Corporate maneuvers to settle Iloilo power fix

Corporate maneuvers to settle Iloilo power fixOne way or another, the power standoff in Iloilo City will be resolved through a series of corporate maneuvers that will hopefully result in a win-win solution

Beleaguered Panay Electric Co., or PECO, of the old money Cacho family is virtually staring at a hostile takeover from MORE Electric and Power Corp. of businessman Enrique Razon Jr. after losing the franchise to distribute electricity in Iloilo City.

With its franchise expiring on Jan.18, 2019 and with nothing to hold on to, PECO it seems has no other recourse but to welcome a takeover from MORE to prevent a disruption in electricity service. It appears that PECO has little options, if any, to extend its hold over Iloilo City. 

The Department of Energy has warned that it will take over the operations of PECO if it refuses to turn over its distribution facilities to MORE, which has just obtained the congressional franchise to distribute electricity in Iloilo City, once PECO’s franchise expires.

The DoE, according to Energy Secretary Alfonso Cusi, had formed a task force with the National Electrification Administration to take over the PECO’s facilities and operations in case the company refuses to implement a transition plan.

“We are prepared to take over in case, to ensure there is no disruption of service. We (with NEA) organized a task force to take over in case there will be no settlement in the issue,” Cusi said.

Cusi, of course, prefers a smooth transition phase, with PECO and MORE forging an agreement that will not disrupt electricity service in Iloilo City.

That could mean the Cachos led by president Luis Miguel Cacho and chairman Mariano Cacho Jr. will agree on a buyout of the family’s 70-percent stake in PECO. First Philippine Holdings Corp. of the Lopez Group  in 1996 purchased 30 percent of the capital stock of PECO in exchange for a stake in Panay Power Corp., which operates a 72-MW diesel plant in Iloilo City.

The Lopez Group so far has kept its distance from the word war between the Cacho family and Mr. Razon. A source said the Lopezes were open to whoever will ultimately take over the Iloilo City franchise.

Razon’s broadsides

Mr. Razon, meanwhile, minced no words in slamming PECO and its alleged poor electricity services in the central Visayan city. He criticized PECO for alleged inefficiencies that paved the way for his company MORE to apply for the franchise to distribute electricity in Iloilo City.

Razon, the majority shareholder of More through his holding company, said Iloilo City residents had suffered from Peco’s “poor services, overcharging of power bills with some reaching more than 1,000 percent, accumulated billings due to erroneous meter readings, technical failures, poor customer service, high electricity rates, constant power interruptions and unexplained charges” for decades.

“If Peco had been doing a good job, we wouldn’t have had the opportunity to apply for this franchise and transform it into a modern, efficient, low cost and state-of-the-art distribution network,” he said.

The Senate public services committee chaired by Senator Grace Poe voted unanimously last month in favor of House Bill No. 8132 granting MORE the franchise to operate a distribution system in Iloilo City.   

“Four generations of Ilonggos have suffered under PECO. Neither are they heard by PECO, who has not addressed the many pending complaints–numbering 1,800―against it… Clearly, it is time that the Ilonggos are relieved of their misery,” Razon, who also chairs port operator International Container Terminal Services Inc., said.

Razon also rebuffed the claims of PECO that MORE did not have the qualifications to run an electric company.   

“We certainly never want to have the qualifications of Peco. We are exactly the opposite of PECO because we have a track record of success in start-ups and large-scale projects not only in the Philippines but globally,” Razon said.

Razon got into the new business through Apex Mining Co. Inc., which owns Monte Oro Resources and Energy Inc., later renamed as MORE Electric and Power Corp. Razon’s Prime Metroline Holdings Inc., which owns Bloomberry Resorts Corp., subscribed to 2 billion shares of Monte Oro. PMHI is now the single biggest stockholder of Apex.

Some analysts say Mr. Razon will likely use MORE and Prime Metroline in the takeover of PECO. But they did not discount the possibility that he may resort to flipping MORE for quick profit.

MORE has boosted its value with the Iloilo franchise and if the Cachos are dead set on keeping their business, they can buy MORE instead. Mr. Razon can also sell MORE to a third party. 

Mr. Razon’s Monte Oro Grid Resources Corp. in 2010 sold its 30-percent stake in National Grid Corp. of the Philippines to OneTaipan Holdings Corp. of Henry Sy Jr., after his group just won the franchise to operate the government’s nationwide power transmission system.

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Topics: Panay Electric Co. , MORE Electric and Power Corp. , Enrique Razon Jr. , Department of Energy
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