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Aboitiz challenges Meralco bid for Baguio ecozone

Aboitiz Power Corp. submitted an offer to challenge Manila Electric Co.’s proposal to operate, maintain and manage Baguio City Economic Zone’s power distribution system for 25 years.

“We submitted an offer to service the requirements of Baguio Export Processing Zone. We have no news yet of the decision,” Aboitiz Power chief operating officer Emmanuel Rubio said.

The Philippine Economic Zone Authority earlier called for a competitive proposal to operate, maintain and manage BCEZ’s power distribution system for 25 years.

“It’s a good opportunity to grow our distribution business albeit small. It allows us to expand to other ecozones,” Rubio said.

Meralco senior vice president and head of customer retail services and corporate communication Al Panlilio said he was hoping that the company’s offer would be “more competitive” than Aboitiz Power’s. 

Meralco is the country’s biggest power distributor with over six million customers in its franchise area.

Aboitiz Power is currently one of the largest electricity distributors in the Philippines with ownership interests in seven distribution utilities including Visayan Electric Co. and Davao Light and Power Co., the country’s second and third largest, respectively.

Both companies also offered bids to become the joint venture partner of state-run Bases Conversion and Development Authority for the development of electric power distribution in New Clark City.

Meanwhile, Peza said the offer of Aboitiz Power was a more “superior proposal” to the offer of state-run National Transmission Corp. and partner Benguet Electric Cooperative.

Peza earlier said the joint counterproposal of Transco with Beneco challenging the offer of Meralco “failed to pass the evaluation.”

Peza also cited the financial reports of Beneco, TransCo’s outstanding debts and the 

proposed distribution rates for the decision.

TransCo president Melvin Matibag, in a letter to Peza, noted “the lack of transparent process, guidelines, terms of reference, very short transaction schedule and evaluation criteria.”  

He said these could not be the reason of Peza for rejecting their proposal.

“We also find Peza’s procedures quite inconsistent with government’s thrust for complete transparency, competitiveness, simplicity and accountability. Thus, a third-party observer might entertain a reasonable conclusion that the transaction might be giving unwarranted benefits, advantage or preference to a private entity,” Matibag said.

He said while Beneco’s income statement showed negative net income, it did not mean real financial loss.  Matibag said this was because the financial report of the electric cooperative did not reflect the total revenue collected from member-consumers while they were required to report non-cash depreciation expense.

Matibag said there was also a difference in the financial computation of electric cooperatives like Beneco and private distribution firms like Meralco.

He said Beneco had a financial rating of 30 percent, according to the National Electrification Administration which meant it “did not default on its obligations to power suppliers, transmission service provider, creditors, government, employees, etc.”

Matibag said Beneco also scored 30 percent in technical performance because of its single-digit system loss of 8 percent to 9 percent.

“The efficient operation of Beneco as one of the leading and usually benchmarked distribution utilities in the country is what motivated Beneco to participate in the Peza selection process,” he said.

Matibag said TransCo had fully settled its tax liabilities with the government amounting to P876 million, while the remaining P856 million was subject to tax abatement with the Bureau of Internal Revenue.

“We request Peza not to take against TransCo this tax liability for purposes of evaluating its financial performance and capability under this transaction,” he said.

Topics: Aboitiz Power Corp. , Manila Electric Co. , Meralco , Baguio City Economic Zone
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