Meralco seeks another waiver from ADB, WB

The Manila Electric Co. (Meralco) is seeking another waiver from the Asian Development Bank (ADB) and the World Bank (WB).

The request is contained in a letter sent to WB and ADB last December, Meralco vice president for finance Daniel Tagaza said.

The new waiver, Tagaza said, will be for 2002. "We did not meet the required return-on-rate-base (RORB) for last year. The same happened in 2001," he said.

In 2001, Tagaza said only the WB granted the company’s request for a waiver. This time around, he said the company is optimistic that both institutions will approve the granting of a waiver.

"This is just a requirement we need to submit to the Energy Regulatory Commission (ERC). We are hopeful they (banks) will approve it (waiver)," he said.

He said they need to submit the audited financial statement to support their waiver application with the banks.

"We have to furnish them with our audited financial statement. We will come out with the statement after the firm’s board approves it middle of this month," he said.

Tagaza said that as of end-2002, the company’s RORB reached only three percent, way below the eight percent prescribed under the loan contract with WB and ADB.

RORB is a measure of the company’s profitability. In 2001, Meralco’s RORB stood at five percent.

The Meralco official said they expect the RORB to hit below the three-percent level if the ERC will not approve the firm’s rate increase, which is still pending.

Meralco’s RORB started to deteriorate in 2002 due to failure to get approval from the ERC for a 30-centavo increase in its basic rate. The company submitted its application for a rate hike in April 2000.

In a related development, Meralco said yesterday it expects to post an unaudited net loss in 2002 after government regulators allowed the firm to recover just a portion of its expected collections from deferred power charges.

The Philippines’ largest power retailer did not give figures, but its announcement indicates a reversal from its 2001 net income of P1.48 billion.

Meralco had recorded net profit of P747.18 million in the first nine months of 2002. The firm previously said it expected a 65 to 70 percent annual drop in its 2002 net income.

The company has not set a date for the release of its full year results, but regulators said companies have until April 15 to submit their audited earnings.