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Bayan Muna solon raps Meralco’s bid to keep overpriced ‘sweetheart deal’

/ 04:51 PM June 12, 2019

MANILA — Bayan Muna Rep. Carlos Isagani Zarate on Wednesday decried what he claimed were dubious attempts by the Manila Electric Company (Meralco) to award to itself a 1,200-megawatt power supply agreement (PSA) through a wholly-owned subsidiary, notwithstanding a recent Supreme Court decision to practically nullify an earlier Meralco PSA with the same subsidiary due to the distribution utility’s failure to bid out the PSA under competitive selection process (CSP) rules.

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“Meralco’s stubborn insistence to give this multi-billion-peso contract to its own subsidiary showed a few days ago when a newspaper reported that Meralco is “willing to undertake the [CSP] in order to allow the construction of the Atimonan coal-fired power plant to start,” Zarate said.

He noted that “from the news report, it is clear that the outcome of the bidding that Meralco will conduct, ostensibly under CSP, to pick the supplier for its 1,200-megawatt power requirement is predetermined. Its subsidiary Atimonan One Energy Inc. [Atimonan One], which happens to be the proponent of a matching 1,200-megawatt power plant in Atimonan, Quezon, will win the bidding.

“Meralco officials, therefore, are making a mockery out of the CSP, which is designed to promote competition and not bid-rigging,” he added.

“Their greedy insistence to continue working on ways to hand the contract to a subsidiary will defeat the hard-earned victory that we won at the Supreme Court, which earlier sided with us and ordered the rebidding of this sweetheart deal between Meralco and Atimonan One,” said the Davao-based solon.

Watching every move

Zarate warned “we are closely watching Meralco’s every move regarding this PSA. We welcome the speedy conduct of a CSP; but if Meralco officials try to rig the outcome of the bidding, we will not hesitate to file new charges in court against these erring and abusive Meralco officials.”

“They should bear in mind that what they are plotting to do is a crime under the Revised Penal Code. It will constitute a restraint of trade or commerce to prevent free competition in the market. In other words, these Meralco officials can face jail time for violating the Revised Penal Code,” he pointed out.

“We will also file a case against Meralco for violating the Philippine Competition Act (PCA), which prohibits a company with a dominant position in the market from engaging in conduct that would substantially prevent, restrict or lessen competition,” he said.

The PSA between Meralco and Atimonan One belonged to a batch of seven power deals that Meralco awarded without bidding to its own subsidiaries, sister companies and affiliates. These PSAs for the supply of 3,551 MW of electricity were filed with the Energy Regulatory Commission (ERC) in late April 2016, or months after CSP took effect on June 30, 2015.

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Designed to get the least cost of electricity, CSP requires electric cooperatives and distribution utilities like Meralco to get at least two offers before awarding a PSA. But Meralco was emboldened to submit the PSAs that it negotiated without bidding and beyond June 30, 2015, after the ERC came out with a controversial resolution, restating CSP’s effectivity to April 30, 2016.

According to Bayan Muna, the seven Meralco PSAs hid  P900 billion in additional or overpriced charges that would burden Meralco customers for over two decades. Bayan Muna, thus, joined other groups that challenged the ERC’s decision to move CSP’s effectivity.

In early May 2019, the Supreme Court ruled that all PSAs, including the seven Meralco deals that were submitted to the ERC on or after June 30, 2015, must undergo CSP. (Editor: Jonathan P. Vicente)

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TAGS: Atimonan One Energy Inc., Bayan Muna, Business, Energy, Meralco, power sector, power supply agreement, supreme court
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