The Manila Electric Company (Meralco) isn’t just a household name but a driver in business continuity and builder of resiliency, especially among high-growth sectors.
In the latest episode of ‘Freshly Brewed,’ BusinessMirror’s digital show, Energy reporter Lenie Lectura sat down with Atty. Arnel Casanova, SVP and Chief External and Government Affairs Officer of Meralco, for an engaging discussion on how power is helping push the Philippines towards progress.
Celebrating its 122nd anniversary this year, Meralco cuts across sectors as the reliable power source of multiple sectors, ranging from household consumers to big corporations from various industries. The task to power up these groups is daunting as the population and business organizations multiply.
Wide reach
To jumpstart the conversation, Casanova gave the audience a glimpse of Meralco’s reach across the country. ‘Meralco is considered the biggest power distributor in the Philippines because we provide more than 50 percent of the nation’s power supply. But if you look at the geographical land area, Meralco’s franchise only covers two percent of the Philippine land area.’
Casanova said that Meralco’s services cover the National Capital Region, Laguna, Bulacan, and Cavite, parts of Quezon, three municipalities in Batangas, and parts of Pampanga.
‘It’s actually small in terms of land area, but in terms of capability and output, within the Meralco franchise, it is more than 55 percent of the Philippine Gross Domestic Product or GDP. It clearly shows (the contribution) of Meralco when it comes to economic growth. ‘
In the first half of the year, Meralco reported over eight million residential, commercial, and industrial customers in these franchise areas. ‘And it’s growing because the population is growing, as well as the country’s industries. We want to create more growth across the country so that everyone can be lifted,’ Casanova explained.
Power as an economic growth driver
To illustrate the impact of a strong distribution utility in enabling economic growth, the Meralco official cited the economic data in its Batangas franchise. There, Meralco services only three municipalities: Batangas City, Sto. Tomas, and San Pascual.
There are 34 towns in Batangas, Casanova said, but Meralco is only present in three. The two nearby towns are serviced by two small private utility distribution companies. ‘But when you look at the energy sales, Meralco’s performance in those three towns actually exceeds the entire province combined,’ he observed.
‘So, when Meralco entered Batangas in the 1990s, the cumulative annual growth rate of the economy in Batangas was 14 percent. That is a double-digit growth, year-on-year. For the last 30 years. So, when you look at those three towns in Batangas, those are the most progressive towns in the province.’
He added that the strong distribution utility in Metro Manila and the Calabarzon, which Meralco covers, correlates with the area being the center of growth and economic productivity. He said, ‘Meralco provides reliable power that the industries need. That is why you will also see the congestion of people because these are where the opportunities are available.’
In search of JV
Recently, the Meralco franchise was extended for another 25 years. Casanova stated that Meralco is open to joint ventures (JV) just as it had done in the past to widen its reach and improve its services.
‘Actually, we’re looking at all the electric cooperatives that are willing to have a joint venture with us. There’s a simple explanation for that: nation-building. When we look at the economic data again, the GDP per capita of Filipinos is about P503,000 per capita per annum, but the rest of the country lags between P150,000 to P200,000 per annum per capita.’
The gap of P300,000 per annum per capita is due to the lack of industries in the countryside, noted Casanova. ‘If you set up a manufacturing facility, cannery, a steel plant, a data center, or a semi-conductor plant, with foreign investors expected to come in-or, even, let’s say, cold storage facility or tourism-you cannot sustain these industries or grow them as fast as you want to when there is unreliable power.’
For its part, Casanova stressed that the company aims to boost the smaller electrical cooperatives by forging partnerships with them. ‘My view, and actually my role in the company, is that we really have to go beyond the Meralco franchise. It has a duty to help and empower our electric cooperatives so that everyone can be uplifted.
‘At a certain point, Metro Manila can only accommodate so much. But the industries must be able to move outside of the Meralco franchise and expand so that we can create more economic opportunities in the countryside. Basically, my analogy is that we make the pie bigger.’
Recently, Meralco has expressed its intent to partner with the Batangas II Electric Cooperative, Inc. (BATELEC II), proposing to support the cooperative’s operations and improve its reliability in the province.
In the 1970s and 80s, the early years of electrical cooperatives, these groups were created for rural electrification or to bring power to these areas. The focus then was to bring electricity to residences.
‘With the arrival of the digital age, however, the power demand has become so big that the non-stock, non-profit structure of the electric cooperatives can no longer cope with such big demands. So private capital is really the one that could adapt to that challenge,’ Casanova commented.
‘And that is why we have proposed to BATELEC II that since Batangas is the fastest industrializing province, we want them to be prepared for the present and future growth of the province. We proposed a joint venture so we could infuse capital and basically make challenges such as brownouts no longer a problem.’
Doing its share for a better Philippines, the focus now is on service reliability among the industries, concluded Casanova, for businesses to sustain their operations and thus be able to generate more jobs for Filipinos.
Watch the full episode on BusinessMirror’s YouTube channel. Catch new episodes of ‘Freshly Brewed’ on Mondays, 10 a.m. on BusinessMirror’s YT, FB, and website.