Metro Pacific units to spend P190B in next 5 years

HONG KONG—Infrastructure holding firm Metro Pacific Investments Corp. expects group-wide capital spending in the Philippines to hit close to P190 billion over the next five years alongside expansion plans for its power, water, toll roads and hospital businesses.

In a media briefing at the head office of its principal shareholder First Pacific Co. Ltd., MPIC officials said most of the capital outlay could be internally funded by the operating units such as Manila Electric Co. and Maynilad Water Services Inc. but the parent company would help out with Metro Pacific Tollways Corp. and the hospital group to fund new acquisitions in the pipeline.

MPIC chief finance officer David Nichols said that in the next four years, Meralco would have to spend about P37 billion to boost the power-distribution business and another P64 billion to build a power-generation portfolio.

Meralco chief operating officer Oscar Reyes told the same briefing that the utility would like to build a power-generation portfolio with a capacity of 1,500 megawatts.

Nichols said Meralco would not have to issue new shares to raise money. With its cash flow or earnings before interest, taxes, depreciation and amortization (Ebitda) of P27 billion and P13.6 billion in cash, he said Meralco could use its balance sheet to raise the equity component of the new power generation projects.

“What that means is as far as MPIC is concerned, there is no money needed to put in Meralco to continue its expansion plan. On the contrary, we will continue to enjoy sizeable dividends from Meralco coming from our holdings in Beacon Electric,” Nichols said.

Beacon Electric Asset Holdings is a joint venture between MPIC and a unit of Philippine Long Distance Telephone Co., likewise controlled by First Pacific, that owns 39.1 percent of Meralco.

Meantime, Maynilad will spend about P40.3 billion to boost efforts to reduce non-revenue water (NRW) leakages in its pipeline, adding new customers and building new sewerage plants.

Maynilad is aiming to scale up its service connections to hit the one million mark very soon, after ending at 937,578 in June. It has reduced its NRW to 48 percent and recovered some 400 MLD (million liters a day).

“We are the biggest story in NRW [improvement],” said Maynilad president Victorico Vargas.

Nichols said that given Maynilad’s Ebitda of P9 billion, MPIC would not need to put in new money into the water business.

“On toll roads, the situation is quite different,” Nichols said, noting that on top of the recurring capital expenditure of P2.5 billion over a five-year period, tollroad unit Metro Pacific Tollways Corp. might need to spend about P13 billion for the acquisition of new roads. Another P25 billion is likely needed to embark on the North-South Luzon Expressway connector road and harbor link projects.

With an Ebitda of only P4.3 billion against a net debt of P7.5 billion, Nichols said there was obviously a need for MPIC to infuse more money to expand the tollroad business. MPTC is seen needing P18.5 billion in fresh equity support from MPIC to support such an expansion plan.

For the hospitals group, Nichols said it could fund its regular capital-spending requirement of P3.8 billion for the next five years. However, he noted that this segment would likely need to budget another P3.5 billion for acquisitions.  MPIC, for its part, is preparing to contribute up to P3.5 billion in additional funds to the hospital segment over the next five years.