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TUESDAY, 31 MAY 2011 21:20 PAUL ANTHONY A. ISLA / REPORTER
Manila Electric Co. (Meralco), the country’s largest power distributor, expects its financial performance this year to be better than last year, Manuel V. Pangilinan, company president and chief executive, said on Tuesday.“Our financial position is going to be certainly ahead this year compared with last year. Overall, core net income for the year is expected to be better this year compared to last year,” the Meralco official told reporters in a press conference after the company’s annual stockholders’ meeting.
Pangilinan declined to provide specific guidance numbers, but quickly described that Meralco’s core net income in the first half is expected to be ahead than the same period last year.
“We choose to be cautious about our outlook for 2011, the presence of promising opportunities for Meralco provides continuing optimism. We have expressed our intent to return to power generation and to diversify into allied businesses. Our affiliation with the infrastructure businesses of the sector companies provides fertile ground for our products and services—existing and new—to grow into,” he said.
Pangilinan said the second-half performance remains uncertain because this period is when the tariff reset—pending the approval of the Energy Regulatory Commission—will take effect by July.
Pangilinan said they will focus on strengthening the core distribution utility business and that improving efficiencies is a continuing agenda because of the customers’ growing requirements and need for reliable, quality, efficient and affordable service.
The Meralco executive emphasized on the need to create a vertically integrated business model with the planned entry into the power generation business.
“Our participation in generation should help alleviate the need anticipated supply predicament as reserves from existing power plants tighten. This, too, will enable us to manage the perennial concern about high power rates,” he said.
Pangilinan added that their power generation portfolio carries a goal of building an aggregate capacity of 1,500 megawatts (MW) at a total estimated cost of about $2.3 billion over the next five years.
“This is a diverse package potentially consisting of busload coal-fired power plant, liquefied natural gas and aeroderivative gas turbines that adopt the high-efficiency capabilities of aircraft engines for peaking requirements,” he said.
Oscar Reyes, senior executive vice president and chief operating officer, said they will be initially focus on putting up their first coal-fired power plant that will likely involve local and regional players.
Reyes declined to specify the coal-fired power plant’s cost, but said a coal power plant usually costs about $2 million per megawatt to construct. He said Meralco is looking at a capacity requirement of 300 MW to 450 MW. They hope to put up the power plant by 2014 or 2015 as construction is scheduled to begin this year.
In 2010, Pangilinan told stockholders that Meralco’s core net income increased by 74 percent to P12.2 billion, while consolidated net income grew by 61 percent to P9.7 billion from P6 billion in 2009.
Pangilinan attributed the increase in net income to the surge in energy sales volumes at 30,247 gigawatt-hours (GWh) last year from 27,516-GWh in 2009. As result, consolidated revenues rose 33 percent to P245.5 billion last year from P184.6 billion in 2009.
“Our electricity sales accounted for 97 percent at P239.1 billion last year from P178.7 billion in 2009. This, as the average distribution rates last year amounted to P1.44 per kilowatt-hour (kWh), which included the rate adjustment under the second regulatory period of the performance based regulation rate implemented in April 2010. The adjustment set the Maximum Average Price at P1.4917/kWh for the regulatory year 2019,” Pangilinan said.
IN PHOTO -- MERALCO executives (from left) Alfredo Panlilio, senior vice president and customer retail services and corporate communications head; president and chief executive Manuel Pangilinan; and chairman Ambassador Manuel Lopez discuss the plan for the utility firm to adapt to the new generation electricity network that has the potential to create new products and services while elevating energy reliability and efficiency to eventually help bring down costs. --Paul Anthony Isla
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