The Manila Electric Co. (Meralco) will temporarily veer away from foreign partnerships after its failed venture in Ghana and the problems in its investment in Singapore.
Manuel Pangilinan, Meralco chairman, made this statement after the government of Ghana terminated last month the operations of the concession of a consortium where Meralco is part of. The concession was supposed to manage an electricity company in that country.
“I think Meralco should focus domestically. We still have to sort out issues with Singapore so we’re waiting for… I think in about two weeks we’re waiting for their final decision of the banks about the restructuring of the debts,” Pangilinan told reporters at the company’s third quarter performance briefing last week.
In 2013, Meralco and First Pacific Ltd. bought a 70 percent stake in GMR Energy (Singapore) Pte. Ltd. which was renamed to PacificLight Power Pte. Ltd. to take a majority share in operating an 800 megawatts liquefied natural gas-fired power plant. The remaining shares are owned by Petronas.
The project experienced financial issues due to the current surplus in power capacity in Singapore which led to a drastic drop in electricity rates in that country.
“There’s a consolidation effort being undertaken by the bigger power generation companies in Singapore. So they 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 will continue to operate. It’s up to regulators and up to the banks to agree to the restructuring of the combined debts of the Pacific Light and Petronas,” Pangilinan said.
Pangilinan discounted the possibility of unloading Meralco’s stake in the company at this time.
He added if consolidation will be allowed, the excess capacity in Singapore will be reduced and will benefit the country in the long-run as it will not discourage investors to build new power plants in order to keep all available power assets efficient.
“…It serves Singapore better if the industry was making some money… because at this rate, nobody is investing in new capacities so you will be consigned with operating existing plants and as they age they become more inefficient. I don’t think that’s what they want so we have to also incentivize the industry to invest in new capacities…” Pangilinan said.