Oligarchs clawing back (1)

August 15, 2022

In one of his weekly addresses to the nation called Talk to the People former President Rodrigo Duterte said he had no regret in running after abusive big businesses ruled by whom he called oligarchs.

He is among the few if not the only leader of the country, save for former President Ferdinand Marcos Sr., to dare cross swords with families and groups who had a firm grip on the economy for ages.

“If there is one thing that I will bring with me when I die, it is that I was able to dismantle the oligarchs holding the government,” Duterte said.

“That’s why I did not accept their election contribution or campaign funds. I never regretted it or I do not regret it. When the time comes, you’ll have your recompense,” he said.

Among those which he considered as big fishes that he hauled in were water concessionaires which he said took advantage of consumers.

“I have many problems. These water concessionaires are shameless,” he said.

Before he stepped down, the concessionaires signed a revamped agreement with the government less the onerous provisions.

SMC’s energy inroad

It appears that the influence of big business is gathering strength anew as the new administration of President Ferdinand “Bongbong” Marcos takes over.

San Miguel Corp. (SMC) which had diversified into heavy industries has invested heavily in the capital-intensive energy sector.

Two SMC affiliates, Excellent Energy Resources Inc. and Masinloc Power Partners Ltd. Co won, through the competitive selection process, Meralco contracts to deliver 1,200 megawatts (MW) of capacity for P4.1462 per kilowatt-hour (kwh) and 600 MW for P4.2605 per kWh under contracts covering 20 years starting 2024.

Stakeholders in the power sector have been questioning the logic of the offers that clinched the Meralco deals being lower than the P4.30 per kwh charged by Sual coal plant and Ilijan natural gas plant, which SMC both operates.

SMC claims in its petition for relief that the Sual and Ilijan rates it signed with Meralco were too low “to recover its fuel costs”.

Just recently, two other SMC units, Excellent Energy Resources, and Masinloc Power Partners won deals for the future energy requirements of Meralco.

Based on SMC’s previous practices, it is expected to run again to Energy Regulatory Commission (ERC) for intervention to jack up its rates once they start operating.

Pricing conflict

SMC’s energy subsidiaries San Miguel Energy Corp. (SMEC) and South Premiere Power Corporation (SPPC) reported losses of P3.7 billion and P1.5 billion, respectively, as of May 2022. Both have a 10-year power supply agreement with Meralco.

SMEC operates the 1,000-MW Sual coal power plant in Pangasinan while SPPC derives electricity from the 1,200-MW Ilijan natural gas facility.

SMC’s energy companies under San Miguel Global Power (SMGP) have combined earnings of P18.8 billion in 2020, 31 percent higher than in 2019, citing “lower fuel costs and spot purchases and effective implementation of power dispatch strategies.”

SMGP profit for 2021 was reported at almost P16 billion as prices of coal and natural gas fell in 2020 when demand dipped due to the global pandemic.

It raked in P17.9 billion in net income from last year up to the first quarter of 2022.

The SMC unit has a pending cost recovery petition with the ERC for P0.80 per kWh to P5.10 per kWh from P4.30 per kWh for its 670-MW of contracted baseload capacity from the Ilijan plant, and an average of P4 per kwh from P4.30 to P8.30 per kwh for the 330-MW contracted baseload capacity from the Sual plant.

To be continued


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