DOE to retain Majestic Energy’s FiT slot

By Lenie Lectura - November 20, 2018

https://businessmirror.com.ph/doe-to-retain-majestic-energys-fit-slot/

ENERGY Secretary Alfonso G. Cusi said last week his agency would not give up the feed-in-tariff (FiT) slot of Majestic Energy Corp. (MEC) to the next complying solar-power provider in the list.

“No. It’s not possible. I even want to remove that FiT so why do I have to give it to another,” Cusi said when sought for comment if the Department of Energy (DOE) is considering the reissuance of MEC’s certificate of endorsement (COE) to other solar-power providers.

MEC previously secured a COE from the DOE and thereafter applied for a certificate of compliance (COC) with the Energy Regulatory Commission (ERC). However, regulators denied MEC’s application for the issuance of a COC for its 41.3-megawatt DC Solar Roof Project.  The project is intended as a FiT-eligible power plant located in the Cavite Economic Zone (CEZ) I and  II, in Rosario and General Trias, respectively.

“We observed that some transactions entered by the company are questionable and necessitates further inquiry. Hence, we deemed it proper to revert the matter to the DOE without further action from the Commission,” ERC Chairman and CEO Agnes VST Devanadera had said.

In its application, MEC said HRD (S) Pte. Ltd., a Singaporean firm, holds 40 percent of the total number of subscribed and paid-up capital stock while Filipino shareholders hold 60 percent of the stocks.

However, MEC’s articles of incorporation and by-laws stated otherwise.

The ERC said MEC amended pertinent provisions, particularly on the voting rights and quorum requirement for shareholders’ meetings from 75 percent to “a majority” of the outstanding capital stock.

Further, MEC redeemed from HRD Singapore Pte. Ltd. some 64,000 preferred redeemable shares at their total par value of P800 million. HRD Singapore also conveyed, transferred, and assigned all its rights and interests to Majestic Holdings Corp. (MHC) 6,000 fully paid redeemable preferred shares of stock in MEC and 2,400 fully paid Class A common shares of stock in MEC.

The redemption of the 64,000 preferred shares of HRD Singapore Pte. Ltd. and the divestment of the 6,000 preferred shares of HRD to MHC resulted in almost 96.923-percent ownership by MHC of MEC.

“Effectively, control did not fall on Filipino shareholders inasmuch as any decision made by the Filipino majority can be overturned by the foreign minority at will,” said the ERC, which also found out that funding was sourced from HRD Singapore Pte. Ltd.

The FiT is basically an incentive in the form of guaranteed power rate given to renewable-energy producers for 20 years. However, consumers are the ones who shoulder the FiT-All, a separate line component in the power bills.

“Based on our per capita, it is difficult for us to provide subsidy or even FiT. As much as possible, we want to bring down our energy tariff. The consumers are the ones who shoulder the FiT,” Cusi said.

The ERC earlier granted a FiT rate of P8.69 per kilowatt-hour to 16 solar projects endorsed by the DOE.