Global deal to expand Meralco’s business

by Alena Mae S. Flores – May 31, 2016 at 11:50 pm

by Manila Standard Today

The majority investment of Beacon PowerGen Holdings Inc. in Global Business Power Corp. will provide the springboard for the generation unit of Manila Electric Co., Meralco PowerGen Corp., to expand to Mindanao and Visayas.

Meralco chairman Manuel Pangilinan told reporters following the stockholders’ meeting of the company that taking a majority stake in Global Business Power would ensure the long-term growth of the power generation business.

“[Long-term vision] is to focus on Visayas and hopefully make our entry into Mindanao in the power sector because the incoming president is from that particular area,” Pangilinan said, referring to President-elect Rodrigo Duterte.

“We hope we could expand our presence in the Visayas and Mindanao as well,” Pangilinan said.

First Pacific Co. Ltd.’s associate, Beacon Electric Asset Holdings Inc., through wholly-owned subsidiary Beacon PowerGen, last week signed an agreement with GT Capital Holdings Inc. of the Metrobank Group to acquire 56 percent of Global Business Power for P22.6 billion.

Beacon Electric, meanwhile, owns a 35 percent stake in Meralco.

Pangilinan said the recent transaction would not have an impact on market cap  limitations imposed under the Electric Power Industry Reform Act of 2001.

“For now because the plants of MGen have really not been built, so there may be still space, maybe once we approach that we will revise our shareholder interest,” Pangilinan said.

Meralco PowerGen owns 22 percent of Global Business Power while another 22 percent is held by Japan’s Orix Corp.

Pangilinan, however, said Meralco PowerGen might take a stake in the 670-megawatt power plant being built by Global Business Power in Luzon.

“Most likely, it will be joint venture with Meralco [through Meralco PowerGen] because it has a PSA [power supply agreement] with Meralco so there will not be much comment,” the official said.

Meralco president Oscar Reyes said the Global Business Power deal could provide supply opportunities

“In terms of synergies, there’s an opportunity to see whether they can respond to certain supply needs,” Reyes said.

Global Luzon has signed a power sales agreement with Meralco for 600 MW of capacity from the planned La Union power plant.

Global Business Power is one of the leading independent power producers in the Visayas. Its power plants are strategically located where high growth is expected, with power facilities in Cebu, Iloilo, Aklan, and Mindoro.

Pangilinan also said it would be too early to discuss plans for the initial public offering of Global Business Power.

The company has an ongoing 150-MW expansion project in Barangay Ingore, Lapaz, Iloilo City through subsidiary Panay Energy Development Corp.