Manuel V. Pangilinan
By Ray L. Junia, Publisher
Something scandalous about the nation’s power industry – it’s in the hands of few oligarchs!
From the Sys to Lopezes, Aboitizes and Consunjis, they are in control of a multi-billion peso industry, virtually placing millions of hapless Filipinos at their mercy.
In recent years, new players emerged with just one driving obsession – rake in billions of pesos in profits like literally squeezing blood from stone.
They include the old-rich Ayalas, banking magnate George Ty and, of course, listed retailer Meralco controlled by Indonesian conglomerate Salim Group through controversial “point man” Manuel V. Pangilinan (aka MVP).
From generation to transmission and distribution of electricity, the oligarchs are just everywhere, placing them in a vantage position to dominate – and dictate – the nation’s economy.
Like A Sore Thumb
Among industry players, Meralco prominently sticks out like a sore thumb, it being the most vilified for raising its power rates to exorbitant levels sans public consultations, in cahoots with an inept Energy Regulatory Commission.
While it cost the Salim Group billions of pesos to buy the Lopezes’ controlling stake in Meralco, their return on equity (ROE) had been awesome, if not mind-boggling.
Based on the firm’s annual reports, Meralco’s (ROE) and profit margin have risen several folds since 2008.
From just five percent in 2008, Meralco’s ROE steadily increased to 10 percent in 2009, 16 percent in 2010 and 25 percent in 2012.
This means that the ROE of Meralco has ballooned five-fold in a span of just five years.
In comparison, Meralco’s 2012 ROE of 25 percent is much higher than the entire power industry’s estimated average of around 15 percent.
From Filipino Pockets
Yet, Meralco has been stingy as far as complying with the government-mandated refund to its customers is concerned.
Apparently, Meralco’s foreign owners want to reinvest elsewhere such as in Singapore and Myanmar the profits they earned from the pockets of ordinary Filipinos.
In Singapore, Meralco acquired last February two brand-new natural-gas-fired 400-megawatt generators valued at US$1.2 billion with earnings from its Philippine operations.
Analysts say that had they been built in the Philippines, Luzon’s 8,000-MW capacity would increase by 10 percent and would have decreased incidence of brownouts and brought down Meralco’s high electricity rates.
Meralco’s defiance is an offshoot of the government’s glaring pro-business, anti-poor policy stance.
Blame, of course, rests squarely on the government’s lack of political will to resist the policy dictates of multi-lateral financial institutions which have a stranglehold on the government’s finances.
For instance, the Electric Power Industry Reform Act (Epira) was passed by Congress in 2001 under threat by the World Bank, the International Monetary Fund and the Asian Development Bank to freeze the bailout funds for the once debt-saddled state-run National Power Corp. (Napocor).
Epira was nursed in its infancy and continue to be protected by its principal author, Sen. Sergio Osmena, who has chaired the Senate committee of energy for the longest time now.
Meant to foster competition in the power industry, Epira turned out to be a toothless law, unable to check its rampant violations by profit-hungry power firms and protect consumer interests.
For more than a decade, Epira failed to check the unabated surge in power rates, one of Asia’s highest, the reason why foreign investors shied away from the Philippines.
Ironically, Epira bred the rise of twin evils of monopoly and oligopoly in the power industry, precisely the key objectives it wanted to eradicate to bring sanity to an industry which has gone berserk with endless rate increases.
Not content with just distribution, some players like the Lopezes and Meralco also ventured into generation and transmission, enabling them to dictate market prices at will. Here the family of the wife of Sen. Osmena and Meralco appears to have violated the law on cross ownership that will allow them to control prices.
Suspicions of shady deals also surfaced, largely attributed to certain loopholes in the Epira law on which some capitalists exploited to the hilt. In gist, Epira called for the fire sale of state-owned power assets even at grossly undercut prices from their appraised value.
How and why ethnic Chinese taipan Henry Sy ventured into power when his core businesses revolved around retail, his flagship that catapulted him to become one of the world’s richest.
It may be gleaned from how the cash-strapped government resorted to a fire sale just to dispose of its power assets as fast as it could.
From out of the blue, the cash-rich Sy has wrested control of the previously state-owned National Grid Corp. of the (NGCP), the company transmitting power to its franchise areas across the country.
Once Napocor’s money-spinner because of its extensive transmission network, NGCP – formerly called Transmission Corp. (Transco) – was sold to Sy for just US$3.95 billion in early 2000.
The taipan, known for his shrewd sense of business, made a down payment of US$987.5 million and promised to settle the balance of US$2.962 billion or P148 billion within 15 years. Why this was allowed had many guessing the answers but surely raised eyebrows while stirring suspicion of another sweetheart deal.
No Such Efficient Market
But reckoned with its strong balance sheet, the NGCP has been making P15 billion annually, hence its income in 15 years would work to P225 billion. That translates to P77 billion profits for Sy.
Amid the power industry’s bleak outlook, calls are mounting to repeal or amend the Epira law by nationalizing or de-privatizing the highly cartelized power industry.
By and large, the power industry is just too important to the national economy to be left to free market forces.
In most countries, power is highly regulated, owned by the state to a substantial degree, and subsidized by public funds.
Looking back, the EPIRA law was apparently enacted on the premise of an existence of an efficient free electricity market, uninhibited by government.
Unfortunately, there is no such market in the Philippines. Its electricity market is controlled by an oligopoly.
While debates are split on whether to nationalize or not the power industry by scuttling the Epira law, there are those who expressed caution against such move.
In a joint statement last week, some groups representing foreign businessmen believe that scrapping or amending Epira will not solve problems hounding the power industry, but will confuse investors regarding the investment climate in the country.
“If EPIRA is sent back to Congress for review, the uncertainty it will introduce into the regulatory regime of the power industry will lead to a potentially chaotic system, and worryingly put our future needs at risk at a time when our supply of power is marginal,” the statement read.
It warned that without stable rules and good investment climate in the energy industry, international and local investors will steer away from making investments in that sector.
But among lawmakers, there’s an emerging consensus that Epira has failed to promote free competition to benefit the consumers and likely to push for some changes in the government’s power privatization policy with a nationalization bias.
Any paradigm shift can’t gloss over the fact that the law has been used as smokescreen to hide patterns of collusion, monopoly and oligopoly among industry players to deceive the consumers without even knowing that they are being robbed.
[By Al Labita]
BASED on Opinyon’s perceptions and social media surveys, the developing pattern of calls for change tilts towards those with a proven track record of integrity and competence outside the abominable dog-eat-dog world of politics.
Something’s Got to Give
At the rate the spate of crisis is laying siege on the three-year-old Aquino presidency, the betting is on whether it would last its six-year mandate. Unable to cope with the crushing pressures spawned by a harsh political climate, Pnoy appears to have lost his sense of control of a country teetering on the brink of becoming a failed state. As defined by Wikipedia, a failed state ensues when a central government becomes so weak or ineffective in stemming the rising tide of widespread corruption and a slumping economy. Another dimension of a failed state is erosion of legitimate authority to make collective decisions and inability to provide public services. Nowhere is such more exemplified than in Noam Chomsky’s book titled Failed States: The Abuse of Power and the Assault on Democracy.
That, in a nutshell, seems foreboding and may be ascribed to the prevailing state of the nation. The emerging scenarios are dreadful – either Pnoy resigns or forced out office. Banking on self-serving popularity rating only whetted the pent-up public clamor for a drastic change in government, given the onslaught of street protests. Neither Pnoy’s propensity to play the blame game has helped him abate his sinking fate nor did it curb the likelihood of a mob rule in a country polarized by clashing vested interests. From his jailed predecessor Gloria Arroyo, Pnoy has now turned to media as his latest favorite whipping boy in heaping blame for his misfortunes in public office. Addressing mid this week foreign journalists, he warned them against falling prey into a conspiracy trap meant to link him to the pork scam.
“Our media and our people are far too good—far too wise—to be grossly and brazenly led to the wrong issue, Pnoy said. “Plunderers should be taken to account,” he added, a stance only eliciting mixed views from hard-nosed newsmen.
Though Aquino enjoys the backing of the men in uniform, past bitter lessons showed how they hastily abandoned and dumped the late dictator Ferdinand Marcos and his predecessors Joseph Estrada and Gloria Arroyo when their hold on power was no longer tenable in the face of mounting public outcry over corruption scandals.
Whether such tragic ending would eventually befall on Aquino remains to be seen as the country’s political complexion remains highly fluid.
While anything can happen, one thing is sure – Pnoy can’t keep his guards down.
Undoubtedly, the highly divisive pork barrel scam has sapped Pnoy’s political will to govern and only exacerbated the people’s loss of trust in him. This early, egging on the 53-year-old bachelor president to quit is like asking for the moon as most lawmakers in both houses of Congress had been exposed as Aquino’s paid hacks through the pork barrel system, the reason why calls for impeachment against him landed on deaf ears. Contrary to his self-projected image as an “incorruptible” president, Pnoy has already gained notoriety for resorting to money politics as evidenced by how he plotted the ouster of then chief justice Renato Corona. So far, there’s no palpable sign as yet on who the people would prefer to succeed Pnoy should current tensions lead to an abrupt end to his six-year reign in power. By operation of law, Vice president Jejomar Binay is next in line, but not necessarily as he has to reckon with the distortions and aberrations of the country’s political history. If we recall, the late senator Arturo Tolentino as the “duly-elected” vice president was supposed to succeed Marcos following the fraud-marred snap polls.
Quirks in Politics
But due to unknown quirks in politics, an unexpected civilian-backed 1986 military revolt intervened, catapulting then plain housewife Corazon Aquino to power notwithstanding her hesitance and inexperience. As in the case of the late democracy icon, an unlikely figure may yet emerge if the current pressure-packed political scene persists.
Who Could She/He Be?
Scanning the horizons, the people are understandably sick and tired of recycling the scalawags in politics – the old and new trapos. Topping the list are the two highly respected captains of the industry – Manuel V. Pangilinan and Ramon S. Ang, both at the helm of publicly listed consumer-oriented conglomerates. Like Pangilinan, Ang faced challenges in turning around San Miguel Corp. (SMC) from an inward-looking company to one of today’s formidable Asian corporate behemoths.
From traditional lines of business anchored on beer, packaging and food, SMC has diversified to cost-intensive strategic industries in what analysts described as a “calculated risk” in a highly competitive environment. Adding power, mining, telecoms, oil, aviation and other related ventures to SMC’s investment portfolio had paid off in that these broadened the conglomerate’s market base, both locally and internationally. Thanks to Ang’s bold forays, SMC has been raking in record-breaking revenues which currently translate to about 10 percent of the country’s gross domestic product, a corporate feat indeed for a homegrown conglomerate. Under Ang’s stewardship, SMC has set its sight on achieving what had long remained on its drawing board – whopping revenues of U$50 billion by 2018 as it plans to acquire new businesses and expand existing ones. By and large, the target is nearly three times what SMC made in 2011, when it ended the year with US$17.5 billion in turnover. Known for his management prowess, Ang initially pegged a US$20 billion revenue target for 2015 but revised it upward in that by end of 2012, the conglomerate had already achieved its goal.
Singapore and Thailand
“Before, when we set a target of US$10 billion, people said, ‘That’s unbelievable!’ But we were able to achieve that. It happened. So that’s why we increased our target. From US$20 billion, we are hoping to reach US $50 billion revenue in the next 5 years,” Ang told reporters.
An engineer by training, he led SMC last year in acquiring management control of the financially ailing Philippine Airlines (PAL) from the group of taipan Lucio Tan. From then on, the nation’s flag carrier underwent rapid changes, including a refleeting program estimated to cost SMC over US$1 billion in capital expenditure to sharpen its competitiveness in the global airline industry. Part of the deal includes PAL subsidiary Air Philippines, a budget airline. Critics may quickly hint of a possible conflict of interest should the tycoons take over the reins of power, an irritant that can be overcome in due time in a democratic setting. Though largely untested, technocracy, as evidenced by the country’s rapid corporate growth, may yet be the key to solving the nation’s decades-old problems of poverty, inequality and dispossession.
Singapore is a case in point. Most of its current crop of leaders — from the prime minister to cabinet members – was plucked out from the corporate sector and became popularly elected. With the stringent values of fiscal, ethics and management disciplines learned from their previous profit-driven businesses, they managed to transform the island city-state from what was once a “basket case” in the early ‘50s to a prosperous nation today with one of highest per capita incomes in Asia. Neighboring Thailand is another example, whose prime minister, Yingluck Shinawatra, comes from a family of corporate elites, the key drivers of the country’s rapid economic growth. Previously, her brother Thaksin, a tycoon, also served as prime minister.
In the Philippines, however, any sudden paradigm shift in a volatile and highly charged political atmosphere can be tumultuous, if not bloody.
- Editorial : Not So Perfect Alibi? (opinyon2010.wordpress.com)
- SC asked to stop PNoy’s dialogue on DAP (manilastandardtoday.com)
- Philippine Airlines Close To Getting a Partner (airlinenewsphilippines.wordpress.com)
- Ernesto Domingo (bigstory.ap.org)
- Ping bares PNoy govt’s ‘ugly side’ (manilastandardtoday.com)
- Standing on its own merits (benchpress86.wordpress.com)
- Billionaire Tan Considers Philippine Air Exit After Two Decades (bloomberg.com)
- Amid corruption worry, Aquino to reform govt fund (bigstory.ap.org)
- PAL flies to London (rappler.com)
THE race is on for the next Philippine President.
This early, eyed as potential candidates come 2016 are: Vice President Jejomar Binay (United Nationalist Alliance), Interior and Local Government Sec. Mar Roxas (Liberal Party), Sen. Bong Revilla (Lakas-CMD), Sen. Grace Poe (Independent), Sen. Francis Escudero (Independent) Batangas Gov. Vilma Santos-Recto (Liberal Party) and businessman Manuel V. Pangilinan.
Of these seven potentials, six have some sort of political lineage in their favor. Binay, the longtime mayor of Makati City has risen to the vice presidency quite spectacularly. Roxas, is the grandson of the late President Manuel Roxas. Escudero, also the scion of a political clan, is a consistent Senate topnotcher. Same with Revilla whose family rules the province of Cavite. Grace Poe, topnotcher in the 2013 Senate race, is daughter of the late movie legend and defeated presidential candidate Fernando Poe Jr. And Vilma Santos-Recto is the star governor of Batangas province and the wife of Sen. Ralph Recto.
And then there is businessman Manuel V. Pangilinan. Without political affiliation and any previous experience in public office (much like a Nancy Binay), political analysts see Pangilinan—or MVP as he is more popularly known—as a certified dark horse for 2016. And with good reason.
While Binay has no qualms about his dream of becoming President, MVP is quick to admit that “no political blood…runs through my veins.” But given his technocratic skills, MVP could probably fare better than the other potential candidates—whose only claim to fame and public office are their family names.
The chairman of PLDT, TV5, Philex Mining and Metro Pacific Investments Corp. (MPIC), MVP has “singlehandedly” built one of the largest business empires in the Philippines. MVP also has the education to back his business skills having graduated cum laude from the Ateneo de Manila University with a Bachelor of Arts degree in Economics and having earned an MBA degree from the Wharton School of the University of Pennsylvania.
Synonymous to telecommunications, media, power , water, mining, education, infrastructure, sports etc., MVP—given his reservations of running for public office–seems a very good choice for 2016. All he has to do is ride on a platform that promises lower electricity, telephone and water rates and he is a shoo-in for the Presidency in 2016.
As it is, MVP already has much of the country on his plate. If he runs and wins in 2016—he’ll be President and CEO of Philippines, Inc.
- Manny V. Pangilinan : Miracle Man (opinyon2010.wordpress.com)
- PLDT, Gokongwei expanding alliance (manilastandardtoday.com)
- The social cancer of Philippine society (rappler.com)
- Nearly 100 Philippine rebels killed or captured (bigstory.ap.org)
- Binay lambasted online for ‘epal’ relief bags (technology.inquirer.net)
- Editorial : MVP for President (opinyon2010.wordpress.com)
- Cavitex investment pays off for MVP group (rappler.com)
- Torrential rains shut down Philippine capital (bigstory.ap.org)
- Saskatchewan Offers 14K jobs for PH Workers (opinyon2010.wordpress.com)
- FirstPac eyes Cojuangco mill (manilastandardtoday.com)
by Ray Junia
SERIOUSLY, I want MVP for President.
I walked late into last week’s editorial meeting. Editors and consultants were discussing this week’s main story.
On top of the list was the impact of a USA default. Very interesting discussion, a doomsday scenario for the Philippines, but actually good if handled correctly. They forecast the currency values will go crazy. But the flipside is we escape from being a victim of globalization.
Second was the burning and bombing of Zamboanga City. There were speculations that PNoy and his cub scouts deliberately burned the city not to take out the MNLF rebels but to grab the news headlines from the Napoles case.
Finally, the decision was to rest our criticism on PNoy. Anyway, almost everyone else is shouting his angst and deep disappointment on the President. And many are asking who should replace PNoy and run this country? We have trusted many of them, from political geniuses to the very sick in mind.
I asked if the Philippines were a corporation, who do you think is the best person to run Philippines, Inc.? The response was almost a chorus: MVP. One said Lucio Tan.
The discussion centered on why MVP? The week’s banner story tells why OpinYon picks him for President.
Most of our political leaders lack the backbone to stand up before the onslaught of foreign economic forces. The country is both a victim and loser in the globalization scheme. We get a pittance from shares of our natural resources extracted by foreign companies. Compare our take from Malampaya with what the Malaysians get from their oil, you will see how badly we are being treated even in our own country.
It is time we get a President who has the skill and character in getting for and giving what is due the Filipino.
Even when OpinYon has been accused of being anti- MVP, there was nothing personal in our review of his business activities. OpinYon coming from consumers’ interests and MVP representing his stockholders’ interests, a clash is always likely. Again, there is nothing personal.
I don’t take it against him, his dogged focus on protecting the interests of his stockholders, his bosses. In fact, I appreciate that kind of loyalty and dedication to his mission.
Now I am throwing the possibility of his making the Filipinos his bosses if and when he becomes the President of our country.
I believe he is the person we need to run our country.
- Mountie brings expertise on ‘culturally sensitive policing’ to Philippines’ war-weary Zamboanga (o.canada.com)
- Saskatchewan Offers 14K jobs for PH Workers (opinyon2010.wordpress.com)
- Nearly 100 Philippine rebels killed or captured (bigstory.ap.org)
- Filipino troops retake 70% of rebel-held villages (bigstory.ap.org)
- Manny V. Pangilinan : Miracle Man (opinyon2010.wordpress.com)
- Sins of Cory (opinyon2010.wordpress.com)
- Incompetent, Dishonest? (opinyon2010.wordpress.com)
- EDITORIAL: No Killing the Pork (opinyon2010.wordpress.com)
- Australia Provides Emergency Aid for Mindanao (opinyon2010.wordpress.com)
- Awol (opinyon2010.wordpress.com)