Biz Buzz: Power supply dispute

Residents of Zamboanga City are caught in the middle of a raging dispute between the local electricity distributor and the company that generates power for the area, Biz Buzz learned.

The bone of contention that’s causing frequent and longer power outages outages? It’s the nonpayment of the Zamboanga City Electric Cooperative (Zamcelco) of its outstanding debts to generating company Western Mindanao Power Corp. ( WMPC) controlled by the Alcantara family.

Zamcelco is now managed by Crown Investment Holdings Inc. ( Crown), which is owned by Rep. Mikee

Romero. The company was awarded an investment management contract late last year that enabled it to take over Zamcelco with the aim of rehabilitating the ailing power cooperative.

But now, according to WMPC, Zamelco has failed to honor its financial obligations amounting to more than P350 million as of last month. Because of this, the power gener-

ator was forced to shut down its operations starting early February since it had run out of fuel.

WMPC claims that as much as 90 percent of its costs go to the purchase of fuel oil, and the company could not order more diesel fuel for its generators until the debts are settled. The shutdown has resulted in rotating power outages throughout the city.

Alleging “overbilling” by WMPC, Crown/Zamcelco have not paid the generating company for power supplied by the latter’s 100-megawatt diesel plant for the months of October until December 2018.

Naturally, WMPC insists that allegations of overbilling are not an excuse for Crown/ Zamcelco to withhold payment and that payment of the arrears which has not been contested during the mandatory 14- day period is obligatory.

At the behest of Zamboanga City Rep. Celso Lobregat, representatives of Crown/Zamcelco and WMPC met with National Electrification Administration (NEA) head Edgardo Masongsong to thresh out the problem. During the meeting at the NEA office on Feb. 8, Crown/Zamcelco agreed to consider a NEA proposal for it to pay WMPC the amount of P150 million, which is roughly the cost of one-month supply of fuel, as a temporary solution while it reviews what it claims as overbilling by the power generator. —DAXIM L. LUCAS

But Crown says...

“We have raised our concern with WMPC officers regarding what we observed as an overbilling in their current invoices,” Crown’s chief management officer Henry Virola told Biz Buzz.

He also pointed out that WMPC’s rate was the most expensive among power suppliers in Zamboanga City.

“However, on Feb. 4, before even sitting down with us to discuss the matter, WMPC suddenly cut the power supply,” the Crown official said. “We find this unilateral action as an affront to the IMC as we just took over management of Zamcelco in Jan. 3 of this year.”

Negotiations between both camps are ongoing. Crown said it had asked other existing power suppliers to supplement capacity and fired up diesel-fired gensets to supply embedded power to Zamboanga City.

In the meantime, the party that both sides claim to be acting on behalf of—the city’s consumers—is waiting for a resolution as the heat of summer approaches, hoping that the dispute will be resolved soon. —DAXIM L. LUCAS

Reinvigorated PNB

Lucio Tan- owned Philippine National Bank (PNB) is getting ready for a major push forward to initially maintain its standing as the country’s fifth largest financial institution and, eventually if things work out as planned, start climbing the ranking ladder.

But how does new PNB president Wick Veloso plan to do this?

For one, he is counting on the bank’s large existing talent pool to renew their efforts to draw in more deposits to its branch network of almost 700, as well as streamline and speed up the process for granting loans (where a bank makes the bulk of its money).

But Veloso also needs to boost PNB’s talent tool, especially at the head office. How can he do this, given his temporary constraints against poaching key bankers for his team?

Well, he can’t “pirate” people for six months, but he can’t stop interested bankers from applying, right?

And so it came to pass that treasury man Simeon Yap jumped ship from Security Bank to become the new head of PNB’s risk management group—an important role especially when running a financial institution with billions upon billions of liquid and hard assets.

Also joining PNB recently is former Veterans Bank of the Philippines treasurer Noel Mal

abag who was Veloso’s former protege at HSBC. He will serve as the bank’s chief dealer, indicating that PNB will become more active in seizing opportunities in the financial markets.

One piece of the puzzle that’s still missing is the bank’s treasurer who will play a key role in managing the bank’s resources over the short- and long-term horizons. Word is that a potential candidate has already been identified. What’s keeping him from joining this early? Well, we hear he’s still waiting for his 2018 bonus to be paid by his current employer.

But, by far, the most important chess piece in the “new” PNB will be its new head of corporate strategy, Chester Luy. If that name sounds familiar, it’s because “Chet” was, until last year, the treasurer of Rizal

Commercial Banking Corp., where he helped “right the ship” after its crisis in 2016.

Luy’s resumé is impressive, being a chartered financial analyst ( meaning he’s a “quant jock”) and has many years of experience under his belt working for the Bank of Singapore, Julius Baer, Bank of America/ Merrill Lynch and Barclays, among others.

Next to Veloso, Luy’s voice will be the most influential in setting the direction of the bank.

At present, PNB ranks fifth in the league table of local banks based on asset size, with the top four being BDO Unibank, Metropolitan Bank and Trust Co., the Bank of the Philippine Islands and government-owned Land Bank of the Philippines, respectively.

But only a few billions separate PNB from China Banking Corp. and Security Bank Corp., both of which are aggressively snapping at its heels.

Now, will all this work? Abangan!