Junking of IPO requirement for gencos sought

Sen. Sherwin Gatchalian wants the lifting of the initial public offering (IPO) requirement for power generation companies (gencos) in order to attract more investments in the country’s energy sector.
Gatchalian, chairman of the Senate Committee on Energy, filed Senate Bill 2217, which seeks to repeal Section 43(T) of Republic Act (RA) 9136 or the Electric Power Industry Reform Act (EPIRA) since he says it no longer serves its purpose.
The said provision directs all private gencos and distribution utilities (DUs) to sell a portion of at least 15% of common shares to the public within five years. This explains why gencos and DUs such as Aboitiz Power Corporation, AC Energy, First Gen Corporation, and the Manila Electric Company (MERALCO) are listed in the Philippine Stock Exchange. Other than the PSE, the shares can be listed in other exchanges or can be offered directly to the public or to their employees, as long as they get approval from the Board of Investments.

“The initial purpose of the public offering requirement for generation companies in the EPIRA has been rendered irrelevant given all the developments in the electric power sector. If we were to encourage more investments in generation to meet our demand needs in the next 20 years, it is crucial to eliminate this additional barrier to entry,” Gatchalian said in a statement.

“In order to promote competition and encourage market development, we have to relax some policies such as the public listing which proved to be burdensome to generation companies especially to small renewable energy (RE) gencos that have difficulty in complying,” he added.Gatchalian pointed out the importance of luring more investments, as the country would need an additional capacity of 71,817 megawatts (MW) installed capacity by 2040.

The senator added that 9,508MW or 13.24% of the additional total installed capacity will come from RE capacity to meet the one percent renewable portfolio standard requirement under RA 9513 or the RE Act of 2008.