Meralco sets $5.2-B projects till 2019

SINGAPORE – Manila Electric Co. (Meralco), the largest power distribution utility in the Philippines, plans to enter into more than $5.2 billion worth of projects until 2019, a top company executive said.

The massive spending is aimed at improving the company’s distribution network and creating a large power generation portfolio to ensure efficient supply.

“The capital expenditures is P65 billion for the distribution utility business. For 2013 alone, it will be close to P13 billion,” Meralco president and CEO Oscar Reyes said in a briefing.

For its expansion into the power generation business, Reyes said Meralco will pour in around P30 billion ($737 million) as its equity investment for numerous power projects from 2013 to 2019.

Reyes said total project cost of the power generation projects is estimated at $4.5 billion, which will mostly be funded through debt financing.

Meralco, through subsidiary Meralco PowerGen Corp., is looking at reaching a generating capacity of 2,700 megawatts (MW) from now until 2020. The portfolio will be composed of four 375-MW liquefied natural gas power plants and two 600-MW coal-fired power plants.

This includes the 600-MW coal power plant in the Subic Bay Freeport Zone in partnership with Aboitiz Power Corp. and the local unit of Taiwan Cogeneration International Corp.

“Meralco’s intent is to partner with other companies. Meralco wants to be a significant shareholder at 50-51 percent,” Reyes said.

He said the power generation portfolio will ensure steady and cost-efficient supply of electricity in the long run as demand growth continues.

The firm’s distribution business is also scheduled for a long-term expansion.

Specifically, Meralco will be pursuing the smart grid, build and upgrade 60 sub-transmission assets, put up 21 new substations and upgrade 150 distribution systems.

Smart grid means “computerizing” the electric utility grid. It includes adding two-way digital communication technology and computer processing from power plants all the way to electricity consumers.

Meralco also plans to grow the existing franchise area, buy into other distribution utilities in the country, and engage in retail electricity supply.

Last year, consolidated customer accounts of the distribution giant grew 3.2 percent to 5.19 million from 5.02 million a year ago while  sales jumped to 32,771 gigawatt-hours (gwh) from from 30,592 gwh in 2011.

System loss was cut to an all-time low at 7.04 percent last year from 7.35 percent in 2011 and 7.94 percent in 2010. System loss refers to energy lost or wasted as electricity is transported, and as well as unaccounted use like theft.