Meralco giving shareholders P1.1B in dividends

MANILA, Philippines – The Manila Electric Co. (Meralco), which is facing a congressional inquiry for alleged excessive pricing, has set aside P1.1 billion for cash dividends to shareholders this year.

Cebu Rep. Eduardo Gullas revealed this yesterday based on documents Meralco has submitted to the Philippine Stock Exchange (PSE).

Of the P1.1 billion, half or P558 million will be distributed tomorrow at 50 centavos per share. The other half will be paid in the second semester also at 50 centavos per share.

Among the shareholders expected to receive their dividends are First Philippine Union Fenosa Inc. and First Philippine Holdings Corp. – two Lopez family-controlled firms that together own 33.38 percent of Meralco.

The two firms hold a total of 372,175,706 common shares, which means that they will receive P372 million in dividends this year.

The other dividend beneficiaries include the Government Service Insurance System, Social Security System, Home Development Mutual Fund or Pag-Ibig Fund, and Philippine Health Insurance Corp.

These government corporations own about 30 percent of Meralco.

The Meralco board approved the payment of the dividends last March 17 based on total common shares of 1,114,770,636.

Like other utilities whose shares are publicly traded, Gullas said Meralco, the country’s largest power distributor, faces the constant challenge of keeping rates fair and reasonable while staying profitable.

“Actually, as a corporation whose shares are traded in the stock exchange, Meralco has a clear mandate to produce gains for shareholders. In fact, GSIS, SSS, Pag-ibig Fund, and Philhealth invested in Meralco precisely to make money, not to lose money,” he said.

He said there is nothing wrong with Meralco making money, provided it is based on a reasonable rate of return.

“This is where regulators are supposed to come in and tell everyone whether the company’s current rates reflect a fair rate of return, or an excessive return.

‘EPIRA failed to lower power rates’

Seven years since its approval, the Energy Power Industry Reform Act (EPIRA) has failed to lower power rates, according to Sen. Joker Arroyo.

“The first law of GMA in 2001 is EPIRA,” he said.

“Seven years after, is it successful?”

Senator Arroyo said the EPIRA law is one reason for high power rates. 

“(The issue) is timely now that EPIRA is being reviewed,” he said. “We wanted reform for two reasons, which are to reduce power rates and reduce the debt of Napocor.”

Sen. Miriam Defensor Santiago, Joint Congressional Power Commission chairwoman, has set a hearing on high power rates at 10 a.m. today.

Energy Secretary Angelo Reyes, Napocor president Cyril del Callar, Energy Regulatory Commission chairman Rodolfo Albano Jr., GSIS president and general manager Winston Garcia, Meralco president Jesus Francisco, consumer group representatives and some lawmakers are expected to attend the hearing.

It is a prelude to the Meralco board meeting on May 26 to be followed by the stakeholders meeting the following day. 

Garcia is backed by five board directors of Meralco, while the Lopezes enjoy support from 11 directors.

OSG wants Meralco-Napocor deal voided

The Office of the Solicitor General (OSG) is asking the ERC to disapprove the P20-billion debt settlement agreement between Meralco and the National Power Corporation (NPC).

The amount represents principals, interests and surcharges on Meralco’s failure to purchase contracted power with the NPC based on a 10-year contract.

In its 36-page motion filed with the ERC on May 7, the OSG went against the position of the state-run NPC in seeking the ERC’s approval of the agreement.

It is “grossly disadvantageous and prejudicial” to the government as it would considerably reduce Meralco’s standing debts with the NPC,” the OSG added.

Solicitor General Agnes Devanadera said the agreement signed on March 24, 2003 is void for being contrary to law, morals and public policy for imposing an additional burden on consumers.

It was neither submitted to nor reviewed by the OSG in violation of the Revised Administrative Code of 1987 and Republic Act 6395, the NPC’s charter, she added. – With Christina Mendez, Mike Frialde