Meralco cuts 2001 capex budget

The Manila Electric Co. (Meralco) will set aside a capital expenditures (capex) budget of P6.8 billion for next year, down 21 percent from this year’s outlay of P8.6 billion.

Meralco president Manuel M. Lopez said they have a five-year capex program that is projected to cost P53 billion.

"Everything is dependent on the rate petition," Lopez said during an interview at the 13th Conference on the Electric Power Supply Industry (CEPSI) held at the Philippine International Convention Center (PICC).

Meralco filed a P0.30 per kilowatthour (kWh) rate hike petition in April this year. Meralco said it needed the increase to reach an eight-percent return-on-rate-base (RORB) and comply with the provisions of a loan agreement with international creditors.

Last year, the company had a capital outlay of P7.9-billion and a net income of P3.3 billion, or lower than the P5.013 billion the year before.

A full-year four-percent RORB or less will make it very difficult for the company to draw the foreign loans.

Meralco loses approximately P500 million per month or roughly P1.5 billion since May this year resulting in the cancellation or temporary shelving of its development projects.

Lopez said the company has shelved its planned bond float due to uncompetitive rates. He said their creditors have expressed concern over the delay in the rate hike and the chances of Meralco reaching an eight percent RORB.

"I am not sure anymore how the World Bank/International Finance Corp. and the Asian Development Bank will think about our RORB," the Meralco president said, adding that it could be the third consecutive year wherein the company has been in technical default to achieve the prescribed condition of the international creditor banks.

Meanwhile, Lopez said they have shelved their plan to borrow $150 million to $200 million from sydnicate banks led by Citibank. "I do not think that it is time to go to the (international loan) market at this time."