 225MW Bauang, La Union diesel plant, and a mini-hydro in Agusan. The Batangas NG plants are within the Meralco franchise area therefore, with Meralco as exclusive customers, no TRANSCO cost is added to the pricing.

    3. With open access, everyone, even Meralco, can buy directly from the Lopezes’ cheaper non-fossil fuel plants and resulting to a cheaper pass-on bill. That is the significance of the Lopezes’ maintaining control over Meralco.

    4. Compared to the delivered price of thermal and coal plants in Navotas and Calaca, power availability in the immediate environment of the largest client region, which is Manila, is to the advantage of Meralco – its network coverage cannot be matched by any competitor – that when a price war in distribution ensues, the odds are tilted lopsidedly in their favor. One of the main reasons why growth is fastest in Calabarzon is because of the reliability of power.

    5. The NPC and the 13+ year-old IPP (some are second-hand plants recalled from retirement) have plants that are not as well-maintained as those of FPHC’s, which business would prefer to connect their mission-critical loads to these unstable sources much less one that passes through the lines of its stiff competitor by way of FPHC’s interests in Meralco?

    6. Open access now will accelerate the Lopezes leaving distribution and focus on generation. It helps that Napocor has been dragging its feet in plant privatization. Whether that will be beneficial to customers, I don’t know.

    The reason government attack dogs want to breakup the franchise and at such an alarming pace and complete with all the dramatics is that they know the where, how, and how much government will soon invest its infrastructure money, before that time comes, all the crony businesses must be in place. They have practically fenced-in the franchise’s areas of expansion. They have covered Central Luzon where Panganay na Anak as Congressman also heads the House Energy Committee (not a coincidence) and in Southern Luzon where Pangalawang Panganay na Anak is Governor.

    They have less than two years to pull it off. Impossible. But should the Lopezes give in to the pressure, it’s academic. The Lopezes appear to be shifting focus from distribution to generation. Even as I agree with Manolo that they should divest from Meralco and concentrate in generation, I would also advise (or plead with) them not yet.

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