Convenience store chains race to win Iloilo market

Mini-Stop of the Robinsons group opened two stores in Iloilo City Thursday (July 24, 2014) to signal its intention to grab a slice of the growing convenience store market here.

The Mini Stop stores are located in the Robinsons Place Mall on Ledesma St. and in the IPSTA in Lapaz.

The entry of Mini Stop to the Iloilo market came in the heels of a virtual “invasion” by 7/11 which opened eight of a planned 25 stores just last month.

An announcement in Bloomberg Businessweek said Philippine Seven Corp. is eyeing the opening of another 80 stores in the next two years to take a commanding presence with 105 stores.7 11 logo

Not to be outdone, a local convenience store outfit, Quix Mart, has also opened new stores in several locations in the city. The Quix Mart is owned by the Que Family of the Iloilo Supermart chain.

Florete: ‘We can deliver’

(Part I of a Special Report on the Water Supply Situation in Iloilo City)

Flowater Resources (Iloilo) Inc. has the capability to deliver the contracted 25,000 cubic meters of processed water to ease the shortage of tap water in Iloilo City.

The problem is that its customer, Metro Iloilo Water District (MIWD), does not have big enough pipes to bring the water to the more than 139,000 households in its franchise area.

This was the assertion Sunday of Dr. Rogelio Florete, chairman of FloWater, during a plant tour and press conference at the company’s P1 billion water treatment facility in Barangay Nanga, Pototan.

“Would I be stupid to spend a billion pesos only to fall short on my commitment?” Florete remarked before a small group of media persons. Former city councilor Perla Zulueta, who had once served on the board of directors of the MIWD, was also present to hear Florete out.

To prove his point, Florete gave the media group access to the 5-hectare property beside the Jalaur River and the water flow metering station where the company’s main 800-mm pipe connects with the MIWD in Leganes, Iloilo.

At the intake pond on the northern bank of the river, Florete showed media that FloWater has three submersible pumps, each capable of drawing 15,000 cubic meters of raw water into its filtration and treatment plant.

Dr. Rogelio Florete explains to media the mechanics of how raw water from the Jalaur River in Barangay Nanga, Pototan is pumped into its treatment facilities from a P20-million intake pond beside the riverbank.

Dr. Rogelio Florete explains to media the mechanics of how raw water from the Jalaur River in Barangay Nanga, Pototan is pumped into its treatment facilities from a P20-million intake pond beside the riverbank.

“To meet the contracted volume of 25,000 cubic meters daily, we just need to operate two submersible pumps,” Florete said. The third one serves as a spare in case one of the two submersible pumps break down.

And it’s not all: Florete showed there are a total of six chambers (one unit for each chamber) on the intake pond for the submersible pumps. Three more are not yet equipped with submersible pumps; these are in anticipation of future business when demand for water grows bigger.

It was this intake pond that became the cause of delays in the plant’s commissioning. “My agreement with the contractor was design, build and transfer,” he said. However, the contractor wanted Florete to start paying him even before construction work could even start, he explained.

“When he continued to drag his feet on the intake pond, I threw him out of the project and took over the work,” Florete added.

Florete also complained the contract imposed a deadline that was impossible to meet. “We were given only six months from the award of the contract to start delivery,” he said. Within that period, he pointed out that he was expected to buy land where the plant was to be built, obtain approval for its conversion from agricultural to industrial, develop the facility and lay out the pipes. “Even just the process of getting the conversion approved took months,” he said.

Workers at the intake pond of the FloWater Resources (Iloilo) Inc. use a vacuum hose to suck sludge from the bottom to keep its depth at optimum level and ensure uninterrupted flow of raw water into its pumping stations.

Workers at the intake pond of the FloWater Resources (Iloilo) Inc. use a vacuum hose to suck sludge from the bottom to keep its depth at optimum level and ensure uninterrupted flow of raw water into its pumping stations.

But Florete said he plodded on, determine to make his own positive contribution, and legacy, to the growth of Iloilo City.

The idea of a bulk supply contract to meet MIWD’s requirements came after its management realized its existing network of deep wells augmenting the main supply line from Maasin was simply inadequate.  MIWD has deep wells in Oton and San Miguel that draw tens of thousands of cubic meters from a known aquifer in the area. Not only was the volume of water pumped from underground sources not enough; there’s concern about overdrawing from the aquifer that could result in salt intrusion. If that happens, the aquifer would be rendered useless, as the process is irreversible.

The mainstay for MIWD’s water supply is the antiquated intake dam in Barangay Daja, Maasin, where the water is then pumped several kilometers to the filter and treatment facility in Barangay Talanghauan, Sta. Barbara. The facilities were designed and built in 1926 during the American colonial rule in the Philippines.

Supply is not the only problem. A critical factor, too, for the MIWD’s inability to deliver a steady stream of water to households is the derelict network of pipes serving the franchise area. Hundreds of millions of pesos have been spent for pipe-laying during the last two decades, but it appears much of the money went to corruption. It was discovered that most of the pipes on the ground are old, with leaks springing every hundred meters or so.

Because of these problems, a study commissioned by the World Bank, known as the “Castalia Report”, showed that MIWD is able to provide water to less than 20% of the 139,000 households in its franchise area. The study was conducted seven years ago, and since then, more subdivisions have sprouted all over the city. That number could easily rise to 145,000.

The situation is rather embarrassing for a city that aspires to host the 2015 APEC sub-ministers meeting and markets itself as a tourist destination. Its hotels depend on twice-a-day deliveries from water tankers to keep their faucets flowing. Only a few areas in the city enjoy 24-hour water service. In many areas, hardly a drop of water reaches households. The business of water tanker deliveries has enjoyed brisk sales because of this.

Hence, the need for a bulk supplier to meet the city’s needs.

(To be continued)

Labor day

I am surprised nobody among our congressmen is pointing out the glaring disparity in the minimum wage levels and fuel prices in Iloilo versus those in the national capital region. As pointed out by Bayan Muna party list Rep. Neri Colmenares recently, the minimum wage level in Iloilo is just P265 per day while workers in Metro Manila are mandated to receive P404 per day. And yet, on the other hand, Iloilo residents pay at least P5.00 per liter more on the price of fuel products than those in the national capital. That’s not to mention that our electricity rates are grossly more expensive than in Metro Manila.

If we go by the logic of compensation theory, workers who face a higher cost of living deserve to be paid more. The indices of cost of living should necessarily include gasoline prices and electricity rates. There can be no debate that these two costs weigh heavily on the economic conditions of a community. Hence, the question begs to be asked: why is the minimum wage in Iloilo lower than Manila?

And while that question is hanging in the air, let me also echo the question posed by Rep. Colmenares: why is the price of oil-based fuel considerably higher in Iloilo than the national capital? How do oil companies determine the P5.00 difference in prices? Transportation costs? If that is so, then a transparent procedure must be established to make it clear to everybody why it is so. We are not unreasonable people. But we have to be informed.

Our congressmen are expected to fight for our interests, economic, social or whatever. This is clearly a major battleground in terms of the economic plight of Ilonggos. There has to be a sense of balance to the way we do things. We should not just accept things as they are. We should learn to question and challenge, especially with the celebration of Labor Day yesterday.

Suspension of WESM for Visayas operations sought

The skyrocketing of spot market rates for electricity to as high as P32 per kilowatt hour (kwh) in the Visayas during the first few days of trading is proof that the region is not ready for the scheme mandated by the power industry reform law, Rep. Salvador “Kiting” Cabaluna III of the 1-CARE party list said.

And before its continued operations could cause in “irreparable damage” to ordinary consumers, Cabaluna asked the Philippine Electricity Market Corp. (PEMC) to suspend the commercial operations of the wholesale electricity spot market (WESM) for six months to allow stakeholders, notably electric cooperatives, enough time to secure bilateral contracts for their power supply.

“Time and again, our sector has cautioned the government the situation in the Visayas is not ripe for the operation of WESM, and this opposition is not without factual basis,” Cabaluna said in a letter to PEMC president Melinda C. Ocampo dated Jan. 3, 2011.

Cabaluna said that “even the Department of Energy (DoE) had postponed its implementation several times because conditions then, as they are now, are bound to result in failure.”

The WESM began operations in the Visayas region on Dec. 26, and as feared, the spot rates had gone as high as P32 per kwh during peak demand, Cabaluna said.

At the same time, Cabaluna questioned the legality of the WESM implementation, which he said began operating without the sanction of the Energy Regulatory Commission (ERC).

Cabaluna said that two years ago, the ERC had ordered the PEMC to submit a package of mitigating measures to protect the market from volatile price fluctuations. On Dec. 10, 2010, the ERC issued a second order on the subject, but the PEMC has failed to comply with it, he added.

“Without such ERC authority, distribution utilities would be violating the law if they pass on to consumers the cost of electricity drawn from the spot market,” Cabaluna wrote.

Cabaluna explained that the rural energy sector that he represents is not against the implementation of WESM. However, he insisted that “structural defects” must first be addressed before it goes into operation.

He said a basic “structural defect” in the WESM operations is the tight energy supply situation in the Visayas. Three new coal-fired power plants — two in Cebu and one in Iloilo — are set to go into full operations on March 26 this year yet, he added.

Cabaluna said the situation is bound to “go haywire” because many electric cooperatives have not yet secured bilateral supply contracts to ensure that they get the bulk of their requirements at a fixed price.

“We have repeatedly argued that we need extra time as most ECs had expiring bilateral contracts with the National Power Corp. on Dec. 31, 2010,” he said.

Because of this, the ECs were not able to complete their negotiations for new bilateral contracts when the WESM was put into operation, he added.

The implementation of WESM on Dec. 26 placed the ECs in a vulnerable situation because they are now forced to draw a big portion of their supply needs from the spot market, he said.

Cabaluna said that in the end, the impact of the spiked rates would fall upon the shoulders of ordinary consumers, as the distribution utilities and transmission firm would simply pass on the cost to their customers.

Cabaluna said that in the end, the impact of the spiked rates would fall upon the shoulders of ordinary consumers, as the distribution utilities and transmission firm would simply pass on the cost to their customers.

Visayas electricity sells for P25/kwh on spot market

Just three days after the Wholesale Electricity Spot Market (WESM) in the Visayas got underway, the “spot rate” of power reached an astronomical P25 per kilowatt hour (kwh) during mid-day trading as demand peaked, quickly drawing a sharp reaction from a party-list congressman representing the rural energy sector that his “worst fears are happening.”

Rep. Salvador “Kiting” Cabaluna III of the 1-CARE party list said it didn’t take long for the “spot market” to manifest the “structural defects” he had warned about when he sought the deferment of the WESM implementation three months ago.

“We saw this coming, but the Department of Energy brushed aside our objections,” Cabaluna said. “The situation is not ripe for the spot market scheme because key elements such as excess power supply and firm supply contracts for distribution utilities are not in place.”

The WESM was established as part of the reforms for the power industry under RA 9136. It seeks to create a “spot market” for excess, or uncontracted generated electricity, to give distribution utilities a choice in buying their power supply and bring about a more efficient power industry.

The law mandates electricity distributors to buy at least 10% of their requirements from the spot market during the first 5 years of the scheme.

Cabaluna said Visayas power utilities are not ready to take part in a WESM scheme because many have not firmed up their bilateral supply contracts with independent power producers (IPPs).

“This leaves these distribution utilities, particularly electric cooperatives, highly vulnerable to the volatile nature of the market,” he said.

The scheme works on the law on supply and demand, he pointed out. When demand is high, and supply is short, then the tendency of prices is to go up, he said.

This is what happened on Dec. 29, he added. At 3 o’ clock of the same day, the spot market rate slid to P15.04 per kwh, which, he said, is still “precipitously high” as far as ordinary consumers are concerned.

Cabaluna said he will monitor the spot market closely to validate his observations.

When Congress resumes session next month, he will reiterate a resolution he had filed three months ago seeking a legislative inquiry into the implementation of the WESM for the Visayas.

The News Today (TNT) to relaunch Jan. 1

As I have reported weeks ago, journalist-turned-businessman Rommel Ynion has bought The News Today from the group of printing tycoon Rosendo Mejica and will be relaunched on Jan. 1.

Here’s a link for the confirmation:

http://www.thenewstoday.info/2010/11/15/a.new.chapter.unfolds.for.the.news.today.html

Clutching for straws (the radio ratings game)

Nothing becomes more contentious over the broadcast airlanes than the release of survey results on listenership for radio stations,’

In an industry that is losing a big share of advertising revenues to television, and even social media, radio networks need to prop up their listenership bases to remain attractive to more discriminating advertisers seeking to get the most value for their peso. In every locality, there is a constant race for the number one position, because the title is a magnet to advertisers.

Hence, it’s not suprising to hear over local radio stations for several days now anchormen firing verbal missiles at their rivals over the results of the latest A.C. Nielsen survey for Iloilo City. The obvious leader, Bombo Radyo DYFM, proudly broadcast its undisputed position in the local market with 6.34%. It was followed by Aksyon Radyo Iloilo DYOK with 2.26% with RMN 774 a distant third with 1.05%. Radyo ng Bayan and RGMA DYSI 1323 rounded up the field with 0.6% and 0.5%.

This drew angry reactions from some “losers”. Novie Guazo of RMN 774, for instance, reportedly started attacking Bombo Radyo and insisted that his station is number one. A verbal slugfest over the airlanes erupted, anchormen trying to rip each other apart as if the exercise will change the equation. It didn’t matter that such angry exchanges don’t speak well of the broadcast industry, not to mention the fact that listeners are not amused at all. The audience wants to listen to solid content, not juvenile brickbats as to who is the toughest kid on the block.

(In fairness to Aksyon Radyo, it came out with a statement accepting the results of the survey. That, I think, is the sober and right attitude. Move on. Accept the truth.)

The results of the survey are unassailable. A.C. Nielsen is the most prestigious among survey groups. Its survey findings serve as a roadmap for advertisers in picking which networks will get their advertising money. And no amount of quarreling will sway the minds of advertisers. Nor will it change the figures on the charts. These networks might as well study the outcomes and learn why they ended up where they are on the charts.

But there is something about the survey results that is very revealing. It’s the fact that the audience share for radio is getting smaller and smaller. Radio is rapidly losing its title as the primary source of information and entertainment. Television has edged out its sister broadcast medium, with social media (Twitter, Facebook, etc) emerging on the horizon as potential challengers.

About 20 years ago, Bombo Radyo enjoyed an average of 15-18% of the market share, with the competition fighting over another 5-8%. Based on this recent A.C. Nielsen survey, the market share for radio has shrunk considerably. This puts more pressure on the networks because this means less and less advertising money to keep them afloat. Less income means cutbacks in promos, technology and manpower. The cycle is vicious, with the radio industry a potential victim of death by strangulation.

I’m not about to say, “for whom the bell tolls.” But the warning signals are there. Radio networks should think deep about how to thrive, not just survive, in this hostile environment. A soul-searching into content and delivery should be done, with possible integration into the social media (such as live-streaming on Facebook) to be seriously studied.

The stakeholders in the radio industry should stop quarreling. Their energies can be put to more productive purposes in finding ways to win back audiences.

Full throttle ahead for Iloilo

I’m having coffee at the Westown Hotel and noticed that the new Smallville 21 of Romeo Go is already completed, with a second adjoining buildng in the final stages of construction.  Along with Iloilo Business Hotel, there are now three medium-sized hotels in the Smallville area, reinforcing its position as the business and entertainment growth area for Iloilo City. Not too far away, the Ayala BPO building is also rising up fast. The new billionaire, Edgar “Injap” Sia II, has likewise commenced his People’s Condominium a block away. Only a hundred meters away is the soon-to-be-opened Plazuela de Iloilo of radio and banking magnate, Dr. Rogelio Florete.

These developments leave no doubt that Iloilo is pushing the throttle lever to “full” in its bid to become the next economic growth center of the country. What used to be fishponds and salt beds have become a sprawling business center for the city, and this will only be enhanced once MegaWorld starts its own development activities in the 55-hectare old Iloilo domestic airport less than a kilometer away. It is easy to envision the area fully developed with more malls and office buildings in the next three to five years. Of course, I also have to mention the reconstruction and renovation of the long-abandoned Royal Palms Hotel in the Fort San Pedro area as well as the opening of a slot machine gambling facility at the Amigo Mall.

The pace of development is now approaching dizzying speed, and it is important that our city officials don’t waste the opportunity to put the required infrastructure to support this growth. City Mayor Jed Patrick Mabilog and the city council can’t afford to be passive by-standers as these things are happening. They have to aggressively look at every concern and take action quickly.

The biggest concern is still power. Right now, the city is suffering from daily outages that last 3 to 4 hours. Ordinary residents and businessmen alike are grousing about how this is making life miserable, and business losses unavoidable. Everybody is pinning their hopes on the operation of the coal-fired power plant of the Global Business Power Corp. anytime this month. The city is getting hungrier and hungrier for power, and the coal-fired power plant is expected to erase the supply deficit. With a total capacity of 164-mW, the new power plant can provide the city, and the rest of Panay island, with their power needs for the next 3-5 years.

The second concern is roads. There are many road sections in the city that are almost impassable due to potholes and poor maintenance. An example is the section of Lopez Jaena St., a major road, in Barangay San Isidro. The road is so bad that navigating the section is like driving through an obstacle course. The city needs every inch of road to be in good condition to facilitate the smooth flow of traffic. A growing business requires swift movement of products efficiently. DPWH should also provide support by pursuing the construction of peripheral roads that would link the outer towns of Leganes, Zarraga, Pavia, Sta. Barbara, San Miguel and Oton.

Third is peace and order. The city is struggling with a surge in sensational crimes these past two months. Taxi drivers have been held up and murdered. A businesswoman was kidnapped and killed, her body dumped under a motel bed. What’s more frightening is that even a policeman, PO1 Jomari Lamis, was shot and killed in broad daylight. Apparently, lawless elements have no respect for our police. This image has to be drastically changed. The culprits for these crimes have to be caught and put to jail. An atmosphere of security and serenity will have to descend upon Iloilo City to make investors feel safe and come here. More importantly, residents should feel protected in going about their daily routines.

These are just a few factors, but I think these are good starting points. We need to bring every sector to cooperate and help in the attainment of these goals. Mayor Mabilog needs to demonstrate decisiveness and forceful action in carrying out his leadership role. The business community must also support City Hall in its initiatives. This is ripe moment for Iloilo City to discard the image of a languid community and become a dynamic force for development.

Fort San Pedro area to regain nightlife luster

The Fort San Pedro area in Iloilo City was traditionally the nightlife park of its people as far back as the roaring 50’s when the sugar industry was the top dollar earner of the country, and rich hacienderos had oodles and oodles of money to spend.  It was where the Casino Espanol, considered the watering hole for the sugar magnates of Iloilo of that era, was located. In the 1980’s, the Fort San Pedro itself became a favorite leisure and entertainment park with its famous chicken bar-b-que (that was long before Injap Sia embarked on “Mang Inasal”).

But the area slowly deteriorated in the last two decades as business moved out of the traditional shopping strip on “Calle Real”, which is how J.M. Basa Street, continues to be called. The opening of big malls “killed” the stores in the area as Ilonggo crowds moved farther and farther away from this long strip that was known for its pre-war buildings. Being on the tail-end, Fort San Pedro lost its attraction to the crowds. It’s only because it is home to many government offices that the area continues to see busy traffic during the day. It has long ceased to be the nightlife capital of Iloilo.

This is likely to change in the next few months. A young businessman named Rommel Ynion has bought the old Royal Palms Hotel and began its reconstruction to turn it into a hotel-casino complex. Ynion also purchased the ruins of the Casino Espanol across the street to provide for wide parking spaces. Rumors on the street say Ynion is behind the move to operate slot-machines at the Amigo Plaza complex on Iznart St. as a prelude to reopening full casino operations at the Royal Palms Hotel.

The only negative factor that can pose problems for this entertainment complex is the heavy concentration of informal settler communities in the neighborhood. Petty crimes like snatching and pickpocketing are rampant in the area. The run-down honkytonk bars a short distance away from this refurbished hotel-casino complex presents an ugly sight for its visitors and turn them off. This early, the city government would do well to already look into this problem. We want investors to feel comfortable about bringing fresh capital to Iloilo City, and authorities need to provide the infrastructure to make this happen.

By the way, Ynion looks like he’s serious about doing big business in Iloilo. He’s already bought “The News Today” from Rosendo Mejica. Apparently, Ynion is anticipating heavy opposition from the church when the casino projects rolls out. He needs a good media outlet to reach out to the community and persuade the people to accept it.

Cebu Pacific eyes dominance in the skies

It’s been reported that Cebu Pacific’s video of the “dancing flight attendants” has become a big hit on You Tube that an estimated 1 million people are viewing it every day. That’s quite an impressive viewership figure, comparable to the “dancing prisoners” at the Cebu provincial jail last year. It’s an excellent publicity stunt that put the airline into everyday conversation, which some say is being done to increase media visibility before the company holds its IPO. Whatever the objective, the people behind the video deserve praises.

But there’s another reason why I’m writing about Cebu Pacific. It’s  about the company’s aggressive marketing strategy that is centered on bargain fares. In this age of digital commerce, Cebu Pacific appears to have dominated the online ticket market with its frequent sale promos and consistently low fares. I haven’t bought a ticket at the traditional sales outlet for a long, long time. When I have to travel, I just click on its website, take out my credit card, and in a matter of minutes, I am able to book my flight.

On the average, I am able to book a flight to Manila for P1,200 one-way. This is cheap — even comparable to an inter-island vessel outlay that requires you to set aside 24 hours to make the trip. How does the airline manage to do this? Not hard to figure out the reason. The airline has made a big effort to cut costs. CebuPac passengers noticed that in most flights, they no longer pass through the “tube” and have to walk down the ramp before boarding their aircraft. Even boarding passes are no longer pre-printed cards; the company now issues paper print-outs the size of an ATM receipt. Aboard the aircraft, the airline doesn’t serve snacks. You have to buy soda or water or food.

The airline has also done well in on-time departures and arrivals. This zealous effort to achieve zero-delays can often be problematic: the airline’s flights occasionally depart ahead of the published schedule. Once, I had to run from the check-in counter to the departure gate in order to catch my flight, although it was still a good 15 minutes before its ETA. This has forced many passengers to be at the airport at least two hours before departure time.

All these are taking place as Philippine Airlines, the national flag carrier, is beset by a labor problem involving its flight attendants. Not too long ago, a good number of its pilots also left the company for higher-paying jobs with foreign airlines. It’s clear PAL cannot keep its customer base unless major changes are also undertaken at the company. I just hope CebuPac’s service improvement program isn’t a short-term effort, but a long-range, sustained campaign to build a loyal customer base.