Losing Sta Ana?

Are we about to see the demise of one of the favorite landmarks of the Filipino masa?

Media has reported about a major intra-corporate war within the Philippine Racing Club Inc. (PRCI), owner and operator of the Sta. Ana racetrack, a sentimental monument as far as horseracing aficionados of the country are concerned.

PRCI’s shareholders are up in arms against the board of directors led by the representatives of the Malaysian-based holding firm Magnum Holdings Berhad. The court has stepped in and has issued a temporary restraining order against the Malaysian-led group in the racing club board.

But there appears more to the conflict than meets the eye. Our friends explained the object of the brewing war: a move by the Malaysian-led block to swap the Sta. Ana race track with stock certificates of a real estate development firm.

That means the racing club would no longer own the racetrack. JTH Davies Holdings, the real estate firm, will own it following the swap.

The shareholders are crying foul for two reasons. First, they allege that there has been no full disclosure concerning the transactions by the PRCI board with JTH Davies Holdings. Second, the value of the latter’s stock certificates appear to be not at par with the value of the prime 26-hectare race track.

We cannot fault the shareholders. By swapping an expensive piece of real estate with stock certificates, the PRCI loses not just its business but its reason for being.

The swap takes away the core of the club’s business. And the very core of one of our favorite pastimes. With no racetrack, what is the racing club supposed to be doing? 

The Sta. Ana racetrack is private property. It belongs to the many shareholders who bought into the publicly-listed PRCI. That it is also in part the property of the Malaysian investors who brought in the cash is something we do not question.

So what is the Malaysian-led block at the racing club up to? Why is ownership of the racetrack being transferred to a real estate firm that has all but folded up? Is the Sta. Ana racetrack gone for good?

The legitimate shareholders say they themselves were not given ample information about the transactions with JTH Davies. They asked for documents and were given none. Lest this Malaysian-led block forgets, these racebettors kept the racetrack alive all these years.

Mafia’s last gambit

If there’s any positive legacy President Arroyo can leave the country with, it’s the reform of the power sector through her passage of the Electric Power Industry Reform Act or the EPIRA law.

The law’s passage however, is only half the work. Implementing the true spirit of the law is the other half of the battle.

If power reforms are to be a true legacy of this administration, then it is essential that they be shepherded properly through the long, sometimes difficult road ahead.   

Take the case of the NPC mafia which is trying to get Malacañang, the general public and some legislators to support a move to amend EPIRA, claiming it does not work and that all we’ve seen since its passage in 2001 are power rate hikes.

While it’s true that power rates have risen considerably since the law’s passage, we must remember that fuel prices worldwide have gone up by almost 200 percent. And fuel accounts for almost half of power costs. 

Price manipulation at the WESM occurred because Siamese twins Napocor and PSALM account for between 80 to 90 percent of the volume traded in the spot market on a daily basis. 

We will never have a well-functioning market until NPC’s market dominance is reduced if not eliminated altogether.

Competiting against a state-owned firm that has unlimited access to taxpayers pockets is bad enough. Having it under conditions where they account for anywhere from 50 to 80 percent of the kilowatt-hours is nothing but ridiculous. 

Such a scenario would only discourage the private sector from continuing to participate in the power generation business. So much so, that the only thing major that’s happening is the sale of existing capacity to the private sector.

Two years ago, both the government and private sector stressed on the projected energy shortage by 2010 unless new or additional capacity was built and put online before then. Yet we see none. And our country’s leadership seems to have forgotten about the impending crisis.

It’s interesting to see how the NPC mafia has been setting the stage to torpedo any real power sector reforms. Though they must pay lip service to encouraging reforms, their primary agenda is apparently to slow down and even halt privatization dead in its tracks. Just seeing how they have slowed down the sale of NPC’s power plants all these years is testament to the success of their delaying tactics.

One key piece of the Mafia’s agenda has always been to open up the electricity market to “retail open access” competition while NPC is still in a highly dominant position. This would have allowed them to contract directly with industrial and commercial customers immediately within the franchise areas of the distribution utilities.

Requiring 70 percent of NPC to be privatized before allowing “retail open access” competition was a necessary safeguard. Now, should the NPC mafia succeed in lowering that legislative threshold to 50 percent, this will allow the anomalous situation of having one dominant competitor breach that market share cap at the start of the competitive market.

The electricity industry is not simple which is why it took almost eight years, three presidents and three congresses before a Power Reform Law finally got passed. The hours of debates and hearings that went into the law were stupefying. However,  PGMA’s legacy of leaving a vibrant, competitive power sector is in danger of being lost. Most especially if she is not able to discern the agendas of those closest to her inside her own government.

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