GSIS: No plan to wrest control of Meralco

MANILA, Philippines – The Government Service Insurance System (GSIS) denied yesterday that it is gearing up for a takeover of the Manila Electric Co. (Meralco), saying it merely wants a “change in management” in the country’s largest power distribution firm to protect the interest of state pensioners.

“We are not taking control of Meralco. What we want is a change in management,” GSIS president Winston Garcia said.

“Claims to this effect are utterly false and malicious, intended to undermine and divert attention away from the GSIS campaign to bring back social responsibility and good corporate governance at Meralco,” Garcia said.

“Clearly, the bogeyman being raised by GSIS critics is but a poorly conceived squid tactic to preserve the appalling status quo at Meralco,” he said.

This developed as Senate Minority Leader Aquilino Pimentel warned the government yesterday against seizing control of Meralco.

“The government should desist from plans to control Meralco or other private businesses,” Pimentel said in reaction to reports the Arroyo administration intends to use the GSIS to spearhead the supposed takeover plan.

Last January, GSIS bought the government’s less than 10 percent stake in Meralco for P8.9 billion. The transaction increased the GSIS stake in Meralco to about 23 percent.

Other government entities such as Philhealth, Land Bank of the Philippines, Social Security System, and Pag-Ibig Fund hold a combined 10 percent stake, bringing the government’s stake in Meralco to a total of 33 percent.

Since GSIS’s latest acquisition of Meralco shares, Garcia has been asking for documents from the power company regarding its finances and operations.

“We are asking for documents to make sure that our pensioners are protected. We are searching for the truth. We are not taking control of Meralco,” Garcia said.

“Meralco has been getting away with bloody murder against its very shareholders, who share the same boat with its customers in being saddled with unjustifiably high electricity bills,” he said.

“The GSIS has four seats in Meralco, but such huge stake has not stopped its management from treating GSIS like a dirt rag,” Garcia said.

“Despite repeated requests for access to corporate documents, the people lording it over at Meralco have turned a deaf ear towards the GSIS,” he added.

Asked if a legal battle will be an option in case Meralco does not heed the requests of GSIS, Garcia said it is indeed being considered.

The GSIS chief said that initially the state pension fund can file a complaint against Meralco with the Securities and Exchange Commission, the country’s corporate regulator.

“First off, the GSIS may be a government-owned and-controlled corporation, but it is not the Philippine government. Likewise, the government would have no interest on Meralco because it has a long-standing privatization policy,” Garcia said.

He accused Meralco of “corporate mischief” with its acquisition of an

insurance company from which it bought insurance coverage “under dubious circumstances.”

“Alas! This insurance company has reinsured Meralco with a Bahamas-based insurance firm which in turn, reinsured the same to another Philippine-based insurance company,” Garcia said.

“The GSIS has no desire to control Meralco, only to protect its members’

investment in this company, while protecting the public from unscrupulous corporate activities that impact negatively on their lives,” he said.

Meralco is set to hold its annual stockholders’ meeting on May 27. Changes in the board may happen given GSIS’ sizeable interest in the distribution company.

At present, the Lopez group, through First Philippine Holdings Corp. (FPHC), holds a 33.4 percent stake in Meralco.

Pimentel said that what the government should do is “use existing laws to ensure electric rates do not skyrocket and consumers are protected from power firms’ greed.”

He warned that a takeover of Meralco could only trigger widespread anxiety in the business sector or even worsen political instability.

Pimentel also voiced suspicion that the government wants to take over Meralco as a retaliatory move against the Lopez family, which controls the ABS-CBN network. The giant network is perceived to be critical of the administration.

“The bottom line here is that we are against the idea of government taking over private enterprises because it has been shown that government is a poor businessman,” Pimentel said, adding that the government should instead stop the anomalies at the National Power Corp.

Lower rates

A Meralco official meanwhile said the firm is committed to lowering power rates.

FPHC chairman and chief executive officer Oscar Lopez made the commitment during the firm’s recent listing of preferred shares at the Philippine Stock Exchange (PSE).

“We’ll try to cooperate as much as we can but there are things that are beyond our control. When oil prices (rise), everything goes up,” Lopez said.

Meralco’s customers paid 82 centavos per kilowatt-hour (kWh) last April because of high prices at the wholesale electricity spot market (WESM) and higher fuel procurement cost.

Lopez also said the firm would rather focus on improving its business than worrying about GSIS plans.

“I don’t know about the ultimate plan of Mr. Garcia, whether he is doing this in order to get a better price for his share because that is his main business, to go in the company and try to shake it, to get a good price,” he said.

The FPHC head reiterated that at present, they are comfortable with their current share of 33.4 percent at Meralco.

“We’re not going to buy additional shares right now, but we’ll continue to do what we’ve been doing, operating the company to the best of our ability,” he said.

“We are quite comfortable with the level that we are in. We’re quite happy with 33.4 percent,” FPHC president and chief operating officer Elpidio Ibanez, for his part, said. – with Christina Mendez, Donnabelle Gatdula