Lopezes seek right price for 13.4% Meralco stake

MANILA, Philippines - Oscar Lopez, the patriarch of the Lopez clan, said they could sell their remaining 13.4-percent stake in Manila Electric Co. (Meralco) if the buyer offers the “right price.”

In an interview on the sidelines of the turnover of the Mindanao geothermal power plants from Marubeni Corp. to Lopez-controlled Energy Development Corp. (EDC), Lopez said at the moment, they are keeping their shares in the power utility firm.

Lopez, who is chairman of First Philippine Holdings Corp. (FPHC), the group’s investment arm and the owner of the 13.4-percent stake, said they are holding on to their Meralco stocks for a number of reasons.

 “We don’t have any immediate plans yet, but it could also be sold if the price is right. But so far, we just want to keep it. So we’re still part owners,” he said.

He said in case they decide to sell the shares, the block will be first offered to the Philippine Long Distance Co. (PLDT) group, adding that they would likely divest off the entire 13.4-percent stake.

Earlier, Lopez was quoted saying that FPHC was inclined to sell its stake in Meralco.

“We look forward to continuing to participate in Meralco as an owner, with representation on the board. If Meralco is able to seize upon the synergistic opportunities that it has been presented, then we stand to realize as much value, if not more, from our remaining 13.4-percent stake than if we had tried to defend our 33.4-percent stake. But if other opportunities arise that are significantly more attractive, then Meralco has the option to sell down or sell out at significantly higher values than would have been possible if we opted to engage in a battle of attrition,” he said.

But Lopez pointed out that they would also wait for the outcome of the performance-based rate (PBR) scheme on Meralco’s operations before selling their shares.

Lopez said the market price of Meralco would likely go up with the approval of the PBR.

“We feel that with the operation of PBR, the price could go even higher, hopefully,” he said.

The Energy Regulatory Commission (ERC) has approved a 25-centavo per kilowatthour (kWh) increase in Meralco’s distribution rate starting May this year under the PBR.

PBR replaces the old measure of profitability, the return-on-rate base (RORB).

Based on initial estimates, Meralco stands to gain P500 million in additional revenues starting June this year due to the implementation of the PBR scheme.  

In 2005, the ERC adopted the PBR for distribution utilities pursuant to its authority under the Republic Act 9136 or Electric Power Industry Reform Act (EPIRA) to adopt internationally- accepted rate making methodologies.

PBR strives to achieve a balance between efficient price levels, allowing utilities efficient revenue to ensure their sustainability, and maintaining or improving network service performance levels.