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Puregold raises P4.7 billion in private share placement

By Arra B. Francia, Reporter
PUREGOLD Price Club, Inc. raised P4.69 billion through top-up share placement to finance its capital expenditures and potential acquisitions for the year.
In a disclosure to the stock exchange on Thursday, the listed supermarket operator said it conducted a share sale consisting of about 104 million common shares at P45 each. This comprises around 3.8% of the company’s total issued and outstanding stock.
The top-up placement price represents a 6.8% discount from the Puregold’s share price of P48.30 on Jan. 16.
Puregold Chairman Lucio L. Co was the sole selling shareholder for the deal, which was done through an overnight book building offering. The transaction was conducted following the approval of its board of directors.
The company engaged Deutsche Bank AG as the placing agent for the transaction.
Sought for details, Puregold Vice-President for Investor Relations John Marson T. Hao said the placement was made by several investors.
“Proceeds will be used for general corporate purposes, capital expenditure, and potential acquisitions,” the company said.
Mr. Hao said the company has yet to finalize its capex budget for this year.
Puregold announced last year that it will incorporate a new unit that will handle its remittance business, PurePadala, Inc. The unit is intended to operate a cash remittance business for the benefit of shoppers in Puregold stores.
Under PurePadala, OFWs can specify how much of the amount sent will be used for grocery shopping at any Puregold store, how much can be for the payment of utility bills, and how much can be encashed.
Puregold grew its net income attributable to the parent by 18% to P4.62 billion in the first nine months of 2018, driven by a 14% uptick in gross revenues to P102.64 billion. System-wide sales also jumped by 14% to P99.82 billion for the same period.
The company attributed its positive performance for the nine-month period to the passage of the tax reform program, which increased take-home pay and effectively boosted higher consumer spending.
Same store sales growth meanwhile stood at 5.8% for Puregold stores, and 8.8% for S&R outlets.
Incorporated in 1998, Puregold’s core business is to trade goods, particularly consumer products such as canned goods, housewares, toiletries, dry goods, food products, pharmaceutical and medical goods on a wholesale and retail basis.
Shares in Puregold fell by 4.97% or P2.40 to close at P45.90 each at the stock exchange on Thursday.

ABS-CBN says iWant subscribers hit 11 million

ABS-CBN Corp. said its newly rebranded streaming platform iWant (formerly iWant TV) now has 11.3 million subscribers.
In a statement, the media giant said iWant’s subscriber base grew by one million within two months after it was relaunched in November. It had 10.3 million subscribers as of October 2018.
“The new iWant recorded 60 million video views in December 2018 and has already gotten two million app downloads on both iOS and Android since it was launched in November last year,” it said.
ABS-CBN’s streaming service, which was originally launched in 2007, features the company’s extensive library of original movies and shows. Aside from live streaming several ABS-CBN shows, it also hosts the company’s old documentaries, specials and films.
The Lopez-led firm said it will start allowing iWant shows to be viewed on televisions through Roku, Android TV boxes and SKY set-top boxes this year.
“New features will also be introduced to subscribers such as offline viewing and commenting on and chatting about their favorite content within the streaming service,” it added.
The iWant service is accessible via a mobile application and through iwant.ph. ABS-CBN has teamed up with both Globe Telecom, Inc. and Smart Communications, Inc. to offer promos to stream iWant videos.
The listed media giant posted a 32% decline in its net attributable income to P1.627 billion in nine-month period on flat consolidated revenue at P29.49 billion and a 5% growth in expenses. — Denise A. Valdez

After ‘Baby Shark’ come penguins?

“BABY SHARK (Doo Doo Doo Doo Doo Doo)” is the YouTube sensation that’s been viewed more than 2 billion times and made the Billboard Hot 100 chart for a second-straight week. The jingle has also become such an earworm that late-night-show host Jimmy Kimmel proposed throwing those responsible in jail for life.
Love or hate it, the South Korean company behind the one-and-a-half minute song about a family of sharks is now seeking to capitalize on the success by expanding its kid-oriented entertainment business. Seoul-based SmartStudy Co.’s Pinkfong is planning to release short videos via Netflix Inc., a cartoon series and a musical in North America this year, one of the company’s founders said in an interview this week. The start-up, which has recently signed various merchandising deals, may also develop games that work with Amazon.com Inc.’s Alexa and Alphabet Inc.’s Google Home voice assistants, he said.
The popularity of the sing-along builds on Korea’s emergence as an entertainment powerhouse. Korean pop, or K-pop, has grown into a $5 billion industry thanks to the success of the likes of boy-band BTS, which has signed commercial deals with big companies from Hyundai Motor Co. to Barbie-maker Mattel Inc., and Psy, whose “Gangnam Style” is at more than 3 billion views and counting.
“We’ve added the ‘K-pop factor’ into our songs, such as very trendy beats and upbeat rhythms,” said Seungkyu Lee, who’s also chief financial officer at SmartStudy. “If you’ve ever heard of ‘Baby Shark,’ you might feel the importance of community. In a group, we should walk or swim together.”
Unlike BTS, SmartStudy has found its niche with kiddie pop, targeting children aged between one and four with addictive, dance-along videos. It was established in 2010 by three former online gaming employees. Mr. Lee, 44, who formerly worked at game-maker Nexon Co.’s marketing department, said the trio wanted to pursue opportunities in the growing market for educational content in smartphones by using their expertise in attracting and keeping users to make money.
Mr. Lee said the Korean educational app-to-video maker’s early days were tough but that its business grew fast after the “Baby Shark” video went viral. Revenue at closely held SmartStudy is expected to have increased to 37 billion won ($33 million) last year from 27.2 billion won and net income probably more than doubled to about 5 billion won, according to Mr. Lee. Digital sales account for about 70% of its total business, with the rest mainly coming from physical sales such as merchandising, he said.
Others are benefiting too. Samsung Publishing Co., which owns 25% of SmartStudy, surged by the 30% daily limit to a record high in Seoul on Wednesday. The stock has gained 83% this year.
For its next act, Mr. Lee says the company will be developing content for older children — aged five to eight — and that he’s looking beyond sharks by closely examining penguins.
“I really liked Madagascar,” Mr. Lee said, in reference to the DreamWorks Animation films that featured some penguins. — Bloomberg

Global Ferronickel holds ore shipments to China steady as economy cools

MANILA — Philippines nickel ore miner, Global Ferronickel Holdings, Inc., said on Thursday it aims to ship 5.7 million wet metric tons (WMT) to China this year, in line with 2018, as China’s cooling economy slows expected demand.
Global Ferronickel also said it has signed a contract to sell 1 million wmt of ore to Baosteel, a unit of top steel manufacturer China Baowu Steel Group. It is also looking to sell ore to China’s Guangdong Century Tsingshan Nickel Industry Co.
The Philippines is the world’s second-biggest supplier of nickel ore, used to make stainless steel, after Indonesia.
The deal with Baosteel, which has been a customer of the Philippines’ second-largest nickel ore producer since 2014, is the biggest so far between the two companies, said Global Ferronickel President Dante Bravo.
Mr. Bravo said the miner expected to remain profitable this year despite a loss of growth momentum in China.
“The effect of the cooling Chinese economy basically brought down the expected demand and ore prices,” he told Reuters. “But overall, we are still profitable. We will be signing new supply agreements with our buyers after the Chinese new year (next month).”
As nickel prices fell last year, Global Ferronickel opted to ship higher-grade ores to maximize profitability. Last year’s shipment volume of 5.709 million WMT was also 3.8% higher than its 5.5 million WMT target, thanks to favorable weather conditions and more efficient operations, it said.
The miner is looking to further boost sales of medium- and high-grade ores this year to 60% of total sales, with low-grade ores accounting for 40%.
Medium- and high-grade made up 53% of the sales mix last year and just 39% in 2017.
The forecast sales volume for 2019 is subject to weather conditions. — Reuters

Mariah, Rihanna file lawsuits

LOS ANGELES/NEW YORK — Singers Mariah Carey and Rihanna sang the blues as they filed lawsuits this week against a former assistant and father, respectively. Meanwhile, Beyonce has dropped a copyright infringement lawsuit.
Rihanna has sued her father for trading on her Fenty brand name and suggesting that a business venture he set up in 2017 is associated with her.
The “Diamonds” singer, whose full name is Robyn Rihanna Fenty, filed a lawsuit in US federal court in Los Angeles on Tuesday accusing Ronald Fenty and two business partners of fraud and false advertising over his Fenty Entertainment talent and production company.
The Barbados-born Rihanna, who uses the Fenty trademark to sell cosmetics, lingerie and sneakers, asked the court for an injunction to stop her father using the Fenty name, and an unspecified amount of damages.
The lawsuit said Rihanna had “absolutely no affiliation” with Fenty Entertainment and yet the company was misappropriating her name and misrepresenting itself as being affiliated with her.
In one instance, Fenty Entertainment accepted a 2017 offer by a third party for Rihanna to perform 15 shows in Latin America for $15 million, the lawsuit said. In another, Fenty Entertainment falsely implied that the singer was involved in a boutique hotels project, it added.
The lawsuit said that despite having repeatedly been told they have no authority to use her name, the Fenty trademark or speak on Rihanna’s behalf, Ronald Fenty and his business partners had continued to misrepresent an affiliation with her.
Fenty Entertainment could not be reached for comment on Tuesday.
MARIAH WANTS $3-MILLION
Singer Mariah Carey on Wednesday sued her former assistant for breaking a nondisclosure agreement, negligence and theft, according to court documents.
Ms. Carey, one of the world’s best-selling singers with 200 million records sold and hits including “We Belong Together,” is seeking at least $3 million in damages from Lianna Azarian and a restraining order to keep her former assistant from further breaking the nondisclosure agreement, according to papers filed in New York State Supreme Court.
Ms. Azarian worked for Ms. Carey from March 2015 through November 2017 as an executive assistant, court documents showed.
Lawyers for Ms. Carey did not immediately respond to requests for comment. Ms. Azarian did not immediately respond to requests for comment.
Entertainment Web site TMZ.com reported on Wednesday that Ms. Azarian had secretly recorded Carey and threatened to release “embarrassing” videos unless the pop star paid up to $8 million. Reuters was not immediately able to confirm those details.
BEYONCE DROPS LAWSUIT
A lawsuit brought by Beyonce over the sale of “Feyonce” items to engaged couples has been dismissed at the singer’s request, court documents showed on Wednesday.
The pop superstar had complained in a 2016 lawsuit that the shirts, hoodies and other items sold to engaged couples by a Texas company under the name Feyonce infringed on her trademark rights and would confuse customers.
One of the Feyonce items was a mug with the phrase “he put a ring on it,” which Beyonce said was intended to recall the lyrics of her 2008 global hit song “Single Ladies (Put a Ring on It).”
A federal judge in New York in October rejected the singer’s request for a permanent injunction to stop the sale of the Feyonce items and ordered both sides to discuss trial dates and a possible settlement.
Beyonce in December asked the court to dismiss the case. It was not clear from Wednesday’s court filing granting the dismissal whether the two sides had reached a settlement. Attorneys did not return a request for comment. — Reuters

D&L renews ISO accreditation for labs

D&L INDUSTRIES, Inc. (DNL) has renewed its international certification for laboratory testing capabilities, which it says are vital for its export business.
In a statement issued Thursday, the listed oleochemical and plastics manufacturer said it has secured ISO/IEC 17025:2005 accreditation from the Philippine Accreditation Bureau.
The accreditation indicates that a firm has complied with international standards for competence in laboratory testing capabilities and management systems.
“With the accreditation, analyses performed by DNL’s analytical laboratory comply with international standards. This supports the facilitation of trade and entry of Philippine products into foreign markets,” the company said.
This is in line with DNL’s target to grow its export business so that it contributes 50% of revenues by 2025. By end-September, exports accounted for 23% of total revenues.
The ISO accreditation, which is valid for five years, will also allow the company to offer its laboratory testing services to third parties, giving it access to a wider range of customers in the industries it serves, namely industrial oils, edible fats and oils, plastics, packaging, pipes, paints, and coatings.
DNL also holds ISO certifications for Quality Management Systems, Environmental Management Systems, Occupational Health and Safety Management Systems, Good Manufacturing Practice, Hazard Analysis, and Critical Control Points, and Food Safety Standard Certification, among others.
“These international certifications represent DNL’s steadfast commitment to both R&D (research and development) and process innovation, allowing the company to achieve sustainable growth in new and existing businesses and increase its relevance to customers,” the company said.
Aside from ensuring its compliance with international standards, DNL has also been ramping up its capacity. It announced last December that it will spend P8 billion for the construction of two plants inside a 26-hectare property in First Industrial Township-Special Economic Zone in Tanauan, Batangas.
DNL’s net income attributable to the parent rose by 13% to P2.4 billion in the first nine months of 2018, amid a one percent uptick in revenues to P20.17 billion for the period.
Shares in DNL slipped 0.17% or two centavos to close at P11.76 each at the stock exchange on Thursday. — Arra B. Francia

Exhibit honors Brocka, Bernal

THE legacies of the iconic auteurs Lino Brocka and Ishmael Bernal, both Philippine National Artists for Film, will be honored a special exhibition called Brocka, Bernal and the City, at the De La Salle-College of Saint Benilde (DLS-CSB) School of Design and Arts (SDA) Campus starting Jan. 25.
Apart from creating some of the country’s finest films and discovering some of the industry’s leading actors and actresses, both Mr. Brocka and Mr. Bernal were known as street parliamentarians during the Marcos dictatorship.
The exhibit examines how the two creative geniuses used Manila as a milieu that greatly affected the lives of Filipinos. It features a series of user-directed film showings where the viewers can freely choose which among the significant pieces are screened.
Mr. Brocka’s Maynila sa Kuko ng Liwanag (1975) and Mr. Bernal’s Manila by Night (1980), which projected a critical reflection of the urban experience at that time, headline the selections. Other film available are Mr. Brocka’s Insiang (1976), Jaguar (1979), and Bona (1980) and Mr. Bernal’s Ikaw ay Akin (1978), Relasyon (1982), Broken Marriage (1983), and Working Girls (1984).
Two separate spaces have been allocated for the works of Mr. Brocka and Mr. Bernal, while a third area is dedicated to recent Brocka- and Bernal-inspired movies such as Manila (2009), starred and co-produced by Piolo Pascual, and Anino (2000), directed by Raymond Red.
Brocka, Bernal, and the City likewise features recorded interviews from the individuals who worked with the filmmakers on and off the camera, including scriptwriter Clodualdo del Mundo, Jr., and actors Bembol Roco, Cherie Gil, Gina Alajar, and Ronnie Lazaro.
Film scholar Ed Cabagnot, directors Nonon Padilla, Peque Gallaga, Mel Chionglo, and Jose Javier Reyes also impart their insights. Mr. Pascual and Mr. Red share how the works of Mr. Brocka and Mr. Bernal motivated them as artists.
Contemporary artworks of the members of the Urban Sketchers of Manila that illustrate some Manila hotspots used by the two directors as shoot locations are displayed and are for sale during the run of the exhibition.
“Film is always relevant because it is a reflection of society, and Brocka and Bernal’s films showcase that,” Center for Campus Art (CCA) Director Architect Gerry Torres noted. “They were activists who voiced out what they saw were the ills of society at that time and what ills they were protesting against then are still around, some even became worse.”
Brocka, Bernal and the City is part of a series of activities in line with the 30th anniversary celebration of Benilde, and is the college’s contribution to the commemoration of 2019 as the 100th year of Philippine cinema.
The exhibit will be open to the public from Jan. 25 to April 29, 2019, 10 a.m. to 9 p.m., at the 12th Floor Gallery of DLS-CSB SDA Campus, 950 Pablo Ocampo (Vito Cruz) St., Malate, Manila.

Malaysian tower provider allocating $1 billion for Philippine expansion

By Denise A. Valdez, Reporter
MALAYSIA-BASED tower company edotco Group Sdn Bhd said it is investing at least $1 billion to build telecommunications infrastructure in the Philippines.
During the signing of a memorandum of understanding (MoU) with the Department of Information and Communications Technology (DICT) on Thursday, edotco Group Chief Executive Officer Suresh Sidhu said the company is aiming to build around 10,000 cell towers in the Philippines in three to four years.
“Today, Malaysia and Bangladesh are the two largest countries for us. Both have about 10,000 locations where we operate. We expect the Philippines to be equal in size,” Mr. Sidhu said during a briefing at the DICT office in Quezon City.
Edotco Group currently operates 28,000 towers across six countries: Malaysia, Pakistan, Sri Lanka, Cambodia, Bangladesh and Myanmar. The Philippines will be the seventh country in its portfolio.
Aside from the Malaysian firm, IHS Holding Ltd. (IHS Towers) from Nigeria also sealed a deal with the DICT on Thursday to start operations in the country.
When asked about its investment and rollout plans, IHS Towers Executive Vice-President and Chief Strategy Officer Ted Manvitz said these details would depend on the orders it will receive from telco operators.
“It really depends… In this market, the number should be in the thousands,” Mr. Manvitz said when asked how many towers it intends to build. The government said the Philippines needs at least 50,000 common towers in addition to the existing 16,000 towers to help improve connectivity in the Philippines.
Aside from edotcom Group and IHS Towers, the DICT also signed similar agreements with local company ISOC Infrastructures, Inc. and Singapore-based ISON ECP Tower Pte. Ltd. earlier.
China Energy Equipment Co. Ltd. is also scheduled to sign an MoU with the DICT on Friday.
Under the MoU, the government will assist tower companies in securing permits to build cell sites — a problem that has hampered the network expansion of PLDT, Inc. and Globe Telecom, Inc.

DoLE sets labor inspection target at 55,000 firms

THE Department of Labor and Employment (DoLE) said it plans to visit at least 55,000 establishments this year to conduct labor inspections.
“For this year, 55,000 (is our) initial target across industries,” DoLE Officer-In-Charge Undersecretary Benjo Santos M. Benavidez told BusinessWorld on Tuesday.
He added that this target was included in the department’s proposed budget for 2019. During the budget hearings last year, DoLE asked legislators for additional funding to pay for 2,000 more Labor Law Compliance Officers (LLCOs) to help inspect over 900,000 establishments nationwide.
DoLE only has about 500 LLCOs currently.
In 2018, the labor department inspected 134,263 establishments. Mr. Benavidez said with more hiring, the department can exceed the 2019 target for labor inspections.
“We will have additional 8,000 (inspection) if we hire additional LLCOs,” he said, adding that the department is looking to add at least 100 more to its current roster.
DoLE announced last year that it will submit a second list of establishments found to be violating labor rules on contracting practices. The focus of the inspections will be private hospitals, TV networks, and construction companies, though Mr. Benavidez said the focus areas will vary by region.
“Some regions don’t have many hospitals or manufacturing firms so instead, we will prioritize the agriculture sector,” he said.
In May, the labor department released a list of 3,377 firms suspected of being involved in illegal contractualization. — Gillian M. Cortez

PSBank raises P8B from stock rights offer

PHILIPPINE Savings Bank (PSBank) on Thursday said it raised P8 billion from a recently completed stock rights offer, which will be used to support the bank’s growth and strengthen capital adequacy.
In a regulatory filing Thursday, the thrift banking arm of Metropolitan Bank & Trust Co. (Metrobank) said it sold 142.9 million common shares priced at P56 apiece during Jan. 7-11 offer period.
The rights shares will be listed on the Philippine Stock Exchange today (Jan. 18).
Eligible shareholders were entitled to subscribe to a share for every 1.68177 common shares as of record date Dec. 20.
The rights offering saw an oversubscription, as it was taken up entirely by the bank’s existing shareholders.
PSBank said the fund-raising activity will enable the thrift lender to sustain its loan growth momentum and support its asset growth, particularly on consumer loans.
In a previous interview, PSBank President Jose Vicente L. Alde said it expects “better” loan growth this year compared with 2018 on the back of softer loan rates.
“The additional capital from the offer will strengthen its CET1 (common equity tier 1) capital, further solidifying the bank’s capital adequacy and financial strength,” PSBank added.
First Metro Investment Corp. served as the sole issue manager, bookrunner as well as lead underwriter of the stock rights offer.
Local banks have been conducting various fund-raising activities to meet the tighter risk management requirements by the central bank under the international Basel 3 standard, which took effect this year.
Last September, the Ty-led savings bank announced it will issue medium-term notes amounting to P10 billion, to “give PSBank an opportunity to access medium-term and stable funding as the bank further expands its consumer banking business.”
Prior to this, it also raised P5.08 billion in August through the issuance of long-term negotiable certificates of time deposits, which carry a 5% coupon.
PSBank booked a P2.03-billion net income in the first nine months of 2018, 8.1% higher than the P1.88 billion logged in a comparable year-ago period, supported by sustained loan growth and higher fee-based revenues. — Karl Angelo N. Vidal

Jazz musician, producer Bob Aves, 64

FILIPINO jazz musician and producer Bob Aves passed away on the night of Jan. 14 in Bacolod City. He was 64 years old.
“My brother Bob Aves peacefully passed away last night after a long battle with lung cancer,” said Lito Aves in a statement on Facebook announcing his passing.
“Bob has always been a private person and as per his request, his wake and burial will be limited to family and cousins only. Thank you for understanding and for all your kind words of sympathy and condolences,” he added.
Mr. Aves, best known for his jazz fusion style which combined jazz alongside traditional Filipino and Southeast Asian musical instruments, first broke into the Philippine music scene in the 1980s after releasing the rock albums Street Legal (1986) and Strange Storms (1988) in collaboration with singer and lyricist, Goff Macaraeg. Together, they were called R.P. (Rock Project).
The Bacolod-born musician, taught himself to play the guitar in his teens and eventually made his way to the University of the Philippines Conservatory of Music before moving on to the Berklee College of Music in Boston, Massachusetts where he got a Bachelor’s Degree in Music, major in composition. While in Boston, Mr. Aves studied classical music with Hugo Norden, former head of the Boston University Music Department.
Two years after releasing Strange Storms, Mr. Aves released Welcome (1990) which saw his first attempts at fusing jazz with ethnic elements in songs like “Amo ‘Ni.”
Mr. Aves also made a name in for himself as a musical arranger and director. His page at gracenono.com outlines a prolific number of commercial and educational albums, some of which he produced in collaboration with his then-wife, singer and ethnomusicologist Grace Nono, including: Earth Kulintang (1995) by Aga Mayo Butocan, Metronomad (1996) by Pinikpikan, Isang Buhay (1988) by Grace Nono, and Session Road (2000) by Session Road, among others.
He also founded Tao Music, a music production company which specializes in the release of titles of Philippine culture-based music, as well as various emergent genres.
In 2000, Mr. Aves released Inner Country, a nine-song solo album said to be a “reflection of Bob’s inner world” as, unlike his previous works “which were heavily marked by the high-tech wizardry of multiple layers of sequenced synthesizers, he opted for the top jazz musicians as well as indigenous and world music practitioners of the country to back him up in a bid to present a live performance to promote his latest masterpiece,” said Richie Quirino in his Bob Aves piece on Ms. Nono’s Web site.
Inner Country won six Katha awards including Best Instrumental Album and Best Instrumental Composition for “In Silence.”
The album used many Philippine indigenous instruments such as the kudlong, the angklung, and the kulintang played alongside electric and nylon guitars.
“It’s about time that we Filipinos create a sound that truly represents our layered consciousness shaped by our living history. This is something that cannot be copied nor simulated from other cultures but can only be the fruit of a continuous process of getting to know oneself and one’s environment… To breathe new life to heritage is what I wish to achieve with the music of the Inner Country, in the hope that it will awaken a keen interest in our roots, as well as inform the world of the distinct sound that we Filipinos have, within ourselves,” Mr. Aves was quoted as saying by Mr. Quirino.
The album was followed by Translating the Gongs in 2006 and Out of Tradition (2014). Mr. Aves was given the Lifetime Achievement Award from the Philippine Jazzfest foundation in 2017.
“For many years, Bob and I made music that was heard in many parts of the world. We made history. From 1996 to 2010, Bob and I were married. The life that we shared was much more complicated than what his dream foretold. There were joys and jubilation, but also deep hurts and heartbreak. Out musical collaboration predated and outlasted our marriage,” Ms. Nono said in a Jan. 14 Facebook post.
“Bob, you have blessed the world with your powerful music. No amount of words can express our gratitude for your gifts,” she added. — Zsarlene B. Chua

ERC orders Meralco, GNPower to stop charging Batangas firm

THE Energy Regulatory Commission (ERC) has ordered Manila Electric Co. (Meralco) and GNPower Ltd. Co. to cease and desist from “assessing, billing and collecting” from Batangas Paper Corp. (BPC) any distribution wheeling charges until their dispute is resolved.
“It is evident that an invasion of a right, which is material and substantial, is being continually inflicted upon the business interest of BPC,” the ERC said in its order dated Dec. 5, 2018 and docketed earlier this week.
It said the case “warrants for an urgent and paramount necessity” for the ERC to issue a relief to prevent serious damage against BPC, thus a halt to Meralco’s distribution wheeling charges “is therefore paramount.”
The case stemmed from a complaint filed by BPC against GNPower and Meralco for the refund of P12,171,764.50 plus legal interest, representing what it alleged as “unauthorized and illegal” assessment and collection of the distribution utility’s wheeling charges.
Meralco has the exclusive franchise to operate a distribution system in the location where BPC operates and maintains its paper factory in Sto. Tomas, Batangas.
GNPower is a retail electricity supplier (RES) that exclusively provides all of BPC’s power needs through a “master power purchase sale agreement.”
The paper company is a contestable customer as certified by the ERC and is allowed to source its electricity directly from a RES.
BPC said that beginning March 26, 2017, it had received a total of seven separate billing statements from GNPower amounting to $1,301,518.64 or P30,652,694.06 for the wheeling charges.
Based on an initial inquiry, BPC was told by GNPower that the charges were for the use of Meralco’s supposed ownership of the sub-transmission lines through which the electricity being provided by the RES passes.
However, BPC said it had discovered “much to its surprise and dismay” that Meralco is, “in truth and in fact, not the real and/or the bonafide owner” of the lines for which it was collecting the distribution utility wheeling charges.
Before filing the case, the paper company exerted effort to stop or preclude Meralco from assessing the “baseless and unwarranted” charges, as well as to convince the distribution utility to return what was collected.
“[B]ut all such effort have come to naught, hence, the filing of the instant complaint,” it said.
The ERC said there is substantial evidence for the issuance of a cease and desist order.
It noted that as a retail electricity supplier, GNPower is responsible for all contractual, service and billing matters related to its contestable customers. The obligation includes those pertaining to distribution wheeling services that will be provided by the distribution utility operating within the location of the customer.
The commission said that based on its record, BPC is directly connected to the 9.72-kilometer segment of the 38.72 kilometer sub-transmission line, which is currently owned, operated and managed by the National Grid Corporation of the Philippines.
It said almost the entire length of the sub-transmission line is located within the franchise areas of both Meralco and Batangas II Electric Cooperative, Inc.
Records also showed that Meralco has a pending application with the commission for the approval of its acquisition of the subject sub-transmission line where BPC is connected.
To date, the commission has not yet issued its resolution on the application filed by Meralco and the electric cooperative, thus both are in no position to acquire and operate the sub-transmission line, the ERC said.
The ERC said the allegations presented by Meralco “lost sight of the fact that [it] can only legally impose the [distribution utility wheeling charge]” on BPC as a contestable customer “if and only if it has assumed ownership of the sub-transmission assets.” — Victor V. Saulon

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