BusinessMIrror November 24, 2018

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BusinessMirror

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A broader look at today’s business n

Saturday, November 24, 2018 Vol. 14 No. 45

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POWER STRUGGLE

NASCENT BUT WELL-FUNDED ELECTRICITY FIRM POISES TAKEOVER OF ILOILO CITY’S POWER SUPPLY FRANCHISE

T

By Lenie Lectura

WO firms—a newcomer and an electricity provider for nearly a century—are racing to provide better power service to commercial establishments and residents of the bustling Iloilo City, marred by an ongoing franchise dispute which has left consumers at the center of the controversy.

Panay Electric Company Inc. (Peco), Iloilo’s power distributor for the last 95 years, is on its eighth year of implementing a modernization program, which includes putting up additional transmission line substations to cater to the growing demand for power in the city, which ranked 11th in the overall competitiveness among 33 highly urbanized cities (HUCs) in the Cities and Municipalities Competitiveness Index (CMCI) this year. Peco currently services the Ilonggos with five subtransmission line substations in Baldoza Lapaz, Tabuc Suba Jaro, Bolilao Mandurriao, Avancena Molo and General

Luna City. It has 450 kilometers of power lines, 20,000 poles, 1,300 distribution transformers and 64,000 electrical meters, and employs 400 personnel.

The boom

“OUR modernization plans started in 2010. It started with [the] upgrading of distribution lines to improve the system’s reliability. There’s a boom here. Ayala had just finished a condo project. Megaworld is building a mall. The Gaisanos, meanwhile, are developing a township. These activities will mean more demand for power and we assure Iloilo that we are up for

it,” said Peco administration manager Marcelo Cacho over the phone. While there is enough capacity to supply the city, Peco wants to be prepared in addressing the growing dynamism in the local economy of Iloilo. It bared plans to put up a 42MW substation to address the 6-percent to 7-percent growth in electricity demand. The additional substation is part of Peco’s remaining P1-billion capital expenditure set aside for its modernization plan, said Cacho. “In 2015 Iloilo’s peak consumption was 98 MW. This year, it has grown to 116 MW. We are see-

ing an annual growth of 6 percent to 7 percent. We are indeed ready. Iloilo is booming in all aspects,” added the official.

Franchise renewal problem

BUT this plan might be put to waste if Peco’s franchise, which expires January next year, is not renewed within that month. The franchise renewal bill of Peco is still pending in Congress due to objections of Iloilo residents and the city council. The protest against Peco’s new franchise is backed by a petition signed by Iloilo residents and a Continued on A2

Chinese consumers on a sudden halt

The Chinese retail sales was below expectations in October, which of course gives reason to consider China’s economy once more.

O

By Peter Lundgreen

Share of income consumed online (in %)

N the famous Singles Day, China 20 the 11th November, Chinese Mexico 16.5 company Alibaba sold goods Indonesia 12 for 213.5 billion renminbi ($30.5 UK 10.5 billion). These kinds of numbers India 10 are quite fascinating and when one Russia 9.75 considers that the turnover leads to one USA 8 billion shipments afterward, it really Source: Lundgreen’s Capital/Various underscores the volume.

PESO EXCHANGE RATES n US 52.2770

China: Yearly change in retail sales (in %) Nov-17 10.2 Dec-17 9.4 Jan-18 9.7 Feb-18 9.7 Mar-18 10.1 Apr-18 9.4 May-18 8.5 Jun-18 9 Jul-18 8.8 Aug-18 9 Sep-18 9.2 Oct-18 8.6 Source: FRED, Fed St. Louis, USA

On the question whether an increase in the turnover of 27 percent compared to Singles Day in 2017 expresses a sharp increase in private consumption, the answer is less exciting—it is actually a no. Almost ironically, Alibaba’s CEO Jack Ma announced on November 2 that the company lowered its forecast result for the current financial year, ending March 31. Bad times can be the excuse for many developments, but nevertheless, it is precisely the current feeling of uncertainty among the Chinese consumers which Alibaba refers to. In line with this, I argue that there have Continued on A2

n JAPAN 0.4628 n UK 67.3380 n HK 6.6762 n CHINA 7.5421 n SINGAPORE 38.0861 n AUSTRALIA 37.9008 n EU 59.6376 n SAUDI ARABIA 13.9350

Source: BSP (November 23, 2018 )

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