No Replacement For Majestics Energy’s Fit Allocation Secretary Cusi Rules

It is the final decision of the Department of Energy that it will not be substituting with any project or capacity the feed-in-tariff allocation originally intended for the 41.30-megawatt peak solar farm project of Majestics Energy Corporation.

“Certainly, there will be no replacement for it. The era for FIT is definitely over – even for those displaced in the allocation,” Energy Secretary Alfonso G. Cusi sternly said.

It must be recalled that a ruling of the Energy Regulatory Commission in July had ditched the FIT incentives for Majestics Energy because of foreign ownership issue hanging over its head.

The regulator then tossed back the matter to the energy department, following the invalidation of the DOE’s endorsement for the company’s FIT certificate of compliance. Majestics Energy has sited its solar farm at the Cavite Economic Zone, south of Metro Manila. It was originally endorsed to avail of the first wave FIT rate of P9.68 per kilowatt hour.

ERC Chairperson Agnes T. Devanadera noted that the agency “reviewed the pertinent documents submitted in support of Majestics Energy Corporation’s application for FIT-COC and we observed that some transactions entered by the company are questionable and necessitates further inquiry.”

The case of Majestics Energy had been with the ERC since the first wave of solar installations in 2014 because the project was applying then to be included in the initial round of FIT incentives.

In fact, the Majestics Energy project had been included in the initial calculation of the FIT-incentivized capacities, hence, questions were raised that with it getting dislodged in the count, would the government be replacing it with another solar developer to avail of the FIT supposedly intended for that venture.

Devanadera asserted though that they opted to “revert the matter to the DOE without further action from the Commission.”

The ERC stipulated that based on its findings as culled from MEC’s application for FIT-COC, a Singaporean firm HRD Pte Ltd. has 40-percent equity in the project; while Filipino shareholders hold 60-percent of the total number of subscribed and paid-up capital stock. On that corporate structure, the company appeared to have been “compliant with the Constitution and laws on Filipino equity requirement,” the ERC stated. However, it was further established later on that MEC’s articles of incorporation and by-laws “have expressed reservations as to the effective control within MEC, particularly the affirmative vote of 75-percent of the outstanding and issued shares,” that are generally required to approve corporate resolutions pertaining to fundamental and management issues.”

Within that premise, the ERC reckoned that “control did not fall on Filipino shareholders in as much as any decision made by the Filipino majority can be overturned by the foreign minority at will.”

The ERC pointed out that it “called the attention of MEC in order to rectify the issues on the ownership requirement of the law,” thus, leading to the company’s amendments of its by-laws on the voting rights and quorum requirement for shareholders’ meetings, among others.

Beyond that, however, the regulatory body culled from the company’s audited 2014-2015 financial statements, that funding for redemption of the company’s preferred shares had been emanating from its Singapore parent firm.

With that, Devanadera thus noted that Majestics Energy “failed to get the Commission’s consensus that the Filipino equity of a corporation is indeed observed.”

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Monday, 19 August 2019 13:02