Meralco sets aside P1B for two indoor substations

Lopez-owned Manila Electric Co. (Meralco) will spend more than P1 billion this year to put up at least two new in-door substation or gas-insulated switchgear (GIS) within its franchise area, a company official said over the weekend.

Meralco team leader for sub-station, design and construction Jose Mari Melendres told reporters in a press briefing over the weekend that they have programmed to construct one GIS in Coastal Road in Parañaque and another one in Legaspi Village in Makati City.

The GIS is a substation that is designed to meet the aesthetic needs of the community where the facility is located.

"Unlike the outdoor or conventional switchgear which is exposed, the GIS is designed to blend with the need of the environment," he said.

Melendres said the project cost for each high-technology GIS would reach more than P500 million. This amount is higher than the previous cost of only P300 million to P350 million.

The Meralco official said they have started the construction of the Coastal-based GIS last April.

He said the GIS in Makati will start in August this year and will be completed by February or March 2005.

Aside from these two new GIS, the company has similar facilities located in Cubao, Edsa Shangrila, Hillcrest, Grace Park and Tutuban.

According to Melendres, they intend to expand other switchyard in Imus, Cavite; Urdaneta, Pangasinan; Sta.Cruz, Laguna and Baliwag, Bulacan.

The official said the expansion is necessary to provide more efficient power to Meralco’s customers.

He likewise pointed out that if no expansion program is implemented or if the capital expenditure of the company continues to drop due to financial problems, Meralco’s service will definitely deteriorate and may lead to massive power outages in the near term.

"In two to three years time, if the government will not do something about the financial problems of Meralco, there will be blackouts in our franchise area," he said.

Meralco has been adjusting its capital expenditure (capex) to cope up with its cash flow problems.

For 2004, it has pegged its capex at P5.75 billion after the Supreme Court suspended its provisional authority (PA) to collect an additional 12 centavos per kWh which should have been reflected in the January 2004 billing statements of its more four million customers.

"Our capex for 2004 had always been pegged between P5.5 to P5.75 billion. We just adjusted it upwards after we received our P.A. for the 12 centavo per kwh rate increase. When it was rolled back, we said we have to go back to the original budget because we can not support it. Now, we have approved a P5.75 billion budget for the year," Francisco said.

In 2002, Meralco spent close to P6 billion in capex though it only programmed a P5.5 billion budget during the period.