MANILA ELECTRIC Co. (Meralco) is looking to borrow
between P10 billion and P15 billion to fund around half of its P30-billion
capital expenditure (capex) for the 2016-17 regulatory periods, its financial
controller said on Tuesday.
“If you look at our past long-term debt,
depending on the requirement, it can be between P10 -- P15 billion,” said Betty
C. Siy-Yap, Meralco senior vice-president and chief financial officer during a
press conference after the utility’s annual stockholders meeting in Pasig City.
“While we have the cash, certainly there is also a need to borrow,” she added.
Ms. Siy-Yap said Meralco has equity infusion requirements for its subsidiaries Meralco Powergen Corp. (MGen), Meralco Energy, Inc. (MServ) and MRail, Inc.
“MGen certainly is one of them for the equity portion of our investment. Our other subsidiaries are also on expansion mode and that includes MServe and MRail,” she said.
In the case of MServ, she said Meralco, instead of infusing capital, linked the unit with a bank to allow it to borrow directly. MServ aims to be the country’s premier energy services company through strategic loadside outsourcing and energy efficiency solutions.
“MRail is going through another rail-related project,” she said of the Meralco unit that is engaged in engineering, construction and maintenance of mass transit system.
Ms. Siy-Yap said the planned borrowing comes after Meralco withdrew its application from the Energy Regulatory Commission (ERC) for the approval of its filing on how much debt it can secure based on its exisiting equity “so that we would not have to go back for each long-term loan arrangement.”
“The market condition at that point also changed. We see interest rates increasing at that time, so we withdrew our request for a [debt-equity] ratio but certainly we would need to borrow and we are exploring other options possible for us,” she said.
ERC regulates the power distribution utility within a so-called “reset period” consisting of four regulatory years. The company’s regulatory year begins on July 1 and ends on June 30 of the following year. Its fourth reset period began on July 1, 2015 and ends on June 30, 2019.
In May, ERC approved a P15.47-billion capital expenditure program for Meralco for 2016, or about P2 billion short of the amount it applied for during the period.
For 2017, Meralco has a pending application for a capital expenditure program amounting to around P15.2 billion for 23 major projects costing P5.6 billion and residual projects at P9.6 billion.
Meralco’s capex program for 2016 comes after the company faced a significant rise in sales in the first four months, largely because of the hot weather. However, sales volume is seen to likely decline in the coming months, amid the onset of the La Niña phenomenon, a weather aberration characterized by heavy rains and flooding.
“In terms of sales volume, it will be a question of to what extent is weather the driver of what we’ve seen. There are other factors... very good economic conditions, positive consumer and business confidence, low inflation, low interest rates... all of these are drivers,” said Oscar S. Reyes, Meralco president and chief executive officer, said.
“People and businesses have more money in their pockets,” he said.
Alfredo S. Panlilio, Meralco senior vice-president, said sales during the first four months of the year “was very strong.”
“We’re going to end the first four months at 12.1% ... so I expect the next few months to be a bit lower, but on top of that I think customer growth would be also strong at 3.9%,” said Mr. Panlilio, who is also the utility’s head of customer retail services and corporate communications.
He said the weather may have an impact on sales for the rest of the year, “surely lower, but hopefully not too low because of the strong economy.”
“We have a lot of new customers coming in -- big and small -- that might still push for growth,” Mr. Panlilio said.
Shares in Meralco rose by 0.8% to P303.40 each on Tuesday.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is party owned by Philippine Long Distance Telephone Co. (PLDT).
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls.
“While we have the cash, certainly there is also a need to borrow,” she added.
Ms. Siy-Yap said Meralco has equity infusion requirements for its subsidiaries Meralco Powergen Corp. (MGen), Meralco Energy, Inc. (MServ) and MRail, Inc.
“MGen certainly is one of them for the equity portion of our investment. Our other subsidiaries are also on expansion mode and that includes MServe and MRail,” she said.
In the case of MServ, she said Meralco, instead of infusing capital, linked the unit with a bank to allow it to borrow directly. MServ aims to be the country’s premier energy services company through strategic loadside outsourcing and energy efficiency solutions.
“MRail is going through another rail-related project,” she said of the Meralco unit that is engaged in engineering, construction and maintenance of mass transit system.
Ms. Siy-Yap said the planned borrowing comes after Meralco withdrew its application from the Energy Regulatory Commission (ERC) for the approval of its filing on how much debt it can secure based on its exisiting equity “so that we would not have to go back for each long-term loan arrangement.”
“The market condition at that point also changed. We see interest rates increasing at that time, so we withdrew our request for a [debt-equity] ratio but certainly we would need to borrow and we are exploring other options possible for us,” she said.
ERC regulates the power distribution utility within a so-called “reset period” consisting of four regulatory years. The company’s regulatory year begins on July 1 and ends on June 30 of the following year. Its fourth reset period began on July 1, 2015 and ends on June 30, 2019.
In May, ERC approved a P15.47-billion capital expenditure program for Meralco for 2016, or about P2 billion short of the amount it applied for during the period.
For 2017, Meralco has a pending application for a capital expenditure program amounting to around P15.2 billion for 23 major projects costing P5.6 billion and residual projects at P9.6 billion.
Meralco’s capex program for 2016 comes after the company faced a significant rise in sales in the first four months, largely because of the hot weather. However, sales volume is seen to likely decline in the coming months, amid the onset of the La Niña phenomenon, a weather aberration characterized by heavy rains and flooding.
“In terms of sales volume, it will be a question of to what extent is weather the driver of what we’ve seen. There are other factors... very good economic conditions, positive consumer and business confidence, low inflation, low interest rates... all of these are drivers,” said Oscar S. Reyes, Meralco president and chief executive officer, said.
“People and businesses have more money in their pockets,” he said.
Alfredo S. Panlilio, Meralco senior vice-president, said sales during the first four months of the year “was very strong.”
“We’re going to end the first four months at 12.1% ... so I expect the next few months to be a bit lower, but on top of that I think customer growth would be also strong at 3.9%,” said Mr. Panlilio, who is also the utility’s head of customer retail services and corporate communications.
He said the weather may have an impact on sales for the rest of the year, “surely lower, but hopefully not too low because of the strong economy.”
“We have a lot of new customers coming in -- big and small -- that might still push for growth,” Mr. Panlilio said.
Shares in Meralco rose by 0.8% to P303.40 each on Tuesday.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is party owned by Philippine Long Distance Telephone Co. (PLDT).
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls.
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