In an interview on Thursday, Meralco president Oscar Reyes confirmed market news that Meralco would invest in Nigerian power distribution as the technical partner of Lagos-based Integrated Energy Distribution and Marketing Ltd. (IEDM), a company that distributes and markets electricity in Nigeria.
Established in 2006, IEDM is a “well respected” group in Nigeria, Reyes told the Inquirer.
“We were [asked] sometime last year … if we wanted to help support or work with one of the major bidders for the Nigeria privatization,” Reyes said at the sidelines of the Bank of the Philippine Islands’ annual stockholders’ meeting.
As part of Nigeria’s effort to privatize its power industry, the government first auctioned off generation assets and distribution assets.
Reyes said Meralco was introduced to IEDM by a European advisory firm that was also helping the Nigerian government in its privatization efforts. After some discussions, Reyes said, Meralco agreed to provide technical support to the group.
“We were technical partners in the bidding, but the technical partner also has a small equity stake,” Reyes said. The stake that Meralco will get is still under discussion. But Reyes estimated that it should be at least 5 percent.
The consortium backed by Meralco ended up winning all four of the power distribution contracts that the Nigerian government would cede to the private sector. But Reyes said that, under the rules, the group can only take over two of the distribution utilities.
Asked about how much Meralco would need to invest in the venture, Reyes said the company would still have to value the deals.
Reyes said Meralco’s partner IEDM was “very pleased” especially because the selection was mostly anchored on the technical partners’ capability. At the same time, he said, a lot of international groups participated in the auction, including Kepco (Korea Electric Power Corp.), which also has interests in the Philippines.
“It’s a good recognition of Meralco,” Reyes said of the venture.
The deal will also increase Meralco’s footprint overseas. Last month, Meralco and its controlling stockholder First Pacific Co. Ltd. of Hong Kong sealed a $488-million deal to acquire a 70-percent stake in a liquefied natural gas (LNG)-fired power plant in Singapore.
Meralco, which is part of the group led by businessman Manuel V. Pangilinan, had a market capitalization of P406.88 billion based on Thursday’s close.