Meralco eyeing up to P15-B new borrowings

by Myrna Velasco – May 31, 2016

from Manila Bulletin

Power utility giant Manila Electric Company (Meralco) will be securing P10 billion to P15 billion worth of loans to bankroll its programmed capital expenditures (capex) for this regulatory year.

According to Meralco chief finance officer Betty C. Siy-Yap, the utility firm intends to borrow this year but it would only be able to exercise this option upon securing the approval of the Energy Regulatory Commission (ERC).

She said they already filed for regulatory approval for an authority to issue bonds or other forms of loan procurement, but they had to eventually withdraw because capital markets’ condition already had some changes not in keeping with their targets, primarily on interest rates.

Siy-Yap said it took sometime for the ERC to decide on their application, hence, “the period within which a provisional approval could be granted has already lapsed, and that market condition at that point also changed.”

She emphasized that they had seen “interest rates increasing, so we withdrew our request for a D-E ratio, but certainly we would need to borrow and we are exploring other options possible for us.”

The Meralco executive added their planned borrowings will just be for the parent firm, while for its power generation business, they have been making arrangements that the banks would directly lend to the project vehicles or with Meralco PowerGen.

“In case of MGen, we’re discussing with banks if they can lend directly to MGen,” she stressed, emphasizing that equity call on their ongoing projects will feasibly be done on a phased approach.

For the planned 1,200-megawatt Atimonan project which is targeted to break ground this year, the cash call for equity will start yet at pre-development phases; while for the Subic project, it will be mostly site preparations at this stage.

“In the case of San Buenaventura (coal-fired power project in Mauban, Quezon), it’s back-ended…the actual infusion will still start in February 2018,” she said.

Beyond these ventures, Meralco is also exploring further expansion in power generation in Visayas and Mindanao – but this will be done through synergies with affiliate Global Business Power Corporation.

Meralco president and chief executive officer Oscar S. Reyes noted that “in terms of synergies, there’s opportunity to see whether they  (Global Power) will respond to certain power supply needs.”

He stressed that Global Power has yet to craft its plans when it comes to additional investments, then from there, they would have to draw where possible alignments of their power generation segments could be set.

Reyes said MGen will be their corporate vehicle for power plant projects in Luzon grid; while Visayas and Mindanao will be with Global Power.