Privatization of PNOC-EDC
Noel
Salonga
PNOC
Energy Development Corporation
Merritt Road, Fort Bonifacio, Taguig City
Abstract
Economic
theories prescribe that government should not compete with the
private sector under perfect market conditions. This is opposite to
the concept of nationalization that requires state intervention to
ensure delivery of goods and services to people. Starting 1990s, due
to changing domestic and global markets, the country embarked on
privatization of the previously heavily nationalized utilities.
Privatization included the power industry, which was made enhanced
by the willingness of private sectors to invest in power industry,
and the enactment of several laws like the Build- Operate-Transfer (BOT)
Law, and the Electric Power Industry Reform Act (EPIRA).
Privatization of PNOC Energy Development Corp. (PNOC-EDC) was
carried out on the above economic and political framework. Since the
1990s, there have been several plans to sell the company to private
owners following the successful privatization of Petron, one of the
subsidiaries of the fully government-owned PNOC. Series of
unfavorable events, however, postponed the implementation of
privatization plans. It was in only in 2005 when these plans were
reconsidered for implementation owing to two major conditions: (a)
the increasing fiscal deficit required fresh sources of funds for
the government, and (b) NPC power plants are set to be privatized.
The
process of privatization started with the resolution of regulatory
and statutory issues, including several audiences with the Joint
Congressional Power Committee (JCPC). After the resolution of all
issues, PNOC-EDC proceeded with privatization phases. The first
phase was the Initial Public Offering (IPO) of 40% of the company
shares in December 2006. The second phase was the sale of 20%
company shares in July 2007 that made PNOC-EDC a private company.
The last phase is the sale of the remaining 40% company shares on
the last quarter of 2007, which will eventually make PNOC-EDC a
fully private corporation. |