Meralco to raise funds for projects, debt refinancing

MANILA, Philippines - Power utility giant Manila Electric Co. (Meralco) is eyeing to raise additional funds to finance projects in the pipeline and refinance its maturing debts, a top company official said yesterday.

Meralco chief finance officer Betty Sy-Yap told reporters that it is now an opportune time to tap the debt market.

We’ve been approached by a lot of bankers. There are opportunities for us to re-finance our debt and we’re also looking at new projects that would require us to source funds from borro-wings,” she said.

She said they are looking at the fund-raising scheme anytime soon.

“We’re planning it within the year. Nothing final yet but before we can actually source it, we have to have firm up our projects — it’s projects first then we’ll go to financing. We’ve never seen such low interest rates. It’s really an opportune time for us to (borrow),” she said.

But Yap said they have not decided yet on the amount of the funds to be raised since this will depend on the amount needed for their projects.

She added that they are eyeing several power generation projects.

“As long as we have a project. As long as we have a good project. And we’re looking at a couple of good opportunities for power generation,” she said.

The Meralco official said they are already in talks with several local and foreign banks. “We are talking to a mix of foreign and local banks. But a lot of them are local banks. Interest rates are very low, there’s so much liquidity in the banking system today. And I think the confidence of investors in the Philippine business environment allows that,” she said.

Meralco chief operating officer Oscar Reyes, for his part, said they are eyeing clean coal and natural gas in power generation projects.

“It appears that there is a need for some peaking capacity. So, we’re addressing that. Secondly, we see that there is also some need for mid and base-load plants. In terms of base-load plants in the short-term, I think we’ll look into two potential plants: one is clean coal power plant and second is, subject to availability, natural gas, I think longer-term, we’ll probably look into natural gas,” he said.

Reyes said hydro and geothermal now offer limited capacities.

The potential for hydro and geothermal is limited. In fact the necessary adequate supply of fuel, we have to find more coal resources. We’ve got to find more natural gas resources. Otherwise, we will depend on foreign supply of fuel, and that’s affecting our cost of power generation,” he said.

He said Meralco would be eyeing at least 600 megawatts of new capacities to ensure supply for its franchise areas.

According to Reyes, they would have a definite plan for its power generation venture by early next year.

“I think, we would probably want to do that within the first half of 2011,” he said.