Lawmakers push bill on anti-conflict of interest in power firms

TWO lawmakers called on their colleagues to act on their measures that seek to strengthen the ban on conflicts of interest in the power industry in light of increasing cross-ownership among industry players.

In a statement on Tuesday, SAGIP Party-list Rep. Caroline Tanchay said that her House Bill 174, or “Act Prohibiting Cross Ownership Among Distribution Utilities and Generation Companies,” will prevent cross ownership among power industry players that were allowed under the Electric Power Industry Reform Act or Epira Law. The bill, which is co-authored by Rep. Rodante Marcoleta, aims to amend Section 45 of Epira which allows cross-ownership of the distribution and generation facilities in the power sector.

It would also allow distribution utilities to source a maximum of 50 percent of its electric supply from an “associated firm,” which, according to the law, are “distribution utility and generation company controlled by a single entity.” Under HB 174, if both the distribution utility and the generation company are controlled by one entity, they should be considered associated firms.

The bill cited the case of the Manila Electric Co., which owns Meralco PowerGen Corp. (MGen), that has ownership shares in power generating plants including the 455-megawatt San Buenaventura Power Plant in Mauban, Quezon, a 237-megawatt coal-fired plant in Sarangani and a 120-megawatt plant in Zamboanga City.

It also entered into a joint venture agreement with San Miguel Corp. for a 1,200-megawatt coal plant in Mariveles, Bataan, as well as acquiring majority ownership of the Ilijan Power Plant from San Miguel Corp.’s South Premiere Power Corp.

Together with San Miguel Global Power Holdings and Aboitiz Power, Meralco PowerGen has forged a $3.3-billion deal to launch the country’s first and most expansive liquefied natural gas terminal in Batangas, which could supply fuel for plants that are expected to generate more than 2,500 megawatts of electricity.

“Totaling the amount of the contracted power vis-à-vis the demand of Meralco would translate to almost 95 percent of the demand of Meralco, as part of the MVP (Manuel V. Pangilinan) Group, sourced from associated firms,” the bill said.

It added that in an apparent contravention of the Epira Law, Meralco has been allowed to “cartelize” the power industry to the prejudice and damage of its consumers.