Meralco boosts capex budget for 2012

Manila Electric Co., or Meralco, the country’s biggest power distributor, has beefed up its capital spending to P11.9 billion in 2012 from only P9 billion last year, to further improve its power distribution service and lower systems losses.

In a filing, Meralco said the approved capital expenditure budget was geared to “support projects in areas with large concentration of core customers, give priority to correction of normal deficiencies in the system, stretch the loading limits of Meralco facilities and initiate practical and cost-effective projects.”

About 75 percent, or P8.9 billion, of the planned P11.9 billion spending for the year will be used to fund electric capital projects related to the power distribution business while the rest will be used for non-electric capital projects.

Funding of capital expenditures will be sourced substantially from internally generated cash flow and borrowings from local and foreign financial institutions, Meralco added.

“Meralco is required by the Energy Regulatory Commission to take necessary steps, including making necessary capital expenditures, to build and maintain its network so as to meet minimum performance and service requirements,” the company explained.

Oscar S. Reyes, senior executive vice president and chief operating officer of Meralco, earlier said that the bulk of the budget will be used for the construction and upgrade of substation facilities, power transformers and distribution lines and feeders.

This move, Reyes said, would ensure that Meralco would continue to have a strong distribution system despite the expected increase in the power load over the next few years.

Meralco also earlier disclosed that a portion of this year’s capex budget was to be earmarked for the P253 million Implementation Services of the Prepaid Electricity Management System project (IS-PEMS), which will enable the utility to lay down the necessary technology and infrastructure and allow for the seamless implementation of the prepaid retail electricity scheme.

The approval to proceed with this project, however, remained pending with the ERC.