MVP says Meralco may tie up with JG Summit

The Manila Electric Co. (Meralco) may explore synergies with JG Summit Holdings Inc., which is acquiring the stake of San Miguel Corp. in the country’s top distribution utility, Meralco chair Manuel V. Pangilinan told reporters.

Pangilinan said that a number of years ago Meralco and JG Summit had talks about the Gokongwei-led conglomerate’s plans to expand its petrochemical plant in Batangas province and the need for a power plant to supply the required electricity.

“We could revive that (power plant talks) or invest with them on the power plant,” Pangilinan said.

Any excess capacity from the power generating facility could be supplied to the Luzon grid, he added.

However, Meralco has so far only given JG Summit a general view of the company and has not gone into talks on any specific project since the transaction with San Miguel has not been completed, Pangilinan explained.

Presently, San Miguel is still a shareholder of Meralco. San Miguel’s transaction with JG Summit will be done in two tranches.

The first is expected to be completed no later than end-December, and the second will be no later than March next year, Pangilinan said.

JG Summit is buying San Miguel’s 27 percent stake in the country’s top power distribution company for about P72 billion.

JG Summit president and COO Lance Y. Gokongwei said the company would fund the exercise through P50 billion in loans plus cash.

The Gokongwei conglomerate has more than P30 billion in cash, partly from a recent P12-billion placement of food-and-beverage unit Universal Robina Corp. (URC).

JG Summit’s petrochemical plant in Batangas province will open next year. Its naphtha cracker unit will produce raw materials for plastic products and will have its own 4-MW power plant using waste materials.

The naphtha cracker is seen to support the anticipated revival of the Philippine manufacturing industry, which has suffered from raw material supply shortages.

The naphta cracker is expected to produce 320,000 MT of ethylene, 190,000 MT of propylene, 216,000 MT of pyrolysis gas, and other by-products such as methane, pyrolysis, fuel oil and acid gases totaling 925,537 MT yearly.

The petrochemical business is seen to be the “fourth leg” of JG Summit, along with its food and beverage, real estate and airline businesses.