A ‘BMW’ luxury car bought by the Panay Electric Company (PECO) from money allegedly taken from its "capital expenditure" (CAPEX) in 2015 during its time as Iloilo power distributor then subsequently sold to its president and chief executive officer has raised more questions than answers.
Sources familiar with the transaction noted that the car in question, a BMW 520D sedan, was purchased by PECO in 2015, at around P5 million. It allegedly ended up as for the personal use of its president and CEO, Luis Miguel Cacho.
The vehicle’s ownership was then transferred to Cacho last year for an undisclosed amount after PECO’s application for a franchise renewal was rejected by Congress in favor of MORE Electric Power Corporation (MORE Power).
Records from the Land Transportation Office (LTO) disclosed the transfer of ownership was consummated on May 22, 2019.
Under PECO’s submission with the Energy Regulatory Commission (ERC) in the course of the latter’s periodic regulatory review of distribution utilities, PECO claimed it intended to purchase vehicles as part of its capital expenditures (CAPEX) with the following allocations:
2011, P2,133,851.00; 2012, P2,231,446.00; 2013, P2,337,988.00; 2014, P2,447,289.00; and, 2015, P2,560,476.00.
The allocations also supposedly covered PECO’s intention to purchase 5 units of utility vehicles but this did not materialize after Cacho allegedly decided to buy the BMW for himself.
“But since the purchase cannot be justified using PECO’s money, it was entered in its book of accounts as for the “purchase of distribution lines and hardwares,’” sources said.
In 2015, the sources added, PECO’s book of account disclosed it spent almost P5 million for its distribution lines and hard ware purchases.
But according to PECO’s lawyers at ‘Divina Law Firm,’ the transaction was not under the company’s ‘CAPEX’ but was booked as part of its "administrative expenses."
“The records will clearly show that said purchase was an administrative expense that was charged to PECO’s own account.
“Contrary to the false claims being peddled to media outlets, the said expense never became part of any of the amounts billed to consumers, as (what) is PECO’s practice with its administrative expenditures.
“Therefore, it is an utter and malicious lie (to claim) that the consumers were made to pay even a single centavo (for the purchase),” PECO’s lawyers clarified.
The firm added the vehicle was "second-hand" and was used by the government during the 2015 APEC Summit.
“Moreover, the expense was never included in PECO’s ERC (Energy Regulatory Commission)-approved capital expenditure.
“It (should) be noted that the Performance Based Rate Increase (PBRI) under the ERC’s rules has been suspended since 2013 and PECO never applied for any emergency CAPEX,” its lawyers said.
But for Halley Alcarde, general manager of the Western Visayas Transport Cooperative (WVTC) and an accountant by profession, “all administrative expense are charged to consumers 100 percent; a luxury car can never be an administrative expense. It should be a capital expense.”
Alcarde maintained that granted PECO’s lawyers are telling the truth, the transaction remains questionable since its 2015 financial statement also showed that it only purchased P747,000.00 worth of transportation equipment, thus giving credibility to the local media’s reports that the sale was booked as “distribution wires.”
Sources added that PECO’s capital expenditures forecasts approved by the ERC for the 2011 to 215 regulatory period stated that “forecasts are to be based on the economically efficient capital expenditure requirements to meet forecast demand.”
“Buying a BMW for personal use by its president cannot be considered ‘economically efficient,’ but rather, an abusive use of customers’ money who will eventually pay for it through the distribution rates of PECO,” they added.