TransCo, Meralco set to ink P700-M purchase contract

The National Transmission Corp. (TransCo) and the Manila Electric Co. (Meralco) is set to finalize an agreement for the purchase by the latter of more than P700 million worth of sub-transmission assets (STAs).

TransCo president Alan T. Ortiz said the sale will be made in two tranches of almost equal amounts.

"If the sale is consummated, it would be the single biggest STA purchase," Ortiz said.

TransCo expects the first tranche to be completed within the year. Meralco president Jesus Francisco, in a separate interview, said the company intends to borrow close to P1 billion from the Asian Development Bank (ADB) to purchase STAs of TransCo.

Of the P7-billion STAs to be sold by TransCo, about P4 billion is located within the franchise area of Meralco.

Ortiz said Meralco could also avail of the financing package being offered by the Development Bank of the Philippines (DBP).

Under Republic Act 9136 or Electric Power Industry Reform Act of 2001, Transco is mandated to sell its STAs or those assets with a capacity of 69 kilovolt (kV) or less, the distribution utilities and electric cooperatives.

Transco has offered the assets to electric cooperatives via the lease purchase financing program.

Under this scheme, electric cooperatives will be allowed to give a downpayment equivalent to 20 percent of the selling price, with the balance to be spread out via over a period not exceeding 75 percent of the remaining life of the assets.