Razon Group sets takeover of Panay electric utility

By Myrna M. Velasco – September 18, 2018, 10:00 PM
from Manila Bulletin

A business group led by Spanish-Filipino billionaire Enrique Razon is in for another major comeback bid in the power sector, with his group’s targeted takeover of the Panay Electric Company Inc. (PECO) in the Visayas.

 

Enrique Razon

Enrique Razon

Razon’s group and the Monte Oro Resources & Energy Inc. (MORE) of businessman Walter Brown are in the running for the PECO acquisition – reinforced by a proposed Congressional franchise (House Bill 8132) that already passed plenary deliberations in the House of Representatives.

Nevertheless, the Panay power utility’s takeover is being opposed by PECO Employees and Workers Association (PEWA) — with them manifesting such sentiment in a letter sent to Representative Franz Joseph Alvarez, the chairman of the House Committee on Legislative Franchise.

The takeover bid, according to PEWA, is done via More Minerals Corporation (MMC), which they revealed is a company “funded by billionaire Enrique K. Razon, through its mother company Monte Oro Resources and Energy Inc. (MORE).”

PECO employees argued that “MMC does not have the power and qualification to establish, operate and maintain the business of electric power distribution and conveyance to end-users.”

PEWA further indicated that “a perusal of MMC’s articles of incorporation as well as that of amended articles of incorporation shows that the establishment, operation and maintenance of electric power distribution and conveyance system to end users is not within its power and purposes.”

Placing the power utility unto the charge of MMC, it was noted, was not actually done through a legally sanctioned purchase deal, but being anchored on the refund process ordered by regulators to be enforced by PECO.

In the passage of the MMC franchise that was just done within six weeks, the Energy Regulatory Commission (ERC) reportedly gave its concurrence that it will be “looking at mode by which to take over facilities of existing franchise holder with just compensation.”

Nevertheless, PEWA reiterated 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.”

The group deemed that for a distribution utility (DU) to serve the needs of Iloilo consumers, the franchised DU must have a capitalization of at least P10 billion.

But MMC’s general information sheet showed that as of August 2018, its capitalization was just hovering at P2.5 billion.

“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,” PEWA stressed.

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