Our Vision is to be a world-class company and the service provider of choice.
Our Mission is to provide our customers the best value in energy, products and services.
At the Threshold of Fresh Synergies: Meralco in 2010
Roberto M. Paterno
MERALCO is an investor-owned electric utility serving roughly a quarter of the estimated 94 million population of the Republic of the Philippines.
It was organized as the Manila Electric Railroad and Light Company 107 years ago in 1903 to provide electric light and power and an electric street railway system to Manila and its suburbs. The facilities that Meralco built to provide these two services represented for many years the largest single investment of American private capital and know-how in the whole of East Asia.
For a little more than four decades, Meralco provided Manilans their first modern mass public transportation system with electric streetcars which in the twenties were supplemented by busses. World War II destroyed the railway system beyond rehabilitation and Meralco gave up its transportation business in 1948, concentrating thenceforth on providing electricity. The electric service it provided powered much of the postwar rehabilitation and early industrialization of the young republic that became independent in 1946.
In 1961, in a move considered daring at that time, a group of Filipino investors led by the entrepreneur Eugenio Lopez Sr. bought Meralco from its American owners, the first major American enterprise to be so 'Filipinized.' During the decade that followed, the new Filipino management built electric generating and distributing facilities at an unprecedented pace to meet the burgeoning needs of its franchise area; this was made possible by earning the confidence of international credit institutions like the Ex-Im Bank of the United States, the Ex-Im Bank of Japan, the International Finance Corporation (IFC), Kreditanstalt fur Wiederaufbau (KFW), and other banks, insurance companies, and major American, German and Japanese suppliers.
Meralco was the first Philippine company to issue mortgage trust indenture bonds successfully in the US financial market on Wall Street. Meanwhile, an enlightened human resource management regime ensured industrial peace and employee loyalty at home. In 1969, Meralco became the very first billion-peso company in the Philippines. This was all the more remarkable because much of it had been achieved without recourse to government guarantees.
In the 1970's, the Philippine Government made it a state policy for the government to own all major generating facilities. Meralco sold its generating plants to the National Power Corporation, and electric distribution became its core business. Indeed, in the first half of the 1980's, Meralco's franchise area tripled in area from 2,678 square kilometers to 9,337 square kilometers, mainly because provincial consumers preferred the rates and service of Meralco to those of the utilities that had previously served them.
During the 1980's, Meralco, upon the request of the government, organized, started up and operated the country's first elevated light rail transit (LRT) system in Manila between Baclaran and Caloocan. It was reminiscent of the prewar role of Meralco in the city's streetcar system. At the end of the decade, Meralco turned over the efficiently functioning system to the government.
Since the late 1980's, state policy on electric generation changed and once again called for private investment in this area.
Reflecting a trend worldwide, the Philippines, since the 1990's, has also been in the throes of a major restructuring of the entire electric utility industry. In general this has included efforts to move towards privatization and at the same time limit monopolies and encourage open competition in large portions of the industry.
More than in the past, much of Meralco's management since the mid-1990's has been directed towards enabling the organization to react nimbly to the changing structures and environments in which it operates, despite its continuing status as one of the oldest and biggest Philippine companies. Drives have gone under different names and slogans, e.g, TQM, re-engineering, Meralco Transformation Program, etc., but they share certain common emphases: customer satisfaction, world-class efficiency and productivity, performance-driven rewards, good corporate citizenship, transparent good governance, and process, organizational and human resource development towards these values.
Occasionally these efforts and their results have received recognition from others. More than a quarter of a century ago in 1980, the Personnel Management Association of the Philippines named Meralco as the Employer of the Year. More recently, the Employers Confederation of the Philippines (ECOP) echoed this in choosing Meralco for its 'Grand Kapatiran sa Industriya' award as the overall winner in 2005 in four identified areas: industrial peace and harmony, productivity, social accountability, and strategic visioning and partnering for business and job survival. Regional Asian publications like Finance Asia, Far Eastern Economic Review, Asiaweek, Asiamoney, Euromoney, have often cited Meralco as among the 'best managed' companies not only in the Philippines, but in Asia. In 2008, the Institute of Corporate Directors, in cooperation with the Securities and Exchange Commission, the Philippine Stock Exchange and the Ateneo de Manila Law School, cited Meralco for being among the leaders in promoting good corporate governance.
Despite all this, Meralco is mindful of the fact that the most important judgment is that of the consumer or customer. The direction is to give the consumer a real choice on where to buy his electricity and Meralco's declared vision is to make itself the energy service provider of choice.
Meanwhile, major stock transactions in 2009, have placed Meralco on the threshold of exciting initiatives in synergistic partnership with two other giant Philippine conglomerates, the PLDT and the San Miguel groups. This should augur well not only for Meralco, but for the Philippines as well.
The synergistic partnerships can lead not only to increased business opportunities and cost reductions, but also to new, expanded and more affordable service to the public.
The Meralco tree plantation project was entered into by and between the company and the Department of Environment and Natural Resources (DENR) on December 17, 1991 through a Memorandum of Agreement (MOA). Meralco started developing the area in 1992. By the end of 1997, the company had planted trees in all the 434 hectares, which represent the project’s plantable area. Tree species used were mangium and bagras (1,667 trees per hectare). The non-plantable areas include creeks, rocky portions, kaingins, and second growth forests.
The 927-hectare Meralco Tree Farms lies in the northern-most part of Rodriguez, Rizal, specifically in Barangay Puray. It is bounded on the north by the Province of Bulacan, in the east by the Marikina Watershed, in the south by the Municipalities of San Mateo and Antipolo, and in the west by the cities of Caloocan and Quezon.
The Meralco Tree Farms has enjoyed the full support of the different units of the government in its implementation of the MOA. For instance, the National Commission for Indigenous People (NCIP) has joined Meralco’s campaign against illegal loggers and charcoal makers within the project area. In the same manner, the assigned military units, which included the Philippine Army 16th IB as well as the Special Action Force (SAF) of the Philippine National Police (PNP), have expressed their cooperation to confiscate all illegally harvested forest products coming from the project areas and vicinities.
Support the Government’s goal to transform all idle and denuded lands of the country into forestlands through a sustainable reforestation method that could provide livelihood opportunities to depressed areas. Specific objectives are:
To date, Meralco has planted 18,623 trees, 98% of which are Mangium trees while the remaining 2% are Eucalyptus and Gmelina trees. These trees have been planted on 179 hectares of solid lands. Plantation development operation was first focused on undeveloped sites mainly due to the refusal of some Dumagat indigenous people to reforest their ancestral lands. However, after 19 years of project operation and the regular visits of Meralco’s staff and communication of the socioeconomic and environmental advantages of the project to the local communities, the Dumagats are now willing to plant their claimed areas under a family approach program. Plantation development strategies too are now being improved. Meralco initiated the introduction of indigenous fruit-bearing trees within open and denuded portions of the project that were mostly planted with fast-growing and exotic species. In this manner, monoculture will be reduced while at the same time providing food to various species of wildlife in the project area and its vicinities.
Included in the corporate budget of Meralco
The Meralco Tree Farms is committed to contribute to the goal of the DENR on forestry development while at the same time strengthening the position of Meralco as one of the leading corporations of the country that help preserve a healthy environment. To attain this, Meralco shall strive to accomplish its mission by streamlining and revitalizing existing forestry activities, including the protection and rehabilitation of endangered species of flora and fauna found inside the project area. The Meralco Tree Farms shall facilitate the continuing review and updating of the existing MOA to make it more relevant and responsive to the social, political, and environmental issues that currently prevail in the project area. It shall also continue to encourage the institution of new programs in view of recent developments and emerging trends in natural resources conservation. Lastly, it shall continue to communicate to the local population the importance of the project, not only to Barangay Puray, but also to the whole Municipality of Rodriguez and the country.
The biggest threats to the plantation are the kaingins. These have been the source of fire that hit the plantation in the previous years. It is for this reason that a fire line, seven meters wide, was constructed following the road. Consultations with Barangay elders were proven to be an effective tool to information dissemination campaigns regarding the socio-economic and environmental importance of Meralco Tree Farms project in their locality. Through these, active partnership with the government in its goal to protect the remaining natural forest stands and the immediate rehabilitation of idle and denuded lands of the country will continue while at the same time train the local community on alternative sources of income not similar to their traditional and destructive ways for the environment.
It was in 2009 when Meralco started seeking for ISO 14001 and OHSAS 18001 accreditation and the South Distribution Services (DS) area was selected as the pilot site. South DS maintains a total of 350 vehicles that includes stake trucks, basket trucks and cranes, which accounts for 27.35% of the total fuel expenses of Meralco. One of the key indicators identified in the Environment, Safety and Health HESHI Management System covenant is improvement in fuel efficiency. With no existing program on fuel consumption monitoring at that time, Meralco’s South Logistics sees the need to create a Prime Team which will focus on improving fuel efficiency for South DS vehicles and attaining their goal. The project was dubbed as “Greening the Distribution Utility through Clean Fleet Management”.
Meralco South DS covers 50.28% of the total Meralco franchise area and services the whole province of Cavite and portions of Laguna, Quezon, and Batangas which cover 45 Municipalities.
The project was done in partnership with the Clean Air Initiative (CAI) - Asia in which Meralco was the first in South East Asia to adapt the United Nations Environment Program (UNEP) – Thomas Nationwide Transport (TNT) Fleet Management Toolkit.
Improve the fuel efficiency and attain sustainable greenhouse gas (GHG) reduction on the South Distribution business operations, specifically its 350 units of fleet via:
Fuel efficiency has been consistently improving since the implementation of the program. Utility vehicles, such as, cars, vans and pick-ups had the biggest improvement from 7.02% to 7.93%. Percentage improvement for all vehicles under South DS is at 14% for the last two years. From Y2008 to Y2011, a total of 133,000 liters of fuel was saved since its implementation, which amounts to PhP 4.92 million in cost avoidance. Most importantly, a total of 100 tons of CO2 was avoided because of the increase in fuel efficiency.
No specific fund is allotted for the implementation of the project since it is imbedded in the annual budget of the Logistics-Fleet office, which includes the in-house training of authorized drivers and maintenance of vehicles. A minimal amount of PhP 20,000 is allotted by the training team for the conduct of eco-driving seminar for new authorized drivers.
The clean fleet management has commenced in the two other Distribution areas, North and Central, which are expected to have more savings and CO2 avoidance from their implementation. By 2012, total GHG accounting is targeted in parallel with the implementation of the clean fleet management in all the three areas. The intention is to include also Meralco’s contractors and other service providers in the clean fleet management program. Vehicle replacement will continue as guided by the clean fleet management principles.
First, is the tedious data gathering. The monitoring of the usage of company vehicles is via trip tickets, which are manually being encoded. Then there is a pending request for system enhancement to capture automatically fuel efficiency data to avoid manual calculations because at present it is being calculated based on extracted data from two different systems. Second, is the problem on the age profile of existing vehicles. Before the project started, the average age of a Meralco vehicle was 10 yrs, which is way beyond the economic life of normal vehicles. But with the approval of the vehicle re-fleeting program, Meralco has been slowly replacing old modeled and less efficient vehicles with new ones. Today the average age of Meralco vehicles is 8 years, which is still beyond the useful life of vehicles but it is still a welcome improvement over the old practice.
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