PREDATORY BIRDS birds are circling as the Philippine government steps up its offensive to take over the power retailer Manila Electric Co. (Meralco), flagship of the country’s largest Filipino business conglomerate, owned by the Lopez family.

The looming battle for control of Meralco marks the biggest takeover bid directed at a Filipino-owned business by a democratic Philippine government since the fall of the Marcos dictatorship in 1986. The outcome is being watched with anxiety by foreign investors that have been wary over uncertainties of long-term investment because of recurrent political turbulences, the inconsistency of government policies on foreign investments, and the confiscatory tendencies inspired by the economic nationalism framework of many policies.

After the administration of President Gloria Macapagal-Arroyo pulled out all the stops for her all-out war to crush the economic power of the Lopez family, three government institutions have gone on overdrive, since last Monday, ostensibly to bring down the “exorbitant” electricity rates, currently the cause of widespread public unrest.

At the spearhead of this campaign are the giant government pension fund, Government Service Insurance System (GSIS), the Joint Congressional Power Commission (chaired by President Arroyo’s ally, Senator Miriam Defensor Santiago, and co-chaired by Rep. Juan Miguel Arroyo, the President’s son), and the presumably independent Energy Regulatory Commission (ERC), where the government has lodged omnibus petitions seeking cuts in Meralco electricity rates. The congressional power commission (Powercomm) and the ERC have been holding simultaneous but separate hearings since last Monday.

Since last week, the GSIS has produced a plethora of demands, starting with a call for full transparency and accountability in the operations of Meralco. That call was made a day after President Arroyo announced on May 2 that the government had filed with the ERC a petition to cut Meralco rates. In six days, GSIS president Winston Garcia escalated the demand with a call for a management revamp of Meralco, saying, “I believe we can bring down the rates only if we change management and put somebody who can initiate reforms.” The statement unmasked the government’s real intention—the takeover of Meralco—and set the tone of the campaign.

By Sunday, Garcia had produced an even more ambitious plan than a buyout of the Lopez shares in Meralco: the breakup of Meralco electricity franchise into two sub-franchises in the metropolitan area—similar to the split of the water distribution operations of the Metropolitan Waterworks and Sewerage Authority (MWSS) into two sectors, with one awarded to the Ayala interests and the other to the Lopez interests (which have subsequently pulled out of the sector).

Garcia said, “We are very much interested, we think Meralco is a good investment. My plan is to take full control of Meralco and break it up into two or more sub-franchises. This worked very well in the MWSS privatization.”

Quickly, Elpi Cuna, Meralco vice president for communications, expressed doubt whether Meralco’s 50-year franchise could be subdivided. “It’s a total package, and the way it is worded, you’d have to go back to Congress to get permission.”

Garcia was making the bid look like an easy process, just like slicing a birthday cake and serving out the sections to ravenous party-goers. Apparently Garcia did not take into account that the government is unwittingly setting precedents in government takeover bids that can make potential investors, and even established foreign investors, more nervous about their own stability and protection from government confiscations.

An even more inquisitorial and arbitrary procedure has been unfolding in Congress since last Monday when the hearings conducted by the joint power commission started. The hearings were so summary and, within four days, the inquiry became a kangaroo court. The hearing was rigged with a preponderance of administration allies. The swiftness with which the chair of the Powercomm made conclusions and prejudgments, mainly based on government-produced witnesses, amazed observers.

Although Meralco is not without fault in the rates controversy, it had no chance from the lynch mob. The lynching was one of the most blatant exercises of travesty of justice and fair play in legislative inquiry seen in recent times.

On the very first day of the hearing on Monday, the chair, Senator Santiago, backed Garcia’s proposal to break up Meralco’s franchises into smaller concessions. She said, “There’s no problem with that, we already have a model. What used to be MWSS, which was divided into two, did not result in higher water rates.” Santiago made the conclusion without hearing any contrarian evidence showing this arrangement produced higher rates.

By Monday, Santiago was able to conclude that the Powercomm hearing had showed “management inefficiency” on the part of the Lopez family. An ally of President Arroyo opened another broadside against Meralco on another issue. In a privilege speech in Congress on Wednesday, Rep. Luis Villafuerte accused Meralco of billing consumers about P13 billion in “ghost deliveries” of electricity purportedly generated by a power producer of the Lopez group. A reply by Christian Monsod, a Meralco director, explaining the deliveries, scarcely merited a few lines in the newspapers. He was not delivering a privilege speech, a platform of sensational vilification not available to non-congressmen.

Speaking of a level playing field, look for it elsewhere. You will not find it in this crush-Meralco crackdown. No one on the side of the government is telling us how to drive down the electricity rates, and by how much. After they shall have demolished Meralco, the next question is—who’s next?

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