Truth, SMC’s duty
The statement to soothe the concerns of its creditors was an offshoot of a detrimental review of economic think-tank Bloomberg International.
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Daily TribuneThe statement to soothe the concerns of its creditors was an offshoot of a detrimental review of economic think-tank Bloomberg International.
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Being forthright about its financial situation is required of San Miguel Corp. energy unit SMC Global Corp, not only because it is a responsibility to its shareholders, but it is also what the public expects since the company is engaged in utility service.
Ambivalent statements will not help as each word that SMC Global Power makes public gives electricity users a glimpse of their future monthly bills.
SMC said the recent decision by the ERC to deny a temporary rate hike, while it will significantly impact its two power facilities with fixed-rate power supply agreements would have no adverse implication on a consolidated basis for SMC Global Power.
Addressing its many creditors, SMC said it will be able to manage maturing obligations in 2023 and beyond.
If necessary, SMC said it will provide financial support to its unit. "For our bondholders, SMC Global Power will continue to be fully compliant with its financial covenants at all times," SMC president Ramon Ang said.
The statement to soothe the concerns of its creditors was an offshoot of a detrimental review by economic think-tank Bloomberg International.
The Bloomberg International report said, "SMC Global's credit profile might weaken to a B1 profile based on Moody's rating methodology for unregulated power companies. It might not benefit from uplift for support from its parent San Miguel Corp., which also has high leverage."
High leverage is business jargon for being heavily indebted.
Consumer groups noticed blatant deceptions in the SMC statements.
They said what was evident was a change in tune of SMC's messaging, with SMC President and CEO Ramon Ang claiming that the conglomerate has enough money to absorb any losses from the fixed-price PSAs.
"SMC said, without proof, that it lost P15 billion over the fixed-price PSAs (power supply agreements) which it is now trying to get rid of," according to Power for People Coalition convenor Gerry Arances.
"After attempting and failing to pass on its burdens to consumers, SMC is now saying that it will have P30 billion in windfall annually in the next two years as its amortizations for its Ilijan and Sual power plants are completed. What is the truth? Did SMC lie about its losses? If so, why? Or is SMC lying right now about its cash flow? If it's not lying about its cash flow, then there is no reason for it to renege on the PSA it signed in 2019," Arances added.
SMC's position as owner of the largest generation companies in the country and as a publicly-held corporation makes it imperative that it be truthful about its pronouncements to the public, he pointed out.
Unless SMC comes out clean, it should be barred from participating in all power supply auctions which P4P said it already indicated plans of being part of in the bid for emergency PSAs of Meralco.
Emergency PSAs will be resorted to once SMC pulls out of its fixed-price agreements with Meralco which it blamed for losses piling up for both its Sual coal and Ilijan natural gas plants.
"SMC stated its intention to join further PSA biddings. But right now, it seems unable or unwilling to uphold its commitments," P4P said.
"Either way, SMC should not participate in such future biddings, at least until it comes out with the truth, the whole truth, and nothing but the truth," it added.
When a level playing field is called for, SMC should be the first to respond as it holds the biggest interest in almost all local businesses.
With its stature at the top of the business totem pole, SMC must be transparent.
