Lopez Group open to compromise on cross-ownership in power sector

The Lopez Group of Companies is open to compromise on the issues of cross-ownership and stranded cost recovery under the proposed Power Sector Restructuring Program now pending in Congress, a ranking company official said yesterday.

"We are open to compromise in cross-ownership and stranded cost as long as this will not affect the viability of the company and will result to future monopolies in the long-term. We want a level playing field," Manila Electric Co (Meralco) board member and overall strategist of the Lopez Group Christian Monsod said.

According to Monsod, this is the reason why they are willing to hold a dialogue with certain parties representing the civil society.

Monsod said they understand the corner of these parties against monopolistic power. "We believe we can address their concerns, even if it means limiting our own business interests while we build the trust among us. We hope that they, in turn, understand that we cannot sacrifice the survival of their business or their ability to provide the public with the highest standards of public services they deserve," Monsod said.

The former Commission on Elections chairman said the power industry has been opened and deregulation will internationalize it further. Local big players are only midgets in the international arena. "We only wish to be treated fairly and evenly in our own country," he stressed.

"And we are with civil society in seeing to it that we do not replace a government monopoly with foreign monopoly or market power abuses by local business," Monsod said.

The civil society, represented by Akbayan Rep. Etta Rosales and Consumers Oil Price Watch chairman Raul Concepcion, claims the proposed power measure will encourage rather than curtail the expansion of monopolies.

Peter Garrucho, president of First Generation Holdings Corp. also a member of the Lopez Group, said there is nothing in the current draft that will benefit the big players. "Under the status quo, both cross-ownership and affiliate bilateral contracts are currently allowed yet this absolute dominance of the generation sector has not happened," he said.

Garrucho pointed out that the Lopez-owned First Generation Holdings only ranks third largest in its home country. "If there is a fear we will dominate and corner the National Power Corp. assets, the facts prove otherwise," he said.

According to Garrucho, there are enough safeguards in the current power bill against possible abuse in cross-ownership.

The two officials said that the experience of California will not happen in the Philippines as long as market forces are allowed to rule the industry.

Another misconception, Garrucho said, is the bill does not carry any rules or regulations to prevent monopoly and oligopoly. "Placing all limits and restrictions on who can participate and how much capacity each one can build will simply weigh down the industry and make it less responsive," he said.

But, he said they are willing to sit down with the civil society to talk about these limits and caps on stranded recovery cost and market cap, or how much they can acquire from their affiliate firms.

However, they emphasized that there should be a reconstituted Energy Regulatory Commission in the bill that will be most powerful among regulatory bodies existing in the country today.

He said other issues such as divestment and hedging of power firms should also be carefully looked at.