Sale of gov’t shares in Petron, Meralco slammed

The proposed sale of government shares in Petron and Manila Electrical Co. (MERALCO) yesterday drew heavy flak from a leading member of the Administration party in the House of Representatives.

Representative Aniceto Saludo, Jr. said reported plans of the government to sell its 40% stake in Petron, one of the three major players in the petroleum industry, and its 20% share in Meralco, the power distribution monopoly in Luzon, are ill-advised, ill-timed and totally disadvantageous to the government and the Filipino people.

Saludo said Finance Secretary Jose Isidro Camacho is the brain behind the fire sale of the country’s stake in these two critical energy sector corporations.  “Camacho like his unlamented prodigy – the ousted BIR chief Rene Bañez, are only good in creating a gargantuan budget deficit and aggravating the national debt.” Saludo said.

Saludo explained that Secretary Camacho to fund the huge budget deficit has resorted to massive billion dollar borrowings and flotation of treasury and government bonds at high interest rates.  Now, he wants to sell the few remaining crown jewels of the government at a loss.”

Saludo explained that selling the Petron and MERALCO shares at a time when war jitters over the planned US attack on Iraq and the recent terror bombing in Davao had pulled down not only the country’s stock market but the sharp drop in stock market trading in the major international bourses to record lows.

“This would be tantamount to undertaking a fire sale of the country’s few remaining crown jewels.” Saludo said.

In the case of MERALCO shares, Saludo said that the value of the power distribution firm’s stocks have been pulled down by the recent ruling by the Supreme Court mandating a refund of P28 billion to all its customers as it ruled that the tax payments passed on to by MERALCO to its consumers was illegal.

He said selling such a huge chunk of MERALCO shares now would be financially disastrous to the government.  It is obvious that Finance Secretary Camacho is “desperately seeking an instant solution to the budget deficit that could hit P300 billion.”

Instead of selling out, Saludo said that the government should have a bigger say in MERALCO because it owns more shares than the Lopez family who only own 16 percent of the power distribution utility.  Government by virtue of its stockholdings in MERALCO  should seriously consider getting involved in policymaking and even in some operations that could be crucial in curbing reported abuses and exploitation of its consumers especially the runaway PPA charges, Saludo said.

“Selling now would only benefit those who are behind this devious plan especially after the MERALCO Board lifted a decades old rule prohibiting the sale of more than ten percent sales of its stocks to any one group or party.  Both of these announcements are clearly related to a bigger play that could only be anti-public and detrimental to government interest,“ Saludo said.

Saludo expressed full, unconditional support to Energy Secretary Vincent Perez’ position not to sell the government’s 40 percent stake in Petron.

He said Energy Secretary Perez is correct in opposing the sale of Petron sale not only because of poor stock market conditions but because having a voice in the management of one of the three major oil industry players can significantly mitigate errant, and opportunistic price increases by the oil industry players.

(Released on March 7, 2003)