Meralco firms up plan to buy TransCo assets

The Manila Electric Co. (Meralco) is firming up the purchase of about P900 million worth of sub-transmission assets (STAs) of the National Transmission Corp. (TransCo).

Meralco president Jesus Francisco told reporters that they have already included in their application for the performance-based rate (PBR) with the Energy Regulatory Commission (ERC) the budget for the acquisition of the STAs.

 “We have asked the ERC to include the purchase of STAs in the list of our capital investment for our PBR application,” the Meralco official said.

Francisco said they would purchase TransCo’s STAs in two tranches.

The first batch, amounting to P300 million will be acquired in 2008 while the purchase of the remaining P500 million will be concluded in 2009.

According to Francisco, they have yet to determine how to finance the acquisition.

“If possible, we want to pay it in staggered basis.  But we have to talk with TransCo because apparently they want us to pay in cash,” he said.

Francisco said if the ERC will approve the inclusion of the STAs acquisition in the PBR computation, “then we will have to look for ways to fund it.”

Under Republic Act 9136 or the Electric Power Industry Reform Act of 2001, TransCo is mandated to sell its STAs or those assets with capacity of 69 kilovolt and below, the distribution utilities and electric cooperatives.

Meralco’s optimism to buy these STAs was anchored on the perceived improvement in the company’s financial condition this year.

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