Meralco shifts focus to local operations after foreign setbacks

By Alena Mae S. Flores – November 03, 2019 at 08:50 pm

Power retailer Manila Electric Co. shifted its focus on domestic power plant expansion after suffering setbacks from two foreign investments.

“I doubt. I think Meralco should focus domestically,” Meralco chairman Manuel Pangilinan said when asked about future investment plants overseas.

The government of Ghana recently terminated the 20-year concession for the operation and maintenance of the assets of the Electricity Company of Ghana by a consortium led by Meralco over alleged demand guarantee breaches.

Meralco’s investment in an 800-MW megawatt combined cycle combustion turbine power plant in Jurong Island, Singapore is also facing debt restructuring, Pangilinan said.

“We still have to sort out issues with Singapore. In about two weeks, we’re waiting for the final decision of the banks about the restructuring of the debts,” Pangilinan said.

Low generation charges and oversupply of power in Singapore made it difficult for power firms like Pacific Light Energy, the joint venture of Meralco subsidiary Meralco PowerGen Corp. and parent firm First Pacific Ltd., to recoup their investments in the 800-MW power plant.

Pacific Light acquired a 70-percent stake in the Singapore power project in 2013 for $488 million. The remaining 30-percent ownership is owned by Petronas of Malaysia.

“There’s a consolidation effort being undertaken by the bigger power generation companies in Singapore. So we are party to that combination because we think it will help reduce the capacities if that consolidation should happen and the more efficient plants like our plant in Singapore will continue to operate,” Pangilinan said.

“At the end, it’s up to regulators in Singapore and up to the banks to agree to the restructuring of the combined debts of the Pacific Light and Petronas and this particular power company in Singapore,” Pangilinan said.

He said a sell-out might not happen, “because it’s losing money and the industry is actually under pressure.”

“I would say the industry [in Singapore] as a whole is not making money. It depends on the price too,” he said.

Pangilinan said investors were shying away from Singapore and there was a need to “incentivize the industry to invest in new capacities which will be more efficient.”

The Jurong power plant is Meralco’s first international investment and an expression of the company’s long-term vision to be a regional player in the power industry, Pangilinan said earlier.