The required initial public offering (IPO) for power generation companies (GenCos) at the Philippine Stock Exchange (PSE) has been proposed for scrapping, so the restructured electricity sector can attract more investments.

To lift that mandate of the Electric Power Industry Reform Act (EPIRA), Senate Committee on Energy Chairman Sherwin T. Gatchalian has filed a new legislative measure – Senate Bill 2217 — purposively to ditch the public listing condition for GenCos.

The lawmaker opined that “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.”

Gatchalian emphasized that such IPO stipulation under EPIRA is most specifically difficult for power generators in the renewable energy (RE) sector, hence, it becomes a deterrent for some investors to enter the Philippine electricity market.

Under Section 43 (t) of the EPIRA and Rule 3 Section 4 (m) of its implementing rules and regulations, the GenCos as well as distribution utilities are mandated “to offer or sell to the public a portion of not less than 15-percent of their common shares of stock.”

The timeframe for the required stock offering should have been five (5) years from the effectivitiy of the law – or as early as 2006, but that has turned out to be a moving target given the heaps of legal clarifications sought on rules and policies; coupled with developments in market conditions.

The solon noted though that “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.”

He added “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.”

Once the IPO policy is tossed out, he reckoned that the country’s power capacity could be beefed up to 71,817 megawatts until year 2040; and 9,508MW of that will be coming from RE technologies.

In a ruling in 2019, the Energy Regulatory Commission (ERC) stipulated that other than IPO, there are other parameters that the GenCos can employ so they can comply with the EPIRA-mandated stock offering.

The ERC, in part, has sought legal shelter from an opinion earlier issued by the Securities and Exchange Commission (SEC) stating that a “public offering” under the Securities Regulation Code (SRC) “does not necessarily require listing and selling in the PSE or any exchange for that matter, since listing is just one form of public offering.”

The SEC has cited provisions of the 2015 implementing rules and regulations (IRR) of the SRC, which defines public offering as “any offering of securities to the public or to anyone, whether solicited or unsolicited.”

The SEC also specified the extent and requirements that must be complied with in the “solicitation or presentation of securities for sale.” ###

Source: Manila Bulletin (