Meralco on track to hit P17-B net income target

HONG KONG—The country’s biggest power distributor, Manila Electric Co., is on track to hit a core net income of at least P17 billion this year and is keen to sustain growth momentum by upgrading its capital spending budget for next year.

Meralco president Oscar Reyes said that in line with the company’s commitment to invest heavily in its distribution business, capital spending for 2014 would be increased to P15.6 billion from about P10.8 billion this year.

“This is to ensure reliable, adequate and cost-competitive power to our residential, commercial and industrial customers,” Reyes said in a press briefing conducted by companies under infrastructure holding firm Metro Pacific Investments Corp., a unit of Hong Kong-listed First Pacific Co. Ltd.

The utility earlier said that capital spending would be about P13.5 billion in 2014. The level was raised as Meralco factored in new tourism, industrial and business process outsourcing (BPO) office projects in the country. For instance, Reyes noted three new big entertainment hubs opening in Pagcor City by 2014-2015 now being built by the Okada, Travellers and Belle-Melco Crown groups. He also noted the expansion of many industrial estates to accommodate new locators while in the service sector, demand from BPOs continued to be strong.

For this year, Reyes said Meralco was in line with its guidance to post a core net income “north of P17 billion,” boosting core profit from P16.3 billion in 2012 and P14.9 billion in 2011.

In the last five years, Meralco has expanded its customer base by an average 3.3 percent a year to 5.36 million.

On the other hand, energy sales volume grew by 2.8 percent this year from 2012.

Meralco is likewise building up its power-generation capability. Site preparation for its two 300-megawatt (MW) Redondo Peninsula Energy project in Subic Bay had been largely completed and the contractor selected. A civil case invoking the Writ of Kalikasan—a law that protects the environment— is now in the Supreme Court.

For the 460-MW San Buenaventura power project in Mauban, Quezon, a partnership with the EGCO group (which holds a 49-percent stake in the project), contractor bids were received in end-November. The new plant is targeted for completion by 2017-2018.

Meralco is also undertaking a feasibility study together with Chubu Electric for a new LNG (liquefied natural gas) or coal plant in Atimonan, Quezon.

Meanwhile, Reyes said the impact of Supertyphoon “Yolanda” on its franchise area was “fairly benign,” estimating total damage cost at only P4.76 million. Foregone energy sales were at around 8.71 gWh affecting 421,956 customers or 8 percent of its total base through sustained or momentary power interruptions during the period, mostly in the southern part of Metro Manila.