Business Mirror
Published on Tuesday, 23 April 2013 20:11 Written by Lenie Lectura / Reporter
Manila Electric Co. (Meralco), the country’s largest power-distribution utility, is open to increasing its stake from 5 percent to up to 20 percent in a consortium that was awarded with a contract to operate two distribution firms in Nigeria.
“We are open to it but it depends on the exact nature of viability of investment but we’d like to take a look at it on the point of view of being more of a service provider to IEDM [Integrated Energy Distribution and Marketing Ltd.],” said Meralco Chairman Manuel Pangilinan.
IEDM is a special purpose vehicle tasked to facilitate businesses in electricity distribution and marketing in the emerging Nigerian electricity market. It made a bid to take over the distribution utilities in Nigeria.
Meralco, he said, partnered with IEDM by taking in a 5-percent stake in the consortium valued at $31,500.
“IEDM doesn’t have any background experience in distribution system. This is for two distribution utilities in Nigeria. They came over many months ago to ask us to partner with them. It is essentially a service agreement. Now, we’ve taken a 5-percent equity stake in IEDM, which costs us about $31,500. However, we’ve been given an option to purchase 5-percent carried interest in IEDM and a further option if we wish to go up to 20 percent,” said Pangilinan.
IEDM officials are expected to arrive in the Philippines this week to thresh out and finalize details of the agreement, including the terms of the option. Should Meralco take the offer to further acquire more stake, Pangilinan said the amount of investment would not cost as much as the $488-million deal it recently sealed to acquire a 70-percent stake in a liquefied natural gas-fired power plant in Singapore.
“The consortium has been awarded and the consortium is expected to take over the areas that they’ve won by the third quarter of the year. We’re still in discussions to finalize exactly the shape of the technical partnership. There’s a team coming over this week from IEDM,” added Pangilinan.
Meralco’s investment in Nigeria will increase the utility firm’s footprint overseas. “It’s exposure to offshore operations and provides employment. It will also be income accretive to us,” said the official when asked how the utility firm will benefit from the deal. source
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