Meralco eyes purchase of Pampanga electric co-op

Business Mirror
by Lenie Lectura - October 30, 2015

THE Manila Electric Co. (Meralco) is looking at acquiring another electric cooperative (EC) in Pampanga to expand its presence in the distribution sector, more particularly, outside of its franchise area.

“We’re looking at distribution utilities in the provinces, quite a number we’re looking at. Probably another Pelco [Pampanga Electric Cooperative Inc.],” Meralco Chairman Manuel V. Pangilinan said.

Preparation to acquire the said EC would start next year, he added. Pangilinan, who was born in Apalit town, did not identify if Meralco would acquire Pelco I or Pelco III.

In 2014 Meralco took over the management and operations of the beleaguered Pelco II, which supplies electricity to the towns of Guagua, Bacolor, Santa Rita, Lubao and Porac. This, after Meralco and Comstech Integration Alliance Inc. (Comstech) won the bidding for the Investment and Management Contract (IMC) of Pelco II.

Under the 20-year contract, Pelco II will still own the cooperative, but Meralco and Comstech will manage and operate it under the IMC. The contract provides that Meralco and ComsTech will assume responsibility for the electric cooperative’s debts with the National Electrification Administration (NEA) and its power supplier. Just recently, the Power Sector Assets and Liabilities Management Corp. (PSALM).received in full the balance of the restructured obligation of Pelco II amounting to almost P1.1 billion.

Backed by IMC and a loan from the Philippine National Bank, Pelco II was able to prepay its restructured account with PSALM, which originally amounted to P1.43 billion to be amortized within a period of 10 years beginning October 2010.

The government is encouraging ECs to consider IMC as an option to address their financial concerns. When asked of Meralco’s participation in the debt payment of Pelco II, Pangilinan said, “Management is there already. So, they are starting to turn it around, investing slowly in capex [capital expenditure].”

Meralco is the country’s largest electric-power distribution company. It is bent on acquiring DUs and/or ECs not only to expand its presence, but to provide improved service and least cost of electricity outside of its franchise area.

The utility firm has a franchise service area covering 9,337 square kilometers and distributes power to over 5 million customers in 34 cities and 77 municipalities in Metro Manila, the provinces of Rizal, Cavite and Bulacan, and parts of the provinces of Pampanga, Batangas, Laguna and Quezon. It supplies power to about 75 percent of the power in Luzon and 55 percent of the whole country.

Meralco President Oscar S. Reyes earlier said Meralco is “looking for new opportunities in new areas.” In particular, Reyes said the utility firm is “looking in the north from Pampanga all the way to La Union. In the south, from parts of Laguna, where we are not yet there, to Batangas.”

He added that Meralco’s interest could be “as far as parts of the Visayas and Mindanao.”

“There are areas where Meralco can be of value because we have the resources, we have the track record and we have the experience,” Reyes said. source