By: Riza T. Olchondra 12:16 AM June 1st, 2016
Metro Pacific Investments Corp.
(MPIC) is looking at expanding the business of Global Business Power Corp.
(GBPC), a major power generation player in the Visayas and some parts of Luzon
that MPIC unit Beacon Electric Asset Holdings recently took control of.
Asked about his vision for GBPC,
MPIC chair Manuel V. Pangilinan said there would be sustained focus on Visayas.
He said the company also hoped to enter the Mindanao market.
MPIC president and CEO Jose Ma. K.
Lim said the conglomerate might consider GBPC’s expansion into Mindanao if
there were opportunities spotted. For now, he said, the new projects of
GBPC were in Visayas and in Luzon.
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GBPC has about 852 megawatts (MW) of
capacity in coal-fired and diesel-fired power plants, including Panay Energy
Development Corp.’s (a unit of GBPC) 150-MW coal-fired power plant in La Paz,
Iloilo, which is set to start operations this year.
Also, a major expansion is underway
in the 670-MW coal-fired power plant of Global Luzon Energy Development Corp.
(another unit of GBPC) in La Union, which is scheduled to become operational by
2022.
Officials of MPIC said the
conglomerate was switching gears, seeing the booming power sector as a major
new growth driver, which the conglomerate is tapping through unit Beacon’s
controlling stake in GBPC.
“If we take a snapshot of 2016,
which is a year of transition, 54 to 55 percent (of profit) came from power.
That’s distribution and power generation,” MPIC CFO David J. Nicol told reporters.
“About 35 percent is a split between the toll roads and water business. The
balance (or about 10 percent) is contributions from other businesses.”
Lim said Beacon had become a bigger
company with the recent acquisition of the controlling 56-percent interest in
GT Capital Holdings Inc.’s unit GBPC for P22.06 billion. Beacon also has a
35-percent share in Manila Electric Co. (Meralco).
The water business used to be a
major contributor to the conglomerate’s bottomline, Lim said, but recent tariff
issues had slowed its growth. MPIC’s water business is anchored on Maynilad
Water Services, Inc. which is awaiting an international arbitration panel to
resolve its case with Metropolitan Waterworks and Sewerage System (MWSS) over a
deferred tariff hike implementation and the regulator’s refusal to pay the
company for losses incurred from the issue.
“Since we took over Maynilad, and
that was 2007, MPIC has been profitable,” Lim said.
However, in 2013, Maynilad faced a
major challenge to its business.
The MWSS rejected the company’s
petition for an P8.58 per cubic meter (cu.m.) hike in its basic water charge
and instead ordered Maynilad to reduce its rate by P1.46/cu.m. The appeals
panel’s decision resulted in a hike of P3.06/cu.m. in Maynilad’s tariff but the
approved rate includes the corporate income tax (CIT) component—a factor that
was excluded from the lower rate approved for another water provider, Manila
Water Co. Inc. MWSS said it wanted to exclude the tax component for Maynilad as
well. The case is now in an international arbitration panel with Maynilad
filing claims for billions of revenue losses from Jan. 1, 2013 due to the
non-implementation of approved rate hike.
In 2015, MPIC’s consolidated net
income attributable to owners of the parent company jumped 20 percent to P9.6
billion. Consolidated core net income grew 22 percent to P10.3 billion.
For the first quarter of 2016, the
conglomerate posted an 8-percent growth in net income attributable to owners of
the parent company (up to P2.6 billion from P2.4 billion). Core net income
increased 7 percent to P2.7 billion from P2.6 billion.
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