A lawmaker on Sunday opposed a proposal to repeal the initial public offering (IPO) requirement for power generation companies (gencos), saying it is against the spirit of the Constitution.
Surigao del Sur 2nd district Rep. Johnny Pimentel said scrapping the statutory requirement for new power gencos to conduct an IPO of at least 15 percent of their common shares and list on the Philippine Stock Exchange (PSE) is “highly regressive.”
“Repealing the obligation would be highly regressive. We must stress that Congress crafted the rule in accordance with the specific mandate of the 1987 Constitution to increase the number of Filipinos owning shares in private enterprises,” Pimentel said in a statement.
Without naming the senator, Pimentel noted that a lawmaker from the upper chamber of Congress proposed the scrapping of the IPO requirement for gencos to encourage more investments in the power sector.
Last week, Sen. Sherwin T. Gatchalian called for the passage of Senate Bill 2217 which seeks to repeal Republic Act 9136 or the Electric Power Industry Reform Act which required all private gencos and distribution utilities to conduct an IPO.
Pimentel noted that under Article 12, Section 1 of the Constitution: “Private enterprises, including corporations, cooperatives and similar collective organizations, shall be encouraged to broaden their base of ownership.”
He said the intention of the Constitution is to distribute new economic opportunities—new income and wealth—to as many Filipinos as possible, including small local investors. “In fact, we compel beneficiaries of congressional franchises, such as airlines and telecommunications firms, to offer at least 10 percent of their shares to the public precisely to give more meaning to the Constitution.”
Pimentel added that the constitutional mandate also prompted Congress to oblige crude oil refineries to sell at least 10 percent of their shares to the public under the Downstream Oil Industry Deregulation Law of 1998.
“This is why ordinary Filipinos can now freely own shares in Cebu Air Inc. (Cebu Pacific) and Pilipinas Shell Petroleum Corp., among other firms that were previously held by a handful of private entities,” he said.
“Share offerings are good for our middle class families, our capital markets and for our economy. They are also good for the offering corporations because they can easily raise fresh capital.”