Meralco firms up focus on domestic expansion

MANILA,Philippines — Manila Electric Co. (Meralco) is focusing its expansion domestically after its overseas ventures are unfruitful, its top official said.

“I think Meralco should focus domestically,” Meralco chairman Manuel V. Pangilinan said when asked about expansion outside the Philippines.

His statement came after Ghana recently cancelled the concession agreement with Meralco and partners for the operation and maintenance of the assets of the Electricity Company of Ghana (ECG).

The concession agreement was terminated nearly three months after it was suspended “due to alleged material breaches in the provision of the Demand Guarantees by the Power Distribution Services Ghana Ltd. (PDS).”

PDS is the special purpose vehicle created by the consortium  between Meralco through Meridian Power Ventures Ltd. (30 percent), Angola-based firm AEnergia SA (19 percent), and three Ghanaian firms namely TG Energy Solution Ghana (18 percent); GTS Engineering Ghana Ltd. (10 percent), and TBK Ghana Ltd. (10 percent).

The Meralco-led PDS signed the concession agreement with ECG on March 1, a year after Millennium Development Authority (MiDA) chose Meralco as the preferred bidder for private-sector participation in ECG and the Parliament of Ghana approved the 20-year concession agreement.

Under the agreement, ECG’s assets would be leased to the PDS, while the ECG would become an asset holding company.

Meanwhile, Meralco is also sorting out issues in its Singapore power investment, which is undergoing restructuring and consolidation.

“As you know there’s a consolidation effort being undertaken by the bigger power generation companies in Singapore. So we are party to that combination because we think it will help reduce the capacities if that consolidation should happen and the more efficient plants like our plant in Singapore will continue to operate,” Pangilinan said.

 “In the end, it’s up to regulators in Singapore and up to the banks to agree to the restructuring of the combined debts of the Pacific Light and Petronas and this particular power company Singapore,” he said.

Pangilinan said they would consider selling if there’s a buyer for their stake in Singapore.

“But there’s probably no buyer because it’s losing money and the industry is actually under pressure. I would say the industry as a whole is not making money. It depends on the price too,” he said.

It was in 2013 when Meralco first expanded abroad with the $600-million acquisition of Singaporean power firm, now called PacificLight Power Pte. Ltd.

This as it joined Hong Kong’s First Pacific Co. Ltd. to form FPM Power Holdings Ltd. (FPMP) to take a 70 percent interest together in a 2x400-megawatt (MW) liquefied natural gas (LNG) power plant being built under GMR Energy (Singapore) Pte Ltd. at that time.

However, given the surplus of power capacity in Singapore, the project has become less viable.

First Pacific, also led by Pangilinan, had said it is looking at several options which include partnering with other companies or just selling its stake in the plant, but nothing has been finalized yet.