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No Love Lost for Meralco

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Winston GarciaWinston F. Garcia, president and general manager of the Government Service Insurance system, minces no words to describe his dislike for the way the lopez clan is running the philippines’ largest electricity distributor.

If the words “Meralco” and “overcharging” were raindrops, then it would have rained cats and dogs inside Crowne Plaza Hotel’s Sapphire Room, where the Anvil Business Club held their recent forum.

At the podium, Winston F. Garcia, president and general manager of the Government Service Insurance System (GSIS), mentioned those words more than enough times to drive home his point: The Manila Electric Company (Meralco), should change the way it runs its utility business so consumers can enjoy lower electricity rates.

Often portrayed by some members of the media as the point man in the government’s alleged attempt to take over the utility firm, Garcia insisted he’s just after some changes that will bring in “a more professional and more competent management team.”

Power Points
Armed with an electronic slide presentation, Garcia stated one by one the issues that he, as a Meralco shareholder and consumer, has against the Lopez management. (The Lopezes own 33.4 percent of the utility, while GSIS owns 25.5%.)

Garcia said the Meralco management has been “insensitive” to the concerns and interests of shareholders. He claims that from 2001 to 2006, not a single centavo was distributed to the its shareholders as dividend, even though the Lopez-owned and controlled companies earned record profits.

He finds it strange that, last year, Meralco declared only one billion pesos as dividends when the company allegedly had an “accumulated and unappropriated surplus” of 13.8 billion pesos (US$ 308.68 million).

“[Meralco] management has no delicadeza and sense of responsibility,” he says with a jab of a finger. (Delicadeza is a Spanish term that roughly corresponds to a sense of what is right and wrong.)

The GSIS chief said it was inappropriate for Mr. Manuel “Manolo” Lopez, the current chairman and chief executive officer of Meralco, to also be a shareholder of First Philippine Holdings Corporation.

First Philippines has a major stake in Meralco and, Garcia revealed, representatives of Lopez-owned companies do not inhibit themselves from meetings where transactions of the Lopez firms are discussed for approval or consideration by the board. Their actions, according to Garcia, violates the rules set by the board itself.

He also told the audience of Meralco’s reluctance to furnish copies of contracts to its shareholders. As most of these documents are voluminous, Garcia said he would ask for copies in advance to give him ample time to review them. But Meralco, he claim, refused his request.

“When I insisted to bring a photocopying machine with me, they relented and said ‘we will allow you to copy provided that you sign a waiver that you cannot use any of the documents for any criminal, administrative or civil proceedings. We also require you to destroy them when we say so.’”

The outspoken Lopez critic also took a swipe at Meralco’s “very expensive bureaucracy.” The company has over 6,000 employees, but for every employee, there are reportedly four to five executives and supervisors. This translates to expenses reaching 5.1 billion pesos (US$ 114.07 million) or about 850,000 pesos (US$ 19,013) per employee. It also has more than 4,000 contractual workers, for whom it spends another 2.9 billion pesos (US$ 64.86 million) annually or around 700,000 pesos (US$15,658)per person.

Moreover, Garcia noted, Meralco supposedly maintains a non-contributory pension plan. He described it as anomalous for two reasons : The employee and the company allegedly do not contribute anything to the pension fund, yet the retired worker would receive a pension based on his latest salary for the rest of his life. “Second, when the employee dies, the pension continues until the death of his or her survivor.”

Garcia told forum guests these financial burdens are passed on to the consumers and that all these are reflected in Meralco’s books.

He also talked about Meralco’s alleged subservience to the Lopez clan, as well as the lack of transparency in explaining the thorny issue of system losses, which are costs likewise shouldered by consumers.

But for Garcia, the biggest anomalies of them all are the dealings of Meralco with the Lopez’s own independent power plants and subsidiaries.

“If Meralco never entered into independent power producer contracts with Lopez-owned companies,” Garcia disclosed, “and decided to buy all the electricity it distributes from the government-owned National Power Corporation, there will be a total reduction of 24% in generation costs.”

Change of Leadership
In summary, Garcia said he wants to see greater transparency in the way Meralco procures goods and services, so that the consumers won’t have to bear “unnecessary burdens.” In particular, he said he wants an independent body to review the systems loss charges, as well as for the Energy Regulation Commission to closely monitor and regulate all employee services.

Reiterating that it’s time “to have a a competent, professional, and independent management team to implement these changes,” Garcia stressed that if he is given the chance to manage the company, he would have electricity costs reduced by 10 to 20% after two months. Otherwise, he added, he would resign from his would-be Meralco post.

Highly Apolitical
When Anvil members threw him some lighthearted political questions, Garcia was at once game and coy but unabashedly evasive. Asked who he thinks would be the winnable RP presidential bets in the 2010 national elections, he just smiled and politely demurred, insisting that he’s the wrong guy to ask because he’s “the most apolitical member of the [Garcia] family.” The Garcias are one of the influential clans in Cebu politics.

He maintains that he disdains politics “because you must have the stomach and the time to do all those things that politicians do—baptize babies, bury the dead, marry couples, attend every fiestas in every town. I just don’t have the patience and time for that.”

Downplaying a member of the audience’s compliment that he’s a hero in the fight against Meralco, Garcia shrugged and said most heroes are dead or tend to die ahead of everyone, “I [just] hope that I will not be a hero but that I could be allowed to finish what I set to achieve in this fight with Meralco.

print ed: 08/08

 

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