Screw Indonesian-controlled Meralco

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“Insanity: doing the same thing over and over again and expecting different results.”—statement attributed to Albert Einstein.

As a nation with one of the most backward electricity industry structures in the world, unchanged for decades, we are indeed mad.

Every year since Marcos fell in 1986 we suffer power outages throughout the summer, and then when the typhoon season comes, we again suffer power outages, this time around purportedly due to the power of nature. We even use the private power industry’s euphemism, to make the phenomenon acceptable: “brownouts,” which, however, refers to drops in voltage and not the total loss of electricity we suffer so often.

Can you imagine not only the metropolis, but also an entire agro-industrial region—Southern Luzon, supposedly our economic powerhouse—losing power for nearly a week? And because of the inefficiency of another public utility, water services, water has been cut off from many areas that use water pumps.

Apologists for the private monopoly that is Meralco point to the huge blackouts in Southern Brazil in 1999, Northeast US in 2003 and Southeast India in 2012. But those blackouts were due to very unique reasons (a software glitch in the US, for example). More importantly, power was restored in only two days. Six days after typhoon Glenda– which was even below the super-typhoon category – many parts of Metro Manila, Southern Luzon and other provinces in the path of the storm, still didn’t have power.

Have you heard of weeklong blackouts in Thailand, Taiwan, Osaka and Tokyo, Hong Kong and Shenzhen?

They are also hit by powerful typhoons at the same frequency as us, about 20 a year, of which five are destructive. There have been power outages in these cities right after they are hit by typhoons certainly, but the power companies manage to restore power in a few hours, even a day’s time. In a town in Cavite where I live, Meralco was just starting to fix electricity poles on the sixth day, and its crew sizes and equipment seemed like they were just on a regular maintenance work.

How much has the country lost in economic output in the last six days?

Typhoons a given

We have had typhoons and super-typhoons since pre-historic times, because our archipelago faces the vast Pacific Ocean where these are generated, and with the earth’s rotation having the effect of building up the destructive power of these weather phenomena.

This even explains much of our history, especially the Church’s pernicious hold on our people’s minds. The typhoons made this colony so unattractive to the Spaniards that so few military men would come here, that it was left to Catholic Church orders—whose eyes were on China—to brainwash the Indios to accept, rather than to fight, the Spanish conquest and exploitation, since after all, they can look forward to being in heaven.

That there will be destructive typhoons every year threatening our power system is so obvious: Why hasn’t Meralco reinforced its power infrastructure to resist typhoons as utility companies have in other typhoon-hit countries? (Instead, Meralco’s spokesman passed on the blame to the National Grid Corp. of the Philippines for two days following the storm, alleging that it was the NGCP’s transmission lines from the power plants to Metro Manila and Southern Luzon that went down. The spokesman stopped using that line, though, when parts of Metro Manila and that region regained power and other areas didn’t.)

In several typhoon- (or cyclone-hit) countries, power companies have had programs decades ago to bury their lines underground to resist whatever happened on the surface. Have you seen any electric post in the Ayala district in Makati (built in the 1960s) and Bonifacio Global City (1990s) – as well as that conglomerate’s new villages like Nuvali and Greenfield—that make these areas’ electricity system typhoon-resistant? Did these cost a fortune Meralco can’t afford?

Has Meralco even started to think of such a program of putting its lines underground?

I was told that many of the electricity “transformers”—the “short-circuiting” of which Meralco always uses as an excuse to explain power outages—are more than 20 years old. A ramrod straight pole is not a tree whose branches of leaves act like sails, thus ending in their uprooting. Strong, modern electric poles like the ones you see in our superhighways NLEX and SLEX were built only in recent years. I haven’t seen any of them falling down. The ones I saw toppled down were poles that were obviously 20, or even 30 years old.

No plan for typhoons

I’ve just read all of Meralco’s annual reports from 2007 to 2013. There is not a single sentence in any of these reports that Meralco has strengthened, or even plans to strengthen, its infrastructure to withstand typhoons as our neighboring countries have done with their electricity systems.

The responsibility given by the government to Meralco, in exchange for having a monopoly over some 5 million households, is not just to provide electricity at normal times. It is to build a power infrastructure that can resist the most powerful of typhoons, as Metro Manila and the adjacent regions make up an area hit every year by typhoons.

The indisputable ethos of Meralco’s owners is that the company is just another firm from which they can suck profits. For instance, the all-important “Message from the Chairman” Manuel V. Pangilinan (revealingly subtitled, “To Our Shareholders,” with no such message to “consumers”) in Meralco’s 2013 annual report entirely boasts of the huge profits the firm has made, its rising share prices and its efforts to go into other businesses.

But Meralco is a government-endowed natural monopoly and its primordial purpose is to ensure efficient, cheap power supply to its clients, the Filipinos, even through the most devastating typhoons.

It really is a scandalous situation, and we’re crazy for not raising a ruckus over our suffering because of Meralco.

Is it because Filipinos have been culturally conditioned not to raise a fuss? Complaining over basic consumer rights are now seen as negativism. Or is it because Meralco is one of the largest advertisers that the press can’t file critical reports about the company? Or has Meralco sent the message to media outfits: don’t cross us, our owners own the Philippine Star and Channel 5, which can muckrake your owners’ dirt, such as their tax-evasion cases?

Meralco’s electricity price of 25 US cents per kilowatt hour (the 2013 average) is the highest in Asia, more expensive for example than rich Singapore’s 23 cents, Thailand’s 15 cents, Malaysia’s 10 cents, and Indonesia’s 5 cents (For details, see my column, “High Electricity Rates, Root of our Backwardness, Jan. 9, 2014).

Yet, despite such high rates charged to consumers, Meralco’s infrastructure is the worst, breaking down for days after a typhoon.

And this will make you mad: Amid its weak and faulty infrastructure, Meralco since 2009 has raked in profits of P66 billion, or an average of P13 billion annually.

This bears a repeat—Meralco enjoys profits of P66 billion since 2009, P13 billion in cold cash every year. Needless to say, it is one of the most profitable companies in the country—its belly swelling each time a Filipino parts with his hard-earned cash to pay this inefficient monster.

A monopoly

Meralco is profitable because it is a monopoly and the government has allowed its prices to increase every year, with hardly any state demand to strengthen its infrastructure. (See “Meralco’s been raking it: Why?”, The Manila Times, January 12, 2014).

Meralco’s spokesman and a famous but gullible TV broadcaster have been repeating in the past several days the propaganda line: “Meralco profits depend on the electricity they sell, so having power outages are not to their advantage, so they’ll do whatever they can to restore power.”

That’s not borne out by the facts: Meralco’s profits surged from P13.7 billion in 2011 to P17.1 billion in 2012, and to P19 billion in 2013, years when massive blackouts occurred because of the powerful typhoons that hit the country in those years.

Meralco’s overriding goal, because profit-seeking private individuals own it, is not to provide cheap, uninterrupted electricity service to their captive customers, but to suck as much profits as they can from the firm. I’d bet their owners applauded billionaire Ricky Razon’s famous quote when he was interviewed at Davos: “I’m not here to save mankind, but to make money.”

The reality is that Meralco’s owners, or rather, the single controlling owner, owns other companies. If investing P100 million in another business could generate more profits in another business, then the owner won’t use that money to improve Meralco’s infrastructure.

This isn’t hypothetical. Early this year, rather than investing some of its profits for the company’s infrastructure, Meralco invested P8.8 billion in acquiring a power plant in Singapore. (See “Meralco fires up $1.2-B 800-MW plant… in Singapore, Manila Times, February 10, 2014.)

Rather than spending its funds to make its delivery of electricity more efficient for Metro Manila and Southern Luzon, and making them typhoon-resistant, Meralco will spend at least P20 billion this year alone on building a 460-MW power plant in Quezon.

And this will make you madder: Rather than use the bulk of its earnings to improve its infrastructure to make it typhoon-resistant, Meralco has been giving most of its profits to its shareholders. These, from 2008 to 2013, totaled P40 billion—an amount I would think would have been more than enough to make at least Metro Manila and Southern Luzon’s electricity infrastructure resistant to typhoons.

Indonesian owner

But this will make you livid: An Indonesian tycoon whose father was a crony of the strongman Suharto, Anthoni Salim, gets the lion’s share of Meralco’s profits, since he directly or indirectly controls 48.3 percent of Meralco.

And he didn’t even spend a peso from his funds to acquire his controlling stocks. (See “Indonesian Magnate Controls Meralco, Feb 23, 2014 and “Salim brought in zero funds to capture Meralco,” The Manila Times, February 26, 2014.)

But isn’t a public utility like Meralco reserved to Filipinos? Yes, but he managed to do it, because of our weak or even captured regulatory bodies (See “How Salim skirted foreign ownership limits,” The Manila Times, March 3, 2014).

The two meanings of “nationalize” are operative in the case of our biggest power company.

One is to put a company in government hands. A company with a monopoly on such a crucial service as electricity just cannot be owned by the private sector. The power companies in Southeast Asia, except for tiny Singapore, which is only as big as the Subic Free Port, are all government-controlled and or owned.

The other meaning of “nationalize” is to recover such a firm from a foreigner, in this case an Indonesian tycoon, Salim, who probably would paraphrase Razon: “I’m not here to make life easier for you Filipinos, but to make money.” Salim, who lives in Los Angeles, wouldn’t care if you and I spend days, weeks or even months, without power.

(Note: My columns cited above were written several months back. Neither Meralco nor any of Mr. Pangilinan’s representatives or proxies has disputed them.)