News Column

Meralco Gave P40 Billion in Dividends to Shareholders, Urged to Restrain its Greed

February 17, 2014

PASAY CITY, Philippines, Feb. 17 -- The Philippines House of Representatives (16th Congress) issued the following news release:

A lawmaker has urged the Manila Electric Co. (Meralco) to "temper its inordinate want for incremental profits" and spare its 5.2 million "captive" residential, commercial and industrial customers from oppressively high electricity rates.

"While we recognize that Meralco is a private enterprise entitled to turn a profit, we also believe that the company is in a position to somewhat restrain its greed," said House Deputy Minority Leader Arnel Ty.

Ty speaks for the minority bloc in the House committee on energy, and represents the Liquefied Petroleum Gas Marketers' Association (LPG-MA) in Congress.

LPG-MA has been pushing for stronger government supervision of the energy markets, including the LPG sector, to reinforce consumer protection against potentially unfair trade practices and pricing abuses, particularly by the dominant oil firms.

Citing Philippine Stock Exchange (PSE) statistics, Ty said Meralco, the exclusive distributor of electricity in Metro Manila and outlying areas, rewarded its shareholders some P40-billion worth of cash dividends from 2009 to 2013.

The hefty dividends came from Meralco's huge annual net profits amounting P17.016 billion in 2012; P13.227 billion in 2011; P9.685 billion in 2010; P6.005 billion in 2009; and P2.800 billion in 2008.

Meralco is expected to report shortly a net profit of P19.409 billion for 2013, based on projections by online stockbroker COL Financial Group Inc.

This year, COL Financial sees Meralco reporting a net profit of up to P21.189 billion.

Meanwhile, Ty urged the House committee on energy to ascertain whether or not Meralco has fully complied with all previous judicial and regulatory orders for the company to refund certain overcharges.

"We find it totally unfair that Meralco has been paying hefty cash bonuses to its shareholders on one hand, while seeking to postpone customer refunds on the other hand," Ty said.

The Energy Regulatory Commission (ERC) previously granted Meralco's request to extend up to December 2015 the deadline for it to complete the payout of a P30.2-billion customer refund ordered by the Supreme Court in 2003.

The refund was due to prior years' corporate income taxes that Meralco passed on to its customers, resulting to overcharges.

PSE records show that the biggest beneficiary of Meralco's large dividend payouts is Beacon Electric Asset Holdings Inc., which owns some 50 percent of the country's largest electric distribution utility.

Beacon in turn is controlled by Metro Pacific Investments Corp. (MPIC), a subsidiary of Metro Pacific Holdings Inc., the Philippine unit of First Pacific Co. Ltd. of Hong Kong.

A previous research study by the independent think-tank International Energy Consultants ranked Meralco's electricity rates as the world's ninth-highest and the second-highest in Asia, largely owing to the high cost of power generation.

This ranking was long before the ERC authorized Meralco to increase its rates by another P4.15 per kilowatt-hour.

The Supreme Court on Dec. 23 temporarily restrained Meralco from implementing the highly controversial upward rate adjustment for 60 days, pending the resolution of petitions against the increase.

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Source: Targeted News Service

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