ERC to require power firms to offer 15% of their stocks to public

MANILA, Philippines - All power generation and distribution utilities (DUs) will be required to offer at least 15 percent of their shares to the public, according to the new rules being crafted by the Energy Regulatory Commission (ERC).

The ERC said the draft rules are consistent with the mandate of the Electric Power Industry Reform Act (EPIRA) and the rules of the Philippine Stock Exchange (PSE) and the Securities and Exchange Commission (SEC).

These rules, however, are not new. The ERC, the power sector regulator, has been trying to impose these rules but has been encountering opposition from the industry players.

In its proposed guidelines, the ERC said the public offering requirement would enhance the inflow of private capital and broaden the ownership base of the power generation, transmission and distribution sectors.

The ERC said this will also protect public interest as it is affected by rates and services of the DUs and other providers of electric power.

According to the commission, these rules will provide the public offering process and requirements of the applicable provisions of Executive Order 226 or the Omnibus Investment Code of 1987, Republic Act 8799 or the Securities Regulation Code, the PSE’s rules and regulations, and all other applicable laws, rules and regulations.

The regulator also noted that the EPIRA aims to ensure the successful restructuring and modernization of the electric power industry by promulgating rules and guidelines under which generation companies and DUs which are not publicly-listed shall offer and sell to the public a portion of not less than 15 percent of their common shares of stock.

For existing companies, such public offering shall be implemented not later than five years from the effectivity of the law while new companies shall implement their respective public offerings not later than five years from the issuance of their certificate of compliance (COC).

The ERC said the rules will apply to generation companies, DUs, electric cooperatives, privately-owned DUs, local government unit (LGU) owned-and-operated distribution systems, and qualified third parties (QTPs) operating in waived areas of franchised DUs.  

The rules will also be applicable to the holding companies of the generation companies’ and DUs.

The ERC said it would need to seek the assistance of legislators on the initial public offering (IPO) of independent power producers (IPPs).