MPIC goes all out in P401-B infrastructure plan

HONG KONG—Pangilinan-led conglomerate Metro Pacific Investments Corp. (MPIC) has bared ambitious plans for the construction of new highways, roads, hospitals, train lines and energy facilities until 2020.

In a briefing here at the weekend, senior MPIC officials said the firm was “fully-committed” to taking a leading role in the country’s infrastructure development, given the wide reach of the company’s interests.

However, officials said funding these projects may be difficult given that many of MPIC’s businesses’ capacity to earn are tied to the government regulators’ ability to deliver on committed tariff increases.

“The level of investment we’re aspiring to make in the Philippines between now and 2020 will take a lot of funding up front,” MPIC chief financial officer David Nicol told reporters.

MPIC’s energy, hospital, road, rail and power subsidiaries have planned about P401 billion in capital spending from 2016 to 2020. Nicol said other potential projects in the group’s “radar” would add P73 billion more in spending.

Save for its hospitals, all of MPIC’s businesses suffer from regulatory risks. Just this year, tariff increases by Maynilad Water Services Inc. and Metro Pacific Tollways Corp. (MPTC) have met delays. Maynilad is already in arbitration proceedings with the government in connection with its claim for sovereign guarantee for its losses.

Separate arbitration proceedings for the delayed tariff increases at the MPTC-controlled North Luzon and Manila Cavite expressways (NLEx and Cavitex, respectively) may begin next year.

Manila Electric Co. (Meralco), which distributes power for all of Metro Manila, also needs the government’s green light before hiking rates. Even MPIC’s new businesses will operate under similar conditions.

MPIC is also involved in the ongoing refurbishment of the country’s Metro Manila’s oldest commuter train line, and plans to make a bid for the development of provincial airports.

Nicol said all MPIC businesses would be expanded significantly over the next four years given the growing demand among consumers. Increasing urbanization will also put more strain on the firm’s power, water distribution and road assets, among others.

Part of MPIC’s capital expenditure will come from debt and new equity, but a significant portion or over half of the budget would be funded from cash from operations—making reliable tariff increases vital.

“We want to spend this money over the next few years but we need the confidence the tariffs will come through as expected,” Nicol said. “We don’t have an infinite ability to fund all this.”