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BoP gap biggest in nearly a year as more dollars flow out

THE PHILIPPINES saw more dollar outflows in May, causing the biggest balance of payments (BoP) deficit in nearly a year, the central bank reported yesterday.
The country’s external payments position settled at a $583-million deficit last month, double April’s $270-million shortfall and surging from the $59-million deficit in May 2017. May’s gap was the widest since the $678-million deficit posted in July 2017, according to the Bangko Sentral ng Pilipinas (BSP).
The BoP measures the country’s transactions with the rest of the world at a given time. A deficit means more funds fled the economy than what went in, while a surplus shows that more money entered the Philippines.
May marked the fifth straight month of deficit. In a statement, the central bank said its interventions to temper exchange rate volatility fueled outflows, coupled with payments for maturing foreign debt.
“These were partially offset, however, by net foreign currency deposits of the national government and income from the BSP’s investments abroad during the month,” the statement read.
The BSP uses its dollar reserves to temper sharp swings in the peso-dollar rate as part of its “tactical intervention” to keep the currency competitive. The local unit weakened to P52.70 per dollar in May to mark a fresh low in nearly 12 years.
May’s balance brought the five-month BoP to a $2.08-billion deficit, ballooning from the $136-million gap posted in the same period last year.
The central bank expects a $1.5-billion BoP deficit this year, wider than the $863-million actual deficit logged as of end-2017.
Still, the projected level is seen “manageable” equivalent to 0.4% of gross domestic product.
Gross international reserves, which reached $79.2 billion as of May — equivalent to 7.6 months of import duties — tempered the deficit.
The wider trade gap is expected due to importation of more capital equipment and other materials needed to support business expansion and the government’s infrastructure development drive.
Analysts have said reversal of the country’s current account to deficit has been the main reason for the persistent weakness of the peso, which has lately been trading at fresh 12-year lows at the P53-to-the-dollar level. — Melissa Luz T. Lopez

Grab PHL to spend P100 million monthly on driver subsidies

GRAB Philippines said it is implementing a “fare subsidy” scheme for its drivers. — REUTERS

GRAB Philippines (MyTaxi.PH) said on Tuesday it expects to spend over P100 million every month on a “fare-subsidy” scheme for its drivers, who are affected by the suspension of the P2 per minute waiting time charge.
Grab Philippines Country Head Brian P. Cu said its computations showed that a transport network vehicle service (TNVS) driver needs to make at least P5.50 per minute or P330 per hour to cover costs related to high fuel, traffic, and vehicle maintenance.
“Since the P2 per minute component was suspended, we received a lot of painful complaints from our partners that their earnings are not sufficient anymore to make a decent living. That’s why we decided to step in,” he said in a statement.
In April, the Land Transportation Franchising and Regulatory Board (LTFRB) suspended Grab’s P2 per minute waiting time charge. Grab has maintained it was allowed to set its own fares without LTFRB approval under a Department of Transportation order in 2015.
Mr. Cu said the subsidy program will “run as long as it’s needed and for as long as we have resources to do so.”
He clarified that this subsidy is different from incentives that drivers continue to receive. With a subsidy, he said drivers will get the difference in fares on “money-losing” trips.
“If a ride from Makati to BGC takes an hour because of heavy traffic despite short distance, and fare is computed at P120 only, Grab will return to the driver the P210 difference to make sure he made P330 for that one-hour trip,” Mr. Cu said.
With the fare subsidy, Mr. Cu expressed hope the TNVS drivers will be “more willing” to take on trips.
Grab earlier said bookings average between 600,000 to 800,000 daily, but the number of TNVS drivers under Grab remains at 33,000.
On May 22, Grab filed a petition to the LTFRB to reimpose its P2 per minute waiting time charge, arguing that the fare policy is legal and other transport network companies (TNC) are allowed to impose the same charge.
LTFRB Board Member Aileen Lourdes A. Lizada told reporters that the petition will be discussed during a hearing. — Denise A. Valdez

Cebu Landmasters to build 1st hotel in Bacolod

CEBU Landmasters, Inc. will build its first hotel in Bacolod City. — CEBU LANDMASTERS, INC.

CEBU Landmasters, Inc. (CLI) is planning to start construction of its first hotel in Bacolod City by the fourth quarter of the year, which is expected to bring its total hotel portfolio to 969 rooms.
In a disclosure to the stock exchange, the property developer said CLI Bacolod Hotels, Inc. — its joint venture firm with Capitaine, Inc. — signed on Tuesday a service management deal with international serviced residences operator The Ascott Limited for the development of Citadines Bacolod.
CLI President and Chief Executive Officer Jose R. Soberano III said the company is seeing a lot of opportunities in Bacolod, banking on tourism and the information technology-business process management (IT-BPM) industry for its growth.
“There is so much potential to cater not only to the tourism industry but also the M.I.C.E. (Meetings, Incentives, Conventions and Exhibits) market in Bacolod,” Mr. Soberano said.
CLI aims to open the Citadines Bacolod by 2021. It will have 200 serviced residential units, ranging from 25 to 60 square meters (sq.m.) each.
Citadines Bacolod will rise on a 4,501-sq.m. lot along Lacson Street, fronting MesaVirre Garden Residences, CLI’s P1.5-billion residential condominium project.
The Citadines brand looks to cater to young professionals, business and leisure travelers. Among the hotel’s amenities are a swimming pool, gym, and game room.
Mr. Soberano added business travelers linked to the IT-BPM industry will also boost hotel occupancy.
This is the fourth time CLI has partnered with The Ascott, following Citadines Cebu City, Citadines Paragon Davao, and lyf Cebu City.
“Cebu Landmasters is very credible. With its track record and deep knowledge of the VisMin market, we are happy to partner with them again for our fourth service residence project, and our first in Bacolod City,” CLI quoted The Ascott Regional General Manager for the Philippines and Thailand Arthur G. Gindap as saying in a statement.
Aside from The Ascott, CLI also has a partnership with the Radisson Hotel Group to build a Radisson Red hotel in Mandaue City.
Citadines Bacolod is part of the 20 projects CLI has lined up for 2018, for a target of 66 projects in different stages of construction by the end of the year. With this, the company has committed to spend P8.8 billion in capital expenditures.
CLI realized a 17% profit growth to P498.7 million during the first quarter of 2018, following a 14% jump in revenues to P1.26 billion. The company targets to book a net income of P1.7 billion for the year, and alongside revenues of P5.3 billion.
Shares in CLI were unchanged at P4.67 apiece at the stock exchange on Tuesday. — Arra B. Francia

What’s in a name?


AN ONGOING exhibition at the Ayala Museum called Historia showcases 54 artworks that span the history of the Bank of the Philippine Islands (BPI) from 1851 when BPI was still called Banco Español Filipino de Isabel II to today’s modern art in keeping with today’s modern bank.
The exhibit is in line with the celebration of the BPI Foundation’s 40th anniversary.
But as far as the guest speaker during the exhibit’s opening night on June 18 was concerned, it would have been better if the exhibit had another name. Ambeth Ocampo, a renowned historian, columnist, and professor, noted: “If the curatorial team had studied in the University of the Philippines, they would have been scolded by their professors because in UP we do not use [the word] ‘historia’ any more, but we use the word ‘kasaysayan.’ In the Philippines, we have two words for history. One is ‘historia,’ which is Spanish, and the other is ‘kasaysayan,’ which is the Tagalog… In UP, they said we should not use it because it is a foreign word,” he said.
“We should use ‘kasaysayan’ because it is rooted in two very important concepts: the first is that ‘kasaysayan’ is rooted in ‘salaysay,’ which is a story or a narrative, and more importantly, it is rooted in the word ‘saysay,’ which means sense or meaning.”
Mr. Ocampo said he did not trust his professors in UP so he dug up some 16th– and 19th-century Spanish dictionaries of Filipino languages only to realize that the word kasaysayan was not in the lists. But he found historia, which used to be translated as salita (word).
“And I realized, salita is a narrative, a story. Then there was the Spanish word historieta in the 19th century and its translation to Tagalog was munting salitang walang kasaysayan, or a small story with no meaning. I realized that kasaysayan is really a more important word because it means something,” he said.
More than just the stories of our past and the tales of our heroes, he said kasaysayan is about the “stories that are relevant for us today, something from which we can draw lessons that help us understand the present and move on to the future.”
But regardless of the choice of exhibition title, the show tells the journey of the oldest bank in the Philippines in the context of nation building.
“We curated the collection to show the parallel growth and development of Philippine art and of BPI as a financial institution,” said Ayala Museum senior director Mariles Gustilo in a statement. “This perspective provides a richer and deeper understanding of the wider environment that shaped and inspired BPI, and how its art collection was formed.”
Ayala Museum was BPI Foundation’s partner in curating Historia, which is the second installment in an art series called Obra that showcases the bank’s private art collection.
Historia is divided in four sections: 19th century prints, Juan Luna, Fernando Amorsolo, and Philippine Modern Art.
“Many would gravitate around the walls that have Lunas and Amorsolos, the auction darlings. Sometimes, in the Philippine art scene today, people look at names rather than pictures, so it’s nice that we have today both names and pictures. It helps us realize what does art really mean. Is it important because it is old? Is it important because it is worth a lot of money?,” said Mr. Ocampo.
The Amorsolo section features five of the first National Artist’s works.
(Photography is not allowed in this section. During the opening of the first Obra exhibit, Mr. Ocampo said he did not understand why it was prohibited. READ: Let them photograph the art says historian Ambeth Ocampo).
Known for his landscapes and paintings of maidens and farmers, this section presents Amorsolo’s Galleon Trade (1959), Mactan (1959), Rice Harvest (1942), Hinulugang Taktak (1951), and The Sculptor (1944).
The most interesting piece in the section is Amorsolo’s much smaller 1939 version of Juan Luna’s Spoliarium. Amorsolo’s oil painting is 55 x 97.5 cm only compared to Luna’s massive 4 x 7 meter painting at the National Museum.
The Juan Luna section (photography is allowed here) features works that highlight Luna’s travels to Germany, Austria, and Normandy, which gives insights to his Filipino sensibilities, both as an artist and as a revolutionary.
The print section features maps and prints created and published during the late Spanish period.
The largest section, Philippine Modern Art, has works that show the progress of perspectives and techniques that have enriched artistic expression. Among the artists whose works are on view in this section are Al Gamet, Neil Doloricon, and Claude Tayag.
Mr. Ocampo said the selection in the exhibition tells us of our past, and more.
“Remember that history is not just a story of the past, but it is story that has meaning, and these artworks have saysay, kasaysayan — they will give particular meanings to those who look at them,” he said. — Nickky Faustine P. de Guzman

DoubleDragon starts building 2nd CentralHub

DOUBLEDRAGON Properties Corp. on Tuesday said it has started construction for its second industrial leasing hub in Iloilo City.
The listed property developer’s unit, CentralHub Industrial Centers, Inc., broke ground for the 3.9-hectare property in Iloilo on Tuesday. The site will host modern, standardized, multi-use warehouses for commissaries, cold storage, light manufacturing, and logistics distribution centers.
CentralHub Iloilo is located along Iloilo R3 Road, which is three kilometers away from the Iloilo International Airport and 10 kilometers away from Iloilo City Proper. The facility will offer 22,000 square meters (sq.m.) of leasable space once fully developed.
This will be the second CentralHub complex under DoubleDragon’s portfolio.
The first industrial leasing project, CentralHub-Tarlac spanning 32,000 sq.m., is set to be turned over to tenants by July.
“We believe that the industrial leasing segment presents significant growth opportunities for DoubleDragon as the current market supply is very traditional and fragmented and with growth now flowing into second and third-tier cities demand for industrial space has risen considerably,” DoubleDragon Chairman Edgar J. Sia II said in a statement.
DoubleDragon has targeted to have eight CentralHub sites by 2020, with two each in North Luzon, South Luzon, Visayas, and Mindanao. These will give the company an initial 100,000 sq.m. of leasable space in the next two years.
The company is banking on industrial leasing as one of its four sources of income, with the other three being provincial retail leasing, office leasing, and hospitality. Potential clients for the industrial facilities include e-commerce businesses and tenants of its community malls.
DoubleDragon is currently building 100 CityMalls until 2020, set to cover 700,000 sq.m. of leasable space. For the office segment, the company has DD Meridian Park in Pasay City and Jollibee Tower in Ortigas Center, which together will cover 100,000 sq.m.
“Other than the e-commerce businesses that will soon require facilities such as CentralHub, there are also a lot of synergies within our ecosystem since both our affiliates and the tenants of our CityMalls are the natural users of warehouse facilities as they continue expand their business to capture the growing consumer base of the Philippines,” Mr. Sia said.
Under the hospitality segment, DoubleDragon seeks to have 5,000 hotel rooms under its brands Hotel101 and JinJiang Inn Philippines.
Once these projects are completed, DoubleDragon will have 1.2 million sq.m. of leasable spaces under its portfolio. The company is slated to generate a net income of P5.5 billion by 2020.
DoubleDragon’s net income more than tripled to P744.56 million in the first three months of 2018, following a 182% jump in revenues to P1.83 billion.
Shares in DoubleDragon shed 65 centavos or 2.51% to close at P25.25 each at the stock exchange on Tuesday. — Arra B. Francia

Ballet Manila brings Asian and American dancers together on one stage


EAST MEETS WEST and converge onstage as Ballet Manila presents American Stars Gala, a one-night only concert that features some of today’s brightest and fastest-rising Asian and American dance artists.
The concert will be on July 7, 7:30 p.m. at the Aliw Theater, Cultural Center of the Philippines complex.
The dance concert will be headlined by Boston Ballet principal dancers Lia Cirio and Junxiong Zhao with soloist Hannah Bettes; Houston Ballet principal dancers Yuriko Kajiya and Jared Matthews; and Ballet Manila resident guest principal artists Katherine Barkman and Joseph Phillips.
Ballet Manila’s artistic director Lisa Macuja-Elizalde said it was choreographer and Boston Ballet faculty George Birkadze who suggested bringing together the outstanding young dancers in one show. Mr. Birkadze was recently in Manila to create new works.
Since most of the dancers were scheduled to perform in gala concerts across the Asia-Pacific region, Mr. Birkadze said it would be the perfect time for them to converge in the Philippines and join forces with Ballet Manila’s artists.
“The plan took off immediately because I really wanted to bring in Lia Cirio, who is an outstanding principal dancer with Filipino roots. It would give local audiences a chance to see her perform and get to know her better,” said Ms. Macuja-Elizalde.
“I am looking forward to seeing where my father spent some of his childhood,” said the US-born dancer who has never been to the Philippines before. “He still has family there, so I am hoping they will be able to attend the show.”
“I know that Filipinos love dance, so I know that performing for them will be rewarding,” said Ms. Cirio, who has been dancing classical, neo-classical, and contemporary roles for the Boston Ballet since 2004.
A fund-raiser for Ballet Manila’s Project Ballet Futures scholarship program, the American Stars Gala’s repertoire will consists of well-loved classics and powerful neo-classical and contemporary pieces, including a world premiere.
Ms. Cirio will perform as the White Swan, Odette, together with Ballet Manila soloist Mark Sumaylo as Prince Siegfried and Ballet Manila’s corps de ballet in Swan Lake Act 2.
Meanwhile, Ms. Kajiya and Mr. Matthews will dance the Giselle pas de deux and the Madame Butterfly pas de deux by Stanton Welch.
Mr. Zhao will partner with Ms. Bettes in the La Sylphide pas de deux and the Sleeping Beauty wedding pas de deux.
Ms. Barkman and Mr. Phillips will perform the Le Corsaire pas de deux and the contemporary piece KBJP, created for them by choreographer Augustus Damian III.
Fresh from participating as the first Filipino contenders in the USA International Ballet Competition’s junior division, Ballet Manila company artists Nicole Barroso and Joshua Enciso will also make a special appearance. Ms. Barroso and Mr. Enciso will dance George Birkadze’s tango-inspired Bru and the classic Diane and Acteon.
Meanwhile, Ballet Manila will unveil Mr. Birkadze’s brand new dance, Imperial, as well as restage a company warhorse, Deconstructing Gershwin, by Hazel Sabas-Gower.
American Stars Gala follows Macuja-Elizalde’s previous efforts to bring international ballet artists to the Philippines, including Today’s Stars of the Russian Ballet (2010), The World Stars of Ballet (2012), and Stars of Philippine Ballet (2013).
Tickets for Ballet Manila’s American Stars Gala are now available at all TicketWorld outlets, online at www.ticketworld.com.ph, or through 891-9999. — Nickky Faustine P. de Guzman

Top Philippine stock fund holds on to cash as bear market nears

THE best stock fund in the Philippines is holding on to its cash as a sell-off that’s wiped out more than $36 billion from Asia’s worst-performing equity market brings the benchmark closer to bear territory.
The Philippine Stock Exchange Index sank 1.5% on Monday as a forecast for a wider current-account gap stoked fears of a weaker currency and rising inflation, bringing this year’s retreat to more than 13%. The gauge is within 2.3% of a bear market as it nears the 7,246.90 level, which is 20% below its Jan. 29 peak. Meanwhile, the peso is hovering around a 12-year low.
“There is no rush to buy into this market,” said Steven Ko, who helps manage about $1.12 billion at Rizal Commercial Banking Corp. “Sentiments have become very negative that it’s highly possible we will see a bear market in the near term.”
The bank’s Rizal Equity Fund has returned 2.2% in the past year, the best performer among 69 peso-denominated Philippine stocks funds in Manila tracked by Bloomberg. It beat the Philippine Stock Exchange Index, which slid 6.7% in the past 12 months.
Mr. Ko said the Philippine stock index could slide to 7,200 as early as this month even if the central bank raises interest rates on Wednesday as the market braces for continued weakness in the peso amid the prospects of a swelling current-account deficit.
The central bank on June 14 raised its current-account gap forecast to $3.1 billion for 2018, more than four times its previous $700-million estimate. The peso has depreciated 6.7% against the dollar this year, Asia’s worst performer.
NO SUPPORT
“The new forecast shows a very big discrepancy and the market is taking this negatively because of its implication on the peso,” Mr. Ko said. “Even if the central bank raises interest rates this week, the peso might not get support in the near term and this spells continued weakness for equities.”
Overseas investors sold $24.17 million of Philippine shares Monday, the 22nd straight day of withdrawals. It’s the longest stretch of outflows since September 2016 and bringing this year’s withdrawals to more than $1.11 billion. Yesterday’s sell-off trimmed the stock index’s valuation to 16 times 12-month estimated earnings, the lowest since Dec. 27, 2016.
Mr. Ko said he has identified stocks that are “very undervalued and have underperformed the market” and that he’s ready to scoop them up once the Philippine stock index hits 7,200. He prefers property companies — the only sector he’s overweight — even as interest rates rise, because of earnings growth prospects. He also likes consumer stocks as the sector’s underperformance this year have made certain names “quite attractive.”
“The weakness and sell-off in equities are mostly currency-related,” Mr. Ko said. While Philippine economic growth is still one of the fastest in the region, “most foreign investors are bearish” because they are also being hit by the weaker peso. — Bloomberg

At world’s biggest art fair, squeezed mid-market raises concerns

BASEL, SWITZERLAND — In a year when many major galleries made record sales, conversations at the world’s biggest art fair last week were not just about the eye-watering sums paid for top works, but also about how to ensure the viability of the market’s lower end.
There was no shortage of top-ticket works on sale at Art Basel, which opened to the public in the Swiss city on Thursday: a pair of paintings by 20th-century American abstract expressionist Joan Mitchell sold for $14 million apiece during the fair’s opening days, reserved for VIPs.
“It’s like that magnificent moment,” said Dominique Levy of Levy Gorvy which sold Mitchell’s untitled 1959 work.
Marc Glimcher, who heads one of the world’s biggest gallery enterprises, Pace, said: “Art Basel is always good, but it isn’t always this-year good. I think many people had the best first day of Art Basel they’ve ever had.”
But with galleries feeling the pressure from lighter foot traffic and the high cost of fairs where much of today’s primary buying happens, the art world is considering how to support the market’s “squeezed middle.”
“It’s always been the case that the top end of the market does a little bit better, but the margin between how it’s performing and everybody else is performing has become wider, and that’s obviously a concern,” said Clare McAndrew, author of the Art Basel and UBS Global Art Market Report.
Over the last 10 years, works under $1 million have fallen in value, whereas works selling for over $10 million have increased nearly 150%, the report found.
“It’s paralleling what’s happening in the world,” McAndrew said. “The gap between the ultra-rich and everybody else has never been wider.”
Facing a top-end boom that is pricing out museums and avid collectors, the art world must ensure the survival of small galleries that might be supporting the next Vincent Van Gogh, said New York gallery owner Sean Kelly.
“It’s the smaller galleries that feed the mid-tier galleries that feed the larger galleries, and we all have to be respectful of that process because otherwise it’s like watching the Great Barrier Reef die,” he said.
“We’re all part of a much larger ecosystem.”
With most wealthy US collectors buying works priced under $5,000, according to a survey by UBS, art vendors should look to new audiences, particularly in emerging markets, said Patricia Amberg who runs UBS’s Art Competence Center, which advises clients with more than $50 million with the bank on collecting.
Online sales, which have grown 72% over the last five years, present a particular opportunity for the lower end of the market, she added.
Art Basel ended on Sunday. — Reuters

PhilWeb buys 2 e-Games sites in Cebu

PHILWEB Corp. has acquired two gaming sites licensed by the Philippine Amusement and Gaming Corp. (PAGCOR) in Cebu City.
In a disclosure to the stock exchange on Tuesday, PhilWeb said its unit BigGame, Inc. purchased the PAGCOR e-Games sites in Consolacion and Lapu-Lapu City, Cebu from Golden Frontier Gaming, Inc. (GFGI).
In exchange for the e-Games sites, PhilWeb gave GFGI 394,322 shares priced at P5.12 each or around P2.02 million, in addition to P2.5 million in cash.
The acquisition brings PhilWeb’s total e-Games sites to 52.
PhilWeb had been operating 286 e-gaming sites across the currently until August 2016, when its license expired. Then newly elected President Rodrigo R. Duterte’s criticisms against online gaming and PhilWeb’s then-Chairman Roberto V. Ongpin put a halt on the company’s operations.
Mr. Ongpin then chose to divest his stake in PhilWeb worth P2 billion, in favor of its current chairman Gregorio Ma. “Greggy” Araneta III in October 2017.
It was only last December 2017 when PhilWeb finally secured clearance from PAGCOR to resume its operations as an electronic gaming system service provider.
PhilWeb saw its revenues surge by 236.7% to P87.8 million during the first quarter of 2018, after securing clearance from PAGCOR to fully resume operations. The company has also managed to trim losses to P28.9 million, from the P72.3 million seen in the same period the year before.
The company earlier said that it hopes to return to profitability by venturing into other gaming business and by regaining the e-gaming outlets it had lost.
Last April, PhilWeb said it is venturing into electronic bingo (e-Bingo), with plans to acquire two e-Bingo sites.
“It is also a service provider to Instant Massive Bingo’s e-Bingo operations in Saipan by providing the latter with technology and support services,” PhilWeb said.
Shares in PhilWeb slipped by 12 centavos or 2.27% to close at P5.16 each at the Philippine Stock Exchange on Tuesday. — Arra B. Francia

Artist Christo floats tomb of barrels in London’s Hyde Park

LONDON — A 20-meter high sculpture of an ancient Egyptian tomb, made from 7,506 red, white, and mauve barrels, has taken temporary residence amid the aquatic wildlife on a lake in London’s Hyde Park.
The floating installation — featuring two vertical sides, two slanted sides and a flat top — was unveiled on Monday by Bulgarian-born artist Christo.
“For three months, The London Mastaba will be a part of Hyde Park’s environment in the center of London,” he said.
“The colors will transform with the changes in the light and its reflection on the Serpentine Lake will be like an abstract painting.”
Work started in April to stack the 55-gallon barrels into their cut-off pyramid shape on a floating platform 40 meters long and 30 meters wide. Thirty-two anchors hold the structure in place.
Christo, whose full name is Christo Javacheff, was joined at the launch by former New York mayor Michael Bloomberg, chairman of the Serpentine Galleries.
Christo and his wife Jeanne-Claude, who died in 2009, are known for such works as The Gates, a 2005 installation in New York’s Central Park, and the wrapping of the Reichstag in Berlin in 1995. — Reuters

ERC junks Majestic Energy’s application for CoC

FACEBOOK.COM/ERCGOVPHTHE Energy Regulatory Commission (ERC) has rejected the application of Majestic Energy Corp. for a certificate of compliance (CoC) for its 41.30 megawatt-peak (MWp) solar rooftop project in Cavite, after the regulator flagged concerns over foreign minority shareholders’ control of the company.
In a statement, ERC Chairman and Chief Executive Officer Agnes T. Devanadera said the agency has reviewed the pertinent documents submitted in support of Majestic Energy’s application for a feed-in tariff (FiT) certificate of compliance.
“We observed that some transactions entered by the company are questionable and necessitates further inquiry… Hence, we deemed it proper to revert the matter to the Department of Energy without further action from the Commission,” she said.
The certificate is proof that a power plant complies with the applicable regulations, making it safe to switch on and operate.
Majestic Energy’s project is intended as a FiT-eligible power plant, giving it a guaranteed fixed rate for the electricity it produces for the next 20 years. It is located in Cavite Economic Zone (CEZ) I and II, in Rosario and Gen. Trias, respectively.
In its evaluation of Majestic Energy’s application for a CoC, the ERC found that HRD Singapore Pte. Ltd. holds 40% of the total number of subscribed and paid-up capital stock, while Filipino shareholders hold 60%. It noted the company initially appeared to be compliant with the Constitution and laws on Filipino equity requirement.
After its review of Majestic Energy’s articles of incorporation and by-laws, the ERC expressed reservations about the effective control within the company, particularly the required affirmative vote of 75% of the outstanding and issued shares in approving corporate resolutions pertaining to fundamental and management issues.
“Effectively, control did not fall on Filipino shareholders inasmuch as any decision made by the Filipino majority can be overturned by the foreign minority at will. ERC called the attention of [Majestic Energy] in order to rectify the issues on the ownership requirement of the law,” it said.
The ERC said Majestic Energy had amended the pertinent provisions of its incorporation papers, particularly on the voting rights and quorum requirement for shareholders’ meetings from 75% to “a majority” of the outstanding capital stock.
The company also redeemed from the Singaporean firm about 64,000 preferred redeemable shares at their total par value of P800 million. HRD Singapore also conveyed, transferred, and assigned all its rights and interests to Majestic Holdings Corp. over 6,000 fully paid redeemable preferred shares of stock in Majestic Energy and 2,400 fully paid Class A common shares of stock in the latter.
The ERC said the redemption of the preferred shares and the divestment of the preferred shares by HRD Singapore to Majestic Holdings resulted in almost 96.923% ownership by the holding firm of Majestic Energy.
However, the ERC upon examination of Majestic Holding’s 2014-2015 audited financial statements observed that the funding for the redemption of the 64,000 redeemable preferred shares and the conveyance of the 6,000 redeemable preferred shares and 2,400 Class A common shares of stock to the holding firm was sourced from HRD Singapore, casting doubts on the legitimacy of the transactions.
“We (the ERC) do not approve applications filed before us hook, line, and sinker. We dig deeper into the relevant documents despite the fact that some government agencies had already granted its imprimatur on an energy project. In this case, [Majestic Energy] failed to get the Commission’s consensus that the Filipino equity of a corporation is indeed observed,” Ms. Devanadera said. — Victor V. Saulon

Treasury makes partial award of 20-year bonds as yields pick up

By Karl Angelo N. Vidal, Reporter
THE GOVERNMENT partially awarded the reissued 20-year Treasury bonds (T-bonds) it offered Tuesday with yields picking up as the rising interest rate environment prompted investors to be more cautious.
At its auction on Tuesday, the Bureau of the Treasury raised just P4.12 billion out of the planned P10-billion borrowing from the reissued long-tenored notes with a remaining life of 19 years and eight months.
Total tenders reached P14.2 billion, still above the amount the government wanted to raise.
The 20-year bonds fetched an average rate of 6.979%, 12.9 basis points higher than the 6.85% average fetched during the last 20-year T-bonds auction in May. This was also higher than the 6.5% coupon rate set in February.
Had the government made a full award of the bonds, the rate would have climbed to 7.11%.
At the secondary market yesterday before the auction, the 20-year papers were quoted at 7.3839%. It fetched a higher rate of 7.3911% at the market’s close.
Deputy Treasurer Erwin D. Sta. Ana said the Treasury decided to partially award the bonds it placed on the auction block to keep the rates in check.
“We looked at the quality of the bids… We tried to look where the sweet spot was, so what we can say as the optimal market level, that’s the driving force behind the partial award,” Mr. Sta. Ana told reporters following the auction.
He added that the Treasury saw demand from the investors despite receiving non-competitive bids from its dealers.
“Obviously, because of the rising interest rate environment, there is really more of a cautious stance taken by some market participants. But then again that’s tempered by the demand in the long end.”
Last week, the US Federal Reserve decided to raise its benchmark rate by a quarter of a percentage point amid improved economic conditions. The federal funds rate now stands at a 1.75%-2% range.
The market is also awaiting for the policy decision of the Bangko Sentral ng Pilipinas (BSP) during its meeting today.
In a BusinessWorld poll, six out of 10 economists expect the BSP’s rate-setting Monetary Board to stay on hold amid signs that domestic inflation may be slowing.
Last month, headline inflation accelerated to a fresh five-year high of 4.6% from the 4.5% logged in April. However, this was lower than the 4.9% expected by the market.
“[If the] market gets more clarity on the policy agenda of the BSP, we could probably see some improvements in terms of auction participation,” Mr. Sta Ana said.
Meanwhile, a bond trader said the result of the 20-year bond auction was in line with market expectations.
“It was in line with the market expectations because investors were looking at bids carrying 6.75%-7% rate to be accepted,” the trader said.
“Although, the T-bonds were only partially accepted given the higher bids by the market,” the trader added.
This quarter, the Treasury is holding two auctions per week — one for Treasury bills and another for T-bonds — to reflect increased borrowing requirements, as it is set to raise P325 billion via the domestic market in the period.
The government plans to borrow P888.23 billion from local and foreign sources this year to fund its budget deficit, which is capped at 3% of the country’s gross domestic product.

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