Meralco scans underserved areas for acquisitions

MANILA, Philippines—The Manila Electric Co. (Meralco) is looking for possible acquisitions in underserved areas in Luzon, Visayas and Mindanao, according to its president and CEO Oscar S. Reyes.

Meralco is looking to acquire distribution utilities and electricity cooperatives in areas where the power distributor can improve services and curb system losses, Reyes said.

“We are looking from Pampanga to La Union, from parts of Laguna to Batangas, and as far as … Visayas and Mindanao,” he said. “Our objective is, are there areas where Meralco can be of value? We want to improve the service where we can.”

Meralco is also venturing into partnerships. The country’s largest distribution utility told the Philippine Stock Exchange that it recently signed a 25-year concession agreement with the Philippine Export Processing Zone Authority (Peza) for the operation and maintenance of power facilities at the Cavite Ecozone (CEZ).

The deal will take effect until May 2039.

CEZ, the largest Peza-owned ecozone, hosts around 400 multinational industrial and commercial locators.

With the concession agreement, Meralco said it was now in a position to provide services within the CEZ area. It will invest a total of P300 million for the improvement of the CEZ power distribution system and customer service facilities.

“The agreement leverages Meralco’s more than 100 years of experience in electricity distribution and customer-centered service in support of Peza’s vision of moving CEZ closer towards being a world-class investment destination,” Meralco said in a statement.

Overseas, the Philippine distributor is flexing its muscles in Nigeria, where it is serving as a technical partner in a power privatization project. Meralco has 5-percent equity in Lagos-based Integrated Energy Distribution and Marketing Ltd. (IEDM), and has the option to raise its stake to as much as 20 percent.

Both Meralco and IEDM are part of a consortium that secured deals to take over two firms privatized by the Federal Republic of Nigeria: Ibadan Electricity Distribution Company Plc. and Yola Electricity Distribution Co. Plc.

Meralco started the joint project in November last year mainly to gain international exposure in bringing down high system losses in a huge franchise area. The company will also earn from fees as a technical partner.

Nigeria is a good opportunity for Meralco to further show its mettle, Reyes said.

“We serve about 25 million people, or a quarter of [the Philippines]. The population served in Nigeria by our partner is 44 million—more than 75 percent [bigger]. They service an area of 300,000 square kilometers. Meralco services 10,000 square kilometers [in the Philippines]—30 times the area. But their system loss is high. That was one of the reasons why we were chosen,” Reyes said.