Meralco to spend P95B up to 2019, eyes Asian opportunities

Business World Online

Posted on February 04, 2013 09:59:14 PM

POWER UTILITY Manila Electric Co. (Meralco) plans to spend a total of P95 billion up to 2019 to boost its power distribution and generation business and is eyeing opportunities elsewhere in Asia, its top official said last weekend.

“We are estimating that a total capital expenditure (capex) investment of P95 billion from 2013 to 2019 would power the nation to sustain its growth trajectory leading to a brighter and more progressive Philippines,” Oscar S. Reyes, Meralco president and chief executive officer, told reporters in a briefing at the Shangri-La Rasa Sentosa Resort & Spa in Singapore last Saturday.

Of the P95-billion budget, the company will allot P65 billion for distribution, while power generation will take the remaining P30 billion, Mr. Reyes said.

This year alone, Meralco has earmarked P13 billion for capex, bulk of which will be for the upgrade of current facilities.

Meralco engages in generation projects through its wholly owned subsidiary, Meralco PowerGen Corp., which last week disclosed plans to tap opportunities presented by Mindanao’s growing electricity requirement through a tie-up with Metropolitan Bank & Trust Co. unit Global Business Power Corp.

Mr. Reyes said in the same briefing that Meralco increased customers by 3.2% to 5.19 million in 2012 from 5.03 million in 2011, and grew sales by 7.1% to 32,771 gigawatt-hours (GWh) last year from 30,592 GWh in 2011. Meralco has yet to release its 2012 annual report.

EYES ON NEIGHBORS
The power distributor has also set its sights beyond the country’s shores, Mr. Reyes said.

“We’re also looking at different countries in the region for power generation and distribution. These include Vietnam, Myanmar, China and Thailand,” he said.

Manuel V. Pangilinan, Meralco chairman, said last month that Meralco was open to partnering with Asian firms for possible “business opportunities,” but did not give details.

“In terms of our potential investments overseas, the aim is to do this in joint venture with other companies, and second this will be fully funded by financing overseas so that they will be self-liquidating, that we will not be utilizing our own funds,” Mr. Reyes explained.

“It’s too early to say, but as they (projects) develop and we have better visibility on an actual venture, then we will make the appropriate disclosures or announcements.”

Mr. Reyes noted that this is a logical next step for his company.

“We’ve seen US, European, Korean, Japanese, and Taiwan companies investing in (power) generation in the Philippines, and I think we’d like to demonstrate that Philippines companies can also look at distribution and generation opportunities in other countries. We’re seeing that with EDC (Energy Development Corp.), for example, which has ventured outside to look at South America,” Mr. Reyes noted.

EDC, a Lopez-led firm, last year broadened its geothermal power portfolio as it secured power concessions in Peru and Chile via joint agreement with Australia-based Hot Rock Ltd.

Meralco, incorporated in 1919, is the country’s largest power distributor with a franchise service area of roughly 9,337 square kilometers. It is into power distribution, generation, and retail electricity supply.

Meralco grew its net income by over a third to P13.77 billion as of September from P10.27 billion in the same nine months in 2011 due largely to a surge in electricity sales.

In the same comparative periods, revenues rose by 13.56% to P214.75 billion from P189.11 billion in 2011, while costs and expenses climbed by 14.01% to P199.43 billion from P174.92 billion.

Beacon Electric Asset Holdings, Inc., Meralco’s biggest stakeholder, is partly owned by Philippine Long Distance Telephone Co. (PLDT). Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a minority stake inBusinessWorld.

Shares of Meralco gained P1.00 or 0.33% to close at P299.80 apiece yesterday from P298.80 on Friday last week. -- Franz Jonathan G. de la Fuente   source