DOF nixes offer on sale of Meralco stake

The Department of Finance (DOF) has rejected one of six proposals for the privatization of Manila Electric Co. (Meralco) shares held by government. The rejected proposal was submitted by the Investment House Association of the Philippines (IHAP) and the ING Barings.

Government holds a 10-percent stake in the country’s best utility company which has been prioritized for sale to the private sector.

Finance Secretary Jose Isidro Camacho told newsmen that the IHAP/ING Barings proposal, which is for a money warrant, is not what government wants.

"Their proposal is not the solution that we prepared to propose unless they want to change their proposal," Camacho said.

Other investment institutions that submitted proposals are Salomon Smith Barney, Lehman Brothers, Credit Suisse First Boston, Deutsche Bank and ABN Amro.

The money warrant gives government the bulk of the proceeds up front with the balance to be turned over after a one-year period. It thus gives revenues up front but "it is not the best structure for government," according to Camacho.

Government is looking at earning some P4 billion from the sale of its stable in Meralco. – Ted Torres