About 54 percent of the Philippines’ 215 power generation companies, representing 13,745 megawatts of capacity, have yet to comply with a legal requirement to conduct a public offering, the Energy Regulatory Commission (ERC) said Thursday.
ERC chairperson Monalisa Dimalanta told a Securities and Exchange Commission (SEC) event, “POWER ON: Harnessing the Power of the Capital Market for a More Sustainable Energy Sector,” that compliance with the public offering rule was only 15 percent, or 37 out of 251 companies.
The SEC’s “POWER ON” initiative aims to encourage energy companies to use capital markets for funding operations and expansion.
Dimalanta said many generation companies are part of larger conglomerates, whose parent firms are already listed or have other means of raising capital.
Independent renewable energy producers, she said, require greater access to capital. “And that’s why they are very interested in this,” Dimalanta said.
The SEC is assisting companies with public offering requirements mandated by the Electric Power Industry Reform Act of 2001 (EPIRA).
Section 43 of EPIRA requires generation companies to publicly offer at least 15 percent of their common shares.
“We have been trying to enforce it, but admittedly, over the last 20 years, it is so hard to enforce because you cannot force the market to buy,” Dimalanta said.
“So, we have been working on this with SEC for almost two years, trying to make the process more accessible,” she said.
Non-compliant companies risk non-renewal of their operating licenses or certificates of compliance, she said.
“That means they cannot operate. So the consequence then is something that we find very difficult to enforce, to implement…The impact of not revoking the certificates of compliance for those that have not complied will be taking out 14 gigawatts of power from the system,” Dimalanta said.
She said 136 non-compliant companies face potential license revocation if the ERC strictly enforces EPIRA.
Dimalanta said the ERC could not simply revoke the licenses, as “everyone will suffer.”