ILOILO City – A Manila-based group is interested to engage in the business of power distribution in this city. But does it have the capability and experience? Panay Electric Company (PECO) has been the city’s sole power distributor for nearly a century. Its franchise expires next year.
A national daily reported on Tuesday that More Minerals Corporation (MMC) planned a “takeover” of PECO and its application for a power distribution franchise already passed the scrutiny of the Legislative Franchise Committee in the House of Representatives.
In a statement yesterday, however, PECO made it clear it wanted to further serve the Ilonggos. It applied for a 25-year extension of its franchise.
PECO’s information technology and administration officer Marcelo Cacho also dismissed the report about MMC’s planned acquisition of the local power distribution utility.
“We are not in talks with them or anything…The company’s goal is to fight,” Cacho told Panay News yesterday.
Among others, PECO questioned the apparent haste in the processing of MMC’s franchise.
MMC is backed by Spanish-Filipino billionaire Enrique Razon and businessman Walter Brown of Monte Oro Resources & Energy Inc.
PECO also questioned MMC’s “expertise and capability to run an electric distribution business since it is a mining firm as stated in its articles of incorporation.”
“Even their partner, the Walter Brown group through shareholder Apex Mining Co Inc., is a power generation company which is a totally different business from power distribution,” added PECO.
It also doubted if MMC has the needed manpower to operate and maintain the distribution and conveyance of electric power.
On their part, according to PECO, it had proven its capability to run a power distribution business. It is in the “top 15 percent” of the 146 electric distribution utilities in the country for “positive reliability performance.”
“This can be seen in the System Average Interruption Frequency Index (SAIFI) figures versus a company like MMC which has no track record in the industry,” PECO added.
The local power distributor also questioned the wisdom of having two power distributors in one franchise area. It warned of duplication of distribution facilities that would result to wastage of scarce resources.
“Such a scenario is severely inefficient and has never been seen in the history of the Philippines,” stressed PECO.
PECO vowed to challenge the MMC franchise application in the House’s Committee on Rules.
House Bill 8132 filed by Cong. Gus S. Tambunting is an “Act Granting MMC a Franchise to Establish, Operate and Maintain, for Commercial Purposes and in the Public Interest, a Distribution System for the Conveyance of Electric Power to End Users in the City of Iloilo.”
In a separate statement sent to Cong. Franz Joseph Alvarez, chairman of the House Committee on Legislative Franchise, the PECO Employees and Workers Association (PEWA) asserted that MMC “does not have sufficient capitalization to enable it to engage in the business of electric power distribution and conveyance to the end-users.”
For a power distribution utility to serve the needs of Iloilo consumers, it must have a capitalization of at least P10 billion, PEWA stressed.
MMC’s general information sheet showed that as of August 2018, its capitalization was just hovering at P2.5 billion, according to PEWA.
“Although it has increased its authorized capitalization to P10 million as of March 2016, the same amount of capitalization is still insufficient for the operation of the business of electric power distribution and conveyance to the end-users,” it stated.
Four months ago, in May, Sen. Grace Poe, chairperson of the Senate committee on public services, said the franchise extension application of PECO may not be renewed, citing various complaints on the poor service of the power distribution utility as well as alleged billing irregularities.
“If they (seek to) renew their franchise but will not improve their services, particularly in replacing old materials and posts, they might not be renewed,” she said.
According to Poe, she had received complaints from people about PECO. “They are not happy of the service,” she said.
Randy Pastolero, assistant vice president for operations of PECO, recognized the need to improve their service.
“We are trying our best to fast-track and complete all of these improvements not because we are renewing our franchise but because we really recognize the need to do this,” he said./PN