Smaller power DUs seek exemption from PSE listing

By Myrna M. Velasco – July 9, 2018, 10:00 PM
from Manila Bulletin

Smaller power distribution utilities (DUs) are seeking exemption from the mandatory listing at the Philippine Stock Exchange (PSE), noting that such may just end up a financially crippling exercise for them.

Department of Energy (DOE) logo

Department of Energy (DOE) logo

This has been the position taken by the Philippine Electric Plant Owners Association (PEPOA) in the proposed amendments to the Electric Power Industry Reform Act (EPIRA) being pushed by the Department of Energy.

“Listing at the PSE may not be practical for small DUs as the cost of doing an initial public offering (IPO) and PSE listing could be quite prohibitive for them,” the group of power utilities said.

It added that if the main goal of stock listing will be to help prop electric utilities’ cash raising activities to fund projects, this may still be a counter-productive step for them to be taken.

“This would defeat the purpose of small DUs in going public as it might not leave sufficient funds to fund their capex (capital expenditure) projects,” PEPOA stated.

It expounded then that “if listing at the PSE would not be practical, small DUs shall be allowed to explore other innovative ways to raise funds from the public.”

The PSE listing of at least 15-percent shareholdings of power utilities, as well as that of the generation companies (GENCOs) has been provided under the original EPIRA, and this is being reinforced again in the proposed modifications of the law.

The GENCOs themselves have their own issues and concerns that they have constantly raised with relevant government agencies when it comes to the IPO prescription of the power industry reform act.

For existing power companies, that was supposed to have been done five years from the law’s effectivity, which should have been as early as 2006, but several policy and regulatory snags have been thrown their way.

Meanwhile for new companies, it was stipulated that their stock listing shall be carried out “not later than five years from the issuance of their certificates of compliance.”

In previous rules set forth by the Energy Regulatory Commission (ERC), it noted that public offering must come in the following forms: listing of the common stocks in the PSE; registration of the common shares of stock in the Securities and Exchange Commission (SEC); and listing of the shares of stock in any accredited stock exchange or direct offer of a portion of the capital stock to the public or their employees.