SURIGAO del Sur Rep. Johnny Pimentel has rejected calls for the scrapping of the statutory requirement for new power generation companies to conduct an initial public offering (IPO) of at least 15 percent of their common shares and list on the Philippine Stock Exchange (PSE).

“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.

A senator earlier urged Congress to withdraw the condition to spur new investments in the power sector, amid unease over rotating brownouts due to the Luzon grid’s lack of supply.

Pimentel cited Article 12, Section I of the Constitution, which provides that: “Private enterprises, including corporations, cooperatives and similar collective organizations, shall be encouraged to broaden their base of ownership.”

“The intention of the Constitution is clearly to distribute new economic opportunities – new income and wealth – to as many Filipinos as possible, including small local investors,” Pimentel pointed out.

“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 said.

Pimentel said 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,” Pimentel said.

The Electric Power Industry Reform Law of 2001 requires new power generating companies as well as new electric distribution utilities to sell at least 15 percent of their shares to the public within five years from the issuance of their certificate of compliance, unless they are controlled by an entity already listed on the PSE.

SHARE OFFERINGS A BOON

“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,” Pimentel said.

Pimentel cited the case of Cebu Pacific, which was able to secure its future as a low-cost domestic and international carrier by raising P12 billion in fresh equity from large foreign investors.

To support its recovery from the pandemic, Cebu Pacific recently issued $250 million worth of bonds that are convertible into the airline’s publicly traded common shares.