(Adds more quotes, Meralco president)
MANILA May 8 The patriarch of a Philippine
business family that controls the country's biggest power
utility said he wants to sell the family stake in the company
following government pressure to lower rates.
"I'm sick and tired of this business," Oscar Lopez,
chairman of First Philippine Holdings Corp (FPH.PS), which owns
more than 33 percent of the power distributor Manila Electric
Co (Meralco) (MER.PS), told reporters on Thursday.
"We can't even get a rate increase because the government
is saying our rates are too high," he said, adding he was
willing to sell the family's holdings in Meralco to state
pension fund Government Service Insurance System (GSIS) or to a
"This is my own opinion," Lopez said. "That's how I feel at
this point," he said, adding he did not know what the rest of
his family thinks about the business.
Shares of Meralco lost 3.6 percent on Thursday,
underperfoming the main stock index .PSI which gained 0.8
percent. The stock has lost 16.7 percent so far this week after
the government stepped up its campaign to press the company for
Winston Garcia, president of GSIS, which holds a fourth of
Meralco, has called for a management revamp in the company to
compel Meralco to lower rates.
"Meralco has been mismanaged for so long a time and
investors are not getting a fair return on their investment,"
Garcia said on Wednesday. He said he wanted to make sure
Meralco was not overcharging consumers and added that GSIS was
not interested in assuming management control of the company.
When asked if the family wanted to buy out the GSIS stake
in Meralco, Lopez said: "We don't have the money...If he wants
he can buy us out," referring to Garcia.
First Holdings' 33.4 percent stake in Meralco is valued at
nearly 30 billion pesos ($704 million), based on Thursday's
Last year, the Lopez family entered into deals to buy
additional stakes in Meralco from partner Union Fenosa UNF.MC
of Spain and from the Meralco pension fund, raising its stake
from 18 percent previously.
President Gloria Macapagal Arroyo has called on Meralco to
lower power rates to appease foreign investors who have
complained of high power costs and to ease the burden on the
country's poor who are saddled with rising food and oil prices.
"Our rates are as low as we can get them," Lopez said.
"It's the government that has to cut the VAT (value-added tax)
if they want to reduce rates and to take out the royalties on
natural gas. And they'll be able to reduce by more than a peso
The last time Meralco raised its basic distribution charge
was in June 2003. A new petition by the company to raise its
basic rates is still pending with the government regulatory
Meralco president Jesus Francisco said at an energy sector
consultation on Thursday that Meralco's average distribution
charge had fallen 21 percent to 93 centavos per kilowatt hour
in December 2007 from 1.18 pesos after its rate hike in June
He said generation and transmission charges in the same
period had increased 24 percent, adding these charges are what
the government should look into because state agencies operate
both power generation and transmission utilities.
Meralco currently sources about 50 percent of its power
supply from state-run National Power Corp and the rest from
independent power producers (IPPs) owned by its mother firm
"We are optimising our purchasing from our IPPs...we are
already doing that," Ivanna de la Pena, Meralco vice president
for utility economics told Reuters. "But our IPPs only account
for about 2,000 megawatts and our peak demand is about 4,500,
so we need Napocor," she said.
The Lopezes bought into Meralco in 1962 but the family's
stake was confiscated by the late dictator Ferdinand Marcos
when he declared martial law in 1972.
The family returned to the company in 1986 after Marcos'
ouster following a popular revolt.
(Reporting by Rosemarie Francisco; Editing by Michael