The Manila Electric Co. (Meralco) is pursuing joint ventures with at least 15 electric cooperatives (ECs) as it seeks to expand its reach beyond its traditional franchise area with the intent of providing reliable and affordable electricity.
In an interview with BusinessMirror, Meralco senior vice president and chief external and government affairs officer Arnel Casanova said the utility firm is hoping to conclude deals with a number of ECs in the next two or three years. The planned investment, he said, is ‘quite substantial because you need to infuse more for capex [capital expenditure].’
Included in its list are First Laguna Electric Cooperative Inc. (Fleco) and South Cotabato II Electric Cooperative Inc. (Socoteco II).
‘Actually, we’re more aggressive in South Cotabato. There are 120 electric cooperatives. If someone wants to join with us to provide better electricity service then it will be good. We have almost 15 on our list. We are working on all of them, some are at the very early stages, but with Batelec II [Batangas Electric Cooperative Inc.], there’s a proposal already,’ he said.
The planned joint venture will be done by converting an electric cooperative into a stock corporation, a move that is allowed under the Electric Power Industry Reform Act (Epira). Basically, Meralco would infuse capital by purchasing shares in the new stock corporation.
Meralco has been in discussions with Batelec II for a joint venture. The utility firm is now waiting a reply from its board. ‘Hopefully, by next year we can finalize one. Hopefully, Batelec I and II, and Socoteco, and then we’ll convert the whole of Pampanga into a joint venture as well.’
Meralco and its subsidiary, Comstech Integration Alliance Inc., manages Pampanga II Electric Cooperative (Pelco II). The partnership began in 2014, involving management support and investments aimed at improving the electric cooperative’s customer service, reliability, and power supply. Pelco II was once classified as an ailing cooperative. Since the partnership, Pelco’s financial performance has significantly improved earning it a rating of ‘AAA.’
It makes sense for Meralco to form JVs with the ECs that are operating near its franchise areas because these can be easily connected with the Meralco substations.
‘But the biggest challenge here is usually the electric cooperatives are historically hostile to private capital because they mostly depend on national government. They are used to that. But the times have changed, they have to adapt or the entire economy will suffer. So, because the industries cannot grow, foreign investors cannot come in as well. Tourism suffers, even healthcare, and our agriculture also.’
At end-June this year, Meralco reported over eight million residential, industrial, and commercial customers in its franchise area. These are Metro Manila, parts of Bulacan, Cavite, Rizal, and select areas in Pampanga, Laguna, Batangas, and Quezon.