Meralco eyes Napocor generating assets

After divesting most of its power generation business more than three decades ago, Manila Electric Co. (Meralco) has revived interest to bid for the generating assets of the National Power Corp. (Napocor).

Meralco chairman and chief executive officer Manuel Lopez told a press conference yesterday that the power firm’s board has seen "the attractiveness of the power generation (business)".

"This is something that our board decided upon. We are looking at various options. We may go into greenfield projects or look at the assets of Napocor, particularly geothermal," Lopez said.

Lopez pointed out that this endeavor will be made separately from its affiliates First Gas Corp. and First Gen Corp., which are also bidding for Napocor assets.

"Meralco is charting it on an independent course," he said, noting that Meralco has a different set of shareholders.

Meralco president Jesus Francisco, on the other hand, said they would use subsidiary Meralco Energy Inc. (MEI) as an investment vehicle for this purpose.

Last year, MEI gave up its electric facilities management business and shifted its strategy to focus on energy services business and look for opportunities created by the electricity industry deregulation.

Since then, MEI has been entrusted by Meralco’s power supply management committee to evaluate the possible acquisition of some generating assets being privatized by the Power Sector Assets and Liabilities Management Corp. (PSALM), a government arm which handles the privatization of Napocor assets.

According to Francisco, MEI submitted and bought the bidding documents from PSALM to be able to participate in the bidding for the 700.73-megawatt (MW) Tiwi-Makban geothermal complex, 360-MW Magat hydro complex and 112-MW Pantabangan-Masiway hydro complex.

Meralco expects the completion of the bidding processes for these assets before the end of this year.

MEI is also considering becoming a retail electricity supplier (RES) that would sell electricity to the contestable market once retail competition starts.

It is now studying the rules and the economics pertaining to buying and selling of power as promulgated by the Electric Power Industry Reform Act of 2001.

Meralco is into indirect power generation business through one of its subsidiaries – First Private Power Corp. (FPPC)-which has an investment in Bauang Private Power Corp.

As of end-2005, Meralco has P164.34 billion worth of assets. It serves some 4.3 million customers.

Todate, the company has a total outstanding loan of P15 billion which will be paid in seven years. So far, the company has to set aside some P2 billion every year to settle these outstanding loans.

Meralco executive vice president and chief finance officer Daniel Tagaza said some of these loans are being paid on quarterly and semi-annual basis.