Government sells stake in Meralco for P8.9 billion

The National Government (NG) has sold its stake in Lopez-owned Manila Electric Co. (Meralco) for P8.9 billion or P1.1 billion less than its previous target of P10 billion, Finance Undersecretary Crisanta Legaspi said yesterday.

The government sold the less than 10-percent Meralco stake to Government Service Insurance System (GSIS) last Jan. 21 and 22 or before Asian stock markets experienced a massive sell-off due to the anticipated recession in the US.

Stock market analysts who declined to be named have questioned the timing of the deal, saying that markets were in a slump. There were also questions on the legality of the transaction given the absence of a public bidding.

However, Legaspi said that the National Government even sold its stake for a price better than the prevailing market rates.

She also said there was nothing illegal about the transaction as there was no need for a public bidding for transactions between two government entities.

“We sold it at a premium and the sale was made to another government entity so there was no need for a public bidding,” Legaspi told reporters.

She said the government decided to finally push through with the sale as it needed the revenues for infrastructure projects and social spending.

“The government needed the funds. It’s better to accept (GSIS’ offer) now so we have revenues for infrastructure,” she added.

The transaction increases the GSIS stake in Meralco to 20 percent.

The GSIS earlier said it wanted to beef up its stock investments, which amounted to P15 billion before the purchase of the Meralco shares.

The government is eyeing to raise P30 billion from privatization of state-owned assets this year. It also hopes to balance the budget this year after decades of incurring deficits.