COMMENTARY

Meralco’s Monopoly and Public Interest 

The recent Supreme Court decision ordering the Manila Electric Company (Meralco), the largest power distribution company in the Philippines, to reimburse P28.1 billion that it overcharged its customers in more than eight years again sharpens the focus of privatization on corporate monopoly and the resulting failure to uphold public interest.

By Antonio Tujan Jr.
Research Director, IBON Foundation
Re-posted by Bulatlat.com

The recent Supreme Court decision ordering the Manila Electric Company (Meralco), the largest power distribution company in the Philippines, to reimburse P28.1 billion that it overcharged its customers in more than eight years again sharpens the focus of privatization on corporate monopoly and the resulting failure to uphold public interest.

For the past two years, the country has been rocked by protests as the expected increase in power costs through the so-called Power Purchase Adjustments or PPA were implemented. These protests started in response to the Meralco petition to increase power rates as a consequence of its unbundling of power charges as stipulated in the new power reform law. However, the debate quickly exposed the fact that the expensive power charges in the Philippines were due to the sweetheart deals that the Ramos administration struck with multinational corporations that it invited to set up power plants under the build-operate-transfer and other similar schemes.

The current controversy further brings focus on corporate monopoly as Congress currently deliberates a Meralco petition to consolidate its myriad power distribution and generation franchises, which it amassed over the years, into a superfranchise.

Meralco now paints itself as the victim in this issue as it claims that reimbursing the overcharged amount will result in dire financial consequence to the company. Corporations and business opinion immediately sided with Meralco in this matter and the fact that, in the first place, Meralco had surreptitiously padded its power charges with their tax costs is conveniently set aside. Meralco and their auditors, Andersen Consulting affiliate SGV, insist that this practice is according to internationally accepted standards (similar probably to what Enron has been practicing), but as the Supreme Court has ruled, this practice is contrary to Philippine law and public interest.

The unstated but patently obvious implication of Meralco’s threat of financial collapse is the prospect of its failure in providing power services and a return to the power outages of the early 1990s. In the face of this blackmail, many government officials have shamelessly become virtual Meralco apologists. On the other hand, options have become muddled in the face of economic crisis, a bankrupt and corrupt government, a partisan Arroyo administration gearing up for elections, an IMF threat not to mess with its neoliberal policies, and so on.

The finance department’s surprising proposal to transform the government’s ownership of the largest chunk of shares in Meralco into a takeover of the board and management is a breath of fresh air. The assumption here is that the purpose of this proposal is to implement the Supreme Court decision, ensure the continued provision of power services and protect the public and national interest while maintaining the operation of the power company.

The proposal has expectedly sent shudders down the spine of transnational corporations which have been lording it over the country for the past half a century. Corporate apologists spared no time to gang up on the government, making it further appear that Meralco is the victim rather than the corporate highway robber. Even opposition politicians who questioned the political motive behind the proposal as a pre-election scheme of the Arroyo administration to gather power and resources only added to Meralco’s support instead.

However, many hold the view that this proposal is probably only a bluff since the IMF has not gone into its usual practice of lecturing the country regarding the dangers of turning back on globalization.

Bluff or not, the government’s proposal to take over management control of Meralco happens to be the only assurance that the public will get reimbursed for what Meralco has stolen and that the country will not be at the mercy of corporate blackmail. More important, it opens the question regarding the failure of privatization and the dangers of corporate monopoly.

Especially for a developing country like the Philippines reeling under the global crisis, the question of state responsibility in providing basic services makes it imperative to revisit the issue of privatization. Proposals regarding the public takeover of water and airline utilities that have also been privatized should not be taken lightly for they touch upon the more fundamental issue of public interest and state responsibility.

Many dismiss the government takeover proposal as regressive in the light of massive graft and corruption and state ineptitude. But this argument precisely fits into the globalist argument for privatization and instead gives us corporate ineptitude, profiteering and corruption.

Much is required to make government truly one that is of, for and by the people, but the challenge has to start now. IBON Foundation/Reposted by Bulatlat.com

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