MERALCO plans to raise capex
Monday, August 21, 2006
By NIEL V. MUGAS
The Manila Times Reporter
Manila Electric Co. (MERALCO) wants to raise its capital expenditures next year to undertake major infrastructure projects that are expected to improve distribution, an official of the Lopez family-led distributor said.
Manuel Lopez, MERALCO chairman, said the company wants to increase its budget to at least P6 billion.
At present, the distributor’s capex is fixed at P5.75 billion, which Lopez said is no longer sufficient to finance the utility’s projects.
"We want our capex budget at about P6 billion to improve our electric system and to improve system reliability," he said.
A major project MERALCO is eyeing is the construction of the substation at Fort Bonifacio.
Lopez noted that the increasing power demand in the area, supported by the mushrooming of establishments, justify the need for a substation that will support electricity distribution.
MERALCO, the Philippines’ largest distribution utility with 70 percent of the Luzon market, is slowly reducing its debt.
Under a credit covenant with the Asian Development Bank (ADB) and several commercial banks led by the Bank of the Philippine Islands and Citibank, the distributor cannot increase its capex until it trims down its debts.
These debts refer to a multi-billion, two-tranche loan secured in 2004. These cover a $190 million loan and a P4 billion IOU, all of which are expected to mature in 2009.
Recently, MERALCO settled some of its debts to ADB. The electricity distributor is also expected to make another pre-payment in October, though it disclosed no specific amount.
Improved system reliability is expected to cut down MERALCO’s system losses or the unrecoverable purchased power lost while in transit.
This year alone, the company expects to reduce its system loss to 9.9 percent due to earlier improvements made in the system.
All utilities are allowed to pass on to customers their system loss at a ceiling of 9.5 percent. Cooperatives are allowed to recover up to 14 percent. All system losses beyond the said ceilings should be absorbed by the distribution utilities and cooperatives.
posted by philpower @ 9:35 PM,
