MPIC boosting Southeast Asian exposure

MANILA, Philippines - Infrastructure conglomerate Metro Pacific Investments Corp. (MPIC) is increasing its exposure in Southeast Asia through its tollroad and water distribution units.

MPIC intends to pursue new investment opportunities in the Philippines even as regulatory risks might dampen revenues of Maynilad Water Services Inc. by P2 billion annually in the medium term, officials said.

“We continue to look at water and tollroad projects in the region, particularly Indonesia and Thailand. We are taking a prudent position by partnering with local firms,” MPIC chief financial officer David J. Nicol said during the company’s annual stockholders meeting.

“The two businesses we’re attracted to are tollroad and water businesses. We have one in Thailand right now and we are evaluating opportunities in Thailand and Indonesia,” Nicol said.

MPIC has taken a look at Myanmar but it still has to bear fruit, while Vietnam poses a number of opportunities but at high prices, Nicol said.

In November, Hong Kong-based parent firm First Pacific Co. Ltd. and MPIC formed a joint venture to acquire a 24.9-percent stake in Thai tollroad operator Don Muang Tollway Public Co. Ltd (DMT) for P5.8 billion.

DMT operates a 21.9-kilometer, six-lane elevated toll road stretching from Din Daeng in central Bangkok past Don Muang Airport and on to the National Monument in the north of the capital under a 27-year concession ending in 2034.

MPIC president and CEO Jose Ma. K. Lim said the Thailand tollroad business is doing well despite the political turmoil.

“The company is hitting its budget. This is done by offsetting slightly lower traffic with tighter management of costs and expenses,” Lim said.

“In Indonesia, we are waiting for elections to happen so we can resume our initiative there to get into water in Jakarta,” Lim said.

For its part, power distribution giant Manila Electric Co., which has a 2x400-megawatt liquefied natural gas power plant in Jurong Island in Singapore through GMR Energy (Singapore) Pte. Ltd., is also looking at other projects here and abroad, Lim said.

“Additional growth could come from winning one or two bids from the Public-Private Partnership (PPP), acquisitions in the Philippines outside of the PPP and further investments in ASEAN,” said MPIC chairman Manuel V. Pangilinan.

The government, through the Department of Public Works and Highways, is bidding out the P35-billion contract to build and operate the 47.02-kilometer Cavite-Laguna Expressway (CALA) next week.

“We plan to build on our own. The tollways group is very qualified to take it on their own and we don’t need a technical partner because we already operate roads,” Lim said.

Metro Pacific Tollways Corp. president Ramoncito S. Fernandez said the company may sell 20-30 percent of the P80-billion tollroad to an investor to fund new projects like the CALA Expressway.

MPIC intends to continue expanding its businesses in the Philippines despite dangers of huge losses from a tariff dispute with the water business regulator.

“If we were to lose, you imagine we’ve got P70 billion to invest and then our cash goes down by P2 billion a year so suddenly it makes it harder to afford the P70 billion in a five year period,” Nicol said.

“So because of that, we can’t take dividends out...and we may need to put more equity here,” Nicol said.

Last year, Maynilad sought arbitration from the International Chamber of Commerce following the order of Metropolitan Waterworks and Sewerage System (MWSS) to reduce rates despite the west zone concessionaire’s petition for a rate increase.

A three-member appeals panel would conduct the arbitration proceedings in accordance with the rules of the United Nations Commission on International Trade Law.