‘Camacho acted in good faith’

Malacañang insisted yesterday that Finance Secretary Jose Isidro Camacho acted "in good faith" when he proposed a sweeping state takeover of beleaguered Manila Electric Co. (Meralco).

Press Secretary Ignacio Bunye said the government only wanted to ensure "stability in the power sector" in case the Nov. 15 Supreme Court ruling ordering Meralco to refund an estimated P28 billion to its customers becomes final.

Meralco earlier said it might go bankrupt and cease operations if the refund pushed through.

Earlier, pro-administration lawmaker Sen. Joker Arroyo branded Camacho’s proposal as "crass opportunism and subtle arm-twisting" of the Lopez family, which owns the utility firm.

It would only allow President Arroyo to appoint cronies to the Meralco board and may even make the problem worse, he said.

Hours after the Supreme Court announced its decision, the Lopez family met with Mrs. Arroyo to discuss the implications of the ruling on the company and the economy.

Camacho made a draft memorandum dated Nov. 12 — three days before the Supreme Court ruling — proposing a government takeover of Meralco’s board of directors, management and operations to prevent a possible company collapse. He desisted when the Lopez family rejected his proposal outright.

Bunye maintained that there was "no intent to take over" Meralco and the proposal was "not a final thing."

"We would like to clarify that it started when the Lopez group approached Secretary Camacho and they indicated that their need was very urgent and they’re looking for advice and assistance," Bunye told reporters.

"And Secretary Camacho, in good faith, sent this kind of proposal patterned after" the rehabilitation of the state-run and debt-saddled Philippine National Bank, he said.

Bunye said the President wanted to "make sure, even as we implement this Supreme Court decision, once it becomes final, there would be stability in the power sector and there would be continued supply of electricity to our consumers."

Mrs. Arroyo had formed a panel headed by Energy Secretary Vincent Perez to "address the company’s problems and formulate a plan to maintain its financial stability as a public utility."

It was speculated that the Supreme Court decision was leaked to Malacañang because Camacho’s draft memo was dated Nov. 12, three days before the tribunal announced its ruling.

"If Mrs. Arroyo did not know of Camacho’s move on Meralco, then why did the President cancel all her appointments the day the Supreme Court released its consumer-friendly ruling so that she could meet with the Lopezes at the Palace?" oppositionist Sen. Tessie Aquino-Oreta said.

Critics cautioned against a government takeover, citing the government’s poor track record of managing government-run companies and enterprises.

In the mid-1990s, the government under President Fidel Ramos launched a privatization program to stem public spending and raise revenue.

Yesterday, the country’s largest labor group expressed deep reservation over a possible government takeover of Meralco.

The Trade Union Congress of the Philippines (TUCP) urged that the government conduct "wide-ranging consultations with consumer groups regarding the fate" of Meralco.

"We have serious concerns over outright government takeover of Meralco because of experiences in the past and it could also be tantamount to reverse privatization," the TUCP said in a statement.

The government should move quickly to prevent a possible collapse of Meralco which the TUCP said "will have grave repercussions on the economy."

Earlier, the TUCP suggested that Meralco refund its customers with corresponding shares of stock to give consumers a "greater voice" in running the company.

"Consumers should have a say in the affairs of the utility firm by having membership in the Meralco board," Aguilar said.

Militant groups, on the other hand, demanded that Meralco immediately pay up in cash.

Meanwhile, Senator Arroyo’s defense of Meralco drew surprise and "extreme disappointment" from Bayan Muna party-list Rep. Crispin Beltran.

"It seems out of character for Senator Arroyo to run to the defense of Meralco instead of standing up for the interest of consumers and the public," Beltran said.

Arroyo was a human rights lawyer during the iron-fisted rule of the late strongman Ferdinand Marcos, who was ousted by a popular uprising in early 1986.

He was a member of the House of Representatives – where he earned a reputation for being independent-minded – before he ran for the Senate last year.

The Supreme Court’s third division ruled that Meralco will have to refund its over three million consumers allegedly for several years of overcharging. Meralco denied it overcharged its customers.

The high tribunal did not give an amount that Meralco would have to refund but the company earlier said it could go as high as P28.15 billion.

The court ruling was based on a petition of the now-defunct Energy Regulatory Board (ERB), the predecessor of the Energy Regulatory Commission (ERC).

In 1998, the ERB ordered Meralco to refund some P10.8 billion based on overcharging allegedly committed from February 1994 to February 1998.

Meralco elevated the case to the court and won a decision in the Court of Appeals in 2000. This prompted the ERB to bring the case before the Supreme Court even as the amount to be refunded continued to grow.

The order will worsen the woes of the power distributor which has already been unsuccessfully petitioning the ERC for a power rate increase.

Meralco said it will have even less money to avoid a debt repayment crunch, amounting to P31 billion, most of it long-term.

Credit ratings agency Standard and Poor’s said Meralco has P5 billion worth of debt maturing in 2003, P7.2 billion in 2004, and P6.4 billion due in 2005. — Marichu Villanueva, Efren Danao, Mayen Jaymalin, Romel Bagares