SENDING THE WRONG MESSAGE
sunrise in Surigao del Norte-Surigao del Sur boundary
The ongoing squeeze play by the government, thru GSIS, on Meralco has already generated adverse effect on the power firm. Reports yesterday said Meralco shares fell by as much as 5.6% on Wednesday before paring its losses to close at P70, down 2.78%, underperforming the main index, which climbed 0.43%.
Already analyst warned that the takeover talks may backfire. “The government is privatizing its power assets debt, boost state finances and attract fresh investment into the energy sector but pressing Meralco to cut rates may turn off foreign investors,” analyst say. According to Peter Wallace government control on power firms may discourage investors.
“If you try and control the price that the power plants sell at, how are you going to privatise them? Who is going to buy them?”
The reasoning of GSIS president Winston Garcia that the prices of Meralco bill will go down if there is a new management who can initiate reforms is flawed. Since when did government men excel in managing private business enterprise? Look at the government telephone system, look at the water distribution services before it was privatized, look at public schools. Its always a given that business run by private individuals or corporators are far way better than those run by the government.
Garcia also said he is doing an accounting on the high power rates of Meralco to protect the interest of GSIS members who are investing in Meralco. How is that? With Garcia’s actions, Meralco share prices are falling. The interest of GSIS members who are the investors will be best served if Meralco is earning out of its power distribution activity. With falling share prices, the interest of GSIS members are adversely affected.
Is Garcia now complaining that Meralco is earning at the rate the power firm is charging its power distribution or his real intention is not for the protection of the interest of the GSIS members but to play up the populist stand against high power price as a precursor to the eventual management takeover of Meralco?
Let us not also forget the culture of corruption in the government. You allow government men to control means one is feeding Meralco to the crocodiles. With a potentially corrupt management, power rates do not necessarily go down and worse, power service would even deteriorate.
Furthermore, the control of the public utility will be put in the hands of people based on political considerations. While power distribution is imbued with public interest, it is also a private business the biggest incentive of which is the returns. If the government wants to encourage more investments then it should not dip its fingers too much on private businesses.
If the government succeeds in taking over Meralco, it will send shivers to other businesses. Whose next? Philippine Daily Inquirer? If Malacanang is displeased, one’s business will be targeted for takeover. Its Marcos time once again with characteristic oppressive, monopolistic and confiscatory policy. With this kind of vindictive policy, investors would shy away from our country and will eventually affect the already sagging economy.
