MANILA, Philippines—The Lopez family-controlled Manila Electric Co. (Meralco) has come under heavy siege from key government sectors, trade chambers and consumer groups in a multi-pronged offensive to force it to bring down high electricity costs.
The new clash between the government and the Lopez group foreshadows a titanic struggle over electric power, the life-blood of Philippine industry and the daily lives of Filipinos. The rates involve 11 million residential electricity users, comprising 92 percent of electricity used by all households.
The Gloria Macapagal-Arroyo administration is leading the charge by mobilizing its allies in both Houses of Congress into launching a joint investigation into Meralco’s power rates and by the intervention of the government giant pension fund, the Government Service Insurance System (GSIS). The GSIS holds 25 percent of Meralco shares and four seats on the 11-member Meralco board to the Lopez group’s five, with the remaining two held by independents. This sets the stage for a pivotal boardroom battle during the annual stockholders’ meeting on May 27.
The enlistment of the GSIS, which is questioning the transparency of Meralco’s costing system for responsibility in the high price of electricity, in the campaign gives it a partisan color far beyond the stated intention of driving down the costs “in the public interest.” It has heightened suspicions that the intervention is part of a plot for a government takeover of Meralco, which has been controlled by the Lopez family since January 1962, when at the height of the nationalist Filipino First policy, the family bought out the firm from its American owners, General Public Utilities of New York.
GSIS president Winston Garcia, a political ally of President Arroyo in vote-heavy Cebu province, has said there is “nothing political” in its media blitz pressing for an investigation of Meralco transactions. The intervention has been perceived as an extension of Ms Arroyo’s enduring feud with the Lopez family which her father, President Diosdado Macapagal, failed to crush when he waged war against the Lopez “oligarchy” in the 1960s.
The effort to dispel the perception that the administration’s offensive was not driven by vindictiveness was undermined by the fact that the joint congressional inquiry, by the Joint Congressional Power Commission, is headed by the President’s allies, Sen. Miriam Defensor-Santiago from the Senate, and Pampanga Rep. Juan Miguel Arroyo, the President’s son, from the House. This suggested an extraordinary personal interest on the President’s part.
Power rates come only second to rising rice prices in importance to Filipinos, and the battle over the power rates has provided the embattled Arroyo administration an issue to divert public attention from the rice crisis. It has allowed the President to pander to public grievances over high electricity costs and redirect public unrest over food price increases to Meralco as a scapegoat. It has not wasted the opportunity to play hero to a public that is feeling the bite of the electricity charges.
Undeniably, Meralco is a convenient villain. At no other time has the Lopez family faced the full weight of presidential power and influence thrown at Meralco since the Ferdinand Marcos dictatorship deployed martial law powers to dismantle the family’s economic interests. The Arroyo administration is no less unscrupulous than the Marcos administration in crushing its enemies. The Lopez group has not seen a more formidable gang up of public offices and private groups, including chambers of commerce and industry, which have been drafted to join forces with the government in doing battle at the Energy Regulatory Commission, where the government has filed omnibus petitions seeking cuts in the Meralco rates. At no time has the Lopez family and Meralco seemed more vulnerable to government and lobby group pressures seeking to reduce electricity rates and to end their management control of Meralco.
In Congress, the other venue of this battle, Meralco faces hostile presidential allies. It cannot count on public opinion to come to its aid. It no longer has the Sugar Bloc that defended the Lopez interests during pre-martial-law Congress.
The power commission in Congress is set to look into two issues. Senator Santiago said it would investigate claims that Meralco’s rates were high because it was buying power from the Lopez-owned power producers. She said the commission would investigate if this arrangement violated penal provisions of the antitrust law.
Representative Arroyo said the main issue “is transparency” of Meralco transactions, and that some committee members have many questions to ask how Meralco came up with its “exorbitant” rates. He noted that Meralco declared a P532-million net income for the first quarter and asked, “What’s keeping them from giving something back to the people?”
Garcia has tried to dissociate his demand for “full transparency and accountability of operations of Meralco” from the perception that it was a double-bladed move to take over the power firm and that the GSIS was being used as a proxy in the President’s grudge fight with the Lopezes. His claim that he merely wanted to protect the GSIS members’ investments in Meralco has failed to impress.
The contentious issue of whether the government can run Meralco more efficiently at less cost and bring down electricity rates looms high in the agenda of the congressional hearings. This should strike into the heart of the issue of the economy being driven by private enterprise or by the government. Public corporations running public utilities have been a dismal failure.
