Tokyo, Japan—Power distributor Manila Electric Co. (Meralco) said it is allotting some P86 billion in capital expenditures (capex) for the next five years, mainly to expand its network and invest some in generation business.
Meralco President Oscar Reyes told reporters in a media briefing that the company is allotting some P65 billion for its distribution business and P21 billion for its power-generation plants, where it has invested in.
The said amount is higher than the P70 billion in capital expenditures and equity investments made in power generation from 2010 to 2014.
“We have to continue our investments as we have flat generation but demand is increasing,” Reyes told reporters during a briefing with the groups led by businessman Manuel V. Pangilinan.
He said peak demand has been growing at annual compounded rate since 2009 as the Philippine economy expands. But it was only recently when the private sector started building new power plants.
For next year alone, the company is spending some P14.7 billion in capex.
Reyes explained that higher capex for the five-year period is needed to meet increasing peak demand of about 6,121 megawatts (MW) in 2014 from last year’s 5,928 MW, as well as growing customer base of 5.56 million this year. The money will also go to the sourcing and delivery of higher energy volumes of about 34,950 gigawatt-hours in 2014.
The investments will help Meralco drive down system loss and boost customer service while containing the generation charge, he said.
These will include the development of 11 distribution substations and two delivery points substations. Ten distribution substations and two delivery-point substations will be expanded.
During the five-year period, Meralco will construct four new sub-transmission lines, install facilities to serve new customers and convert 80 nonstandard voltage distribution lines to standard primary distribution voltage.
Reyes explained that the company has to either install new distribution facilities or strengthen the existing system to weather typhoons.
Meralco currently has a power-generation portfolio that will cost P255 billion to develop, although its equity interest will translate to an investment of only P21 billion since the projects will require only 25-percent equity, while the remaining 75 percent will be financed by borrowings.