Curious turn of events

Two franchise controversies have been hogging the news lately. The 17th Congress – in the exercise of its power to grant franchise on public utilities – is in the middle of the stormy controversies. Under the country’s 1987 Constitution, franchise is a privilege granted by the State through Congress, originating from the House of Representatives and concurred by the Senate before it goes for signing into law by the Office of the President.

One involves a local electric power franchise granted by the Lower House to a new player set to take over an existing power utility that has been serving Iloilo City for nearly a century but whose franchise renewal application has been set aside. The franchise bill of the new power utility player is now pending approval at the Senate.

And the other that will reach the 17th Congress is the furor among local and foreign telecommunications companies (telco) that tried to outbid each other to become the third player in the Philippines. Thus, it became known as the third telco that the administration of President Rodrigo Duterte initiated amid public outcry over slow internet speed, dropped calls and other criticisms on existing telco services.

It is actually an attempt to break up the duopoly of current telco giants – Smart Telecom under the Philippine Long Distance Telephone (PLDT) Co. of business leader Manny V. Pangilinan and Globe Telecom of the Ayala group of companies.

We discussed about these franchise controversies with Cyril del Callar, ex-Napocor president and now the chief regulator compliance of Monte Oro Resources Energy (MORE) Co. and Ilocos Sur Councilor Luis “Chavit” Singson in our Kapihan sa Manila Bay last Wednesday at Café Adriatico in Malate.

The MORE Co., owned by industrialist Enrique Razon, is the mother company of the MORE Electric and Power Corp. that recently got its franchise to operate electricity services in Iloilo City. However, this is being challenged by Panay Electric Co. (PECO), the existing power utility in Iloilo City that is owned and managed by the local oligarch Cacho family for the past 91 years of its existence.

Long before MORE filed its franchise application, PECO argued it has been trying to secure approval from the House of Representatives a renewal for 25-year legislative franchise of its electricity distribution business in Iloilo City. But in the course of the Senate public hearing, it turned out PECO has been operating not under a congressional franchise but a franchise it got from the National Electrification Authority (NEA).

At the Kapihan sa Manila Bay, Del Callar belied PECO’s charges that it was a “hostile takeover” by MORE, aided by Congress to transfer their franchise to the Razon business empire. With a capitalization of P2 billion to acquire a 25-year legislative franchise to manage and distribute electricity, Del Callar argued MORE could deliver cheaper and reliable electricity, and upgrade existing facilities that Iloilo City residents deserve.

PECO threatened to cut off its electricity services in the booming capital city of Iloilo province in retaliation against an Iloilo City Council that denounced its poor but expensive electricity services and asked the 17th Congress not to grant its franchise renewal. Department of Energy (DOE) Secretary Alfonso Cusi yesterday warned of possible government takeover should PECO makes good its threat.

In the case of Singson, the former Ilocos Sur Governor has cried foul against the decision of the National Telecommunications Commission (NTC). This after the NTC bidding committee disqualified SEAR Telecom – the consortium of TierOne Communications International and Singson-led LCS Group of Companies – for not having the P700-million worth of letters of credit (LCs) as participation security.

Singson later presented several pieces of manager checks totaling P700 million – which is good as cash in lieu of LCs – in its appeal on the NTC ruling. Aside from Singson’s SEAR consortium, two other bidders were disqualified by the NTC.

On Nov. 19, the NTC officially declared Mindanao Islamatic Telephone Company Inc., or Mislatel consortium as the country’s new major player (NMP) as the lone qualified bidder. It is composed of Udenna Corp., a company owned by President Duterte’s campaign donor and Davao City-based businessman Dennis Uy, its subsidiary Chelsea Logistics Holdings Corp. and the state-owned China Telecommunications Corp.

The resolution was signed by NTC Commissioner Gamaliel Cordoba; deputy commissioners Edgardo Cabarios and Delilah Deles; and Oversight committee chairman undersecretary Eliseo Rio Jr., who is also officer-in-charge of the Department of Information and Communications (DICT).

In our Kapihan sa Manila Bay forum, Singson insisted Mislatel breached a contract with DigiPhil Technology, a subsidiary of Singson’s consortium members to which it originally entrusted its congressional franchise but sold it a month later to Udenna. For this breach of contract and not having honored the right of first refusal of SEAR, Singson disclosed, they will pursue a case against Mislatel before appropriate courts.

Still furious over the NTC decision, Singson is mulling to file a graft case against the NTC officials before the Ombudsman. Singson questioned the motives behind the NTC’s decision that ignored letter/complaints he lodged against Mislatel at the NTC a month before the bidding award took place.

Singson rejected Udenna’s offer to join their consortium, citing his own company’s local telco services that have a backbone facility servicing Northern Luzon at cheaper prices, which will soon be linked up to a satellite by August next year for its planned nationwide expansion.

Stepping into the third telco bidding controversy, both the Senate and the House vowed to look into the legality of NTC’s controversial award to Mislatel consortium and scrutinize its capability, including concerns raised on its foreign partner, China Telecom.

As the fairy tale character “Alice in Wonderland” quipped in bewilderment, this is getting curiouser and curiouser.