(Adds more quotes, Meralco president)
MANILA, May 8 (Reuters) - 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 foreign firm.
“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 lower rates.
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 closing price.
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 rates.”
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 body.
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 2003.
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 First Holdings.
“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 Urquhart)