MVP open to working with Malaysia's Petronas

by Lenie Lectura, BusinessMirror

Posted at Mar 13 2013 09:37 AM | Updated as of Mar 13 2013 05:37 PM

MANILA, Philippines - After taking the majority stake in a power project in Singapore, the group of Manuel V. Pangilinan (MVP) said it was open to working with Petronas of Malaysia.

“We’re open. I think they’re a good company, very experienced, fully integrated oil company so if we could, they are somebody we’d like to work with in the Philippines,” Pangilinan, chairman of the Manila Electric Co. (Meralco), said on Monday night.

If opportunity comes up, Pangilinan added, an investment that Meralco is eyeing would involve gas-fired power plants in the Philippines, not in Malaysia. He said Meralco’s priority is to do business in the country.

“The focus has been here in the Philippines. I don’t think they [Petronas] need us there. Well, we’re open here. I think we’ve announced we’re looking at gas-fired plants, they’re minded to invest here in the Philippines, subject to government approvals,” according to Pangilinan.

Still, Meralco plans to further expand overseas.

Its president, Oscar Reyes, said separately that Meralco is also looking at Indonesia aside from Myanmar, Thailand and Vietnam.

“Singapore came as a pleasant opportunity. Myanmar, I think we’re looking at opportunities in distribution [there]. We’re looking at potential partners in Myanmar, so for Myanmar it’s mainly distribution,” Reyes added.

For Indonesia, he said Meralco is looking at opportunities in the power-generation business. “It depends on the site. We’re still scouting. We can’t say at this point. Like the Singapore investment, it was opportunistic,” Reyes added.

Meralco, together with First Pacific Co. Ltd., through the former’s wholly owned subsidiary Meralco PowerGen Corp. (MPG), is taking the majority 70 percent of a Singapore power project using a joint-venture company.

FPM Power Holdings Ltd. (FPMP) will be the corporate vehicle to secure the business interest of the joint venture. First Pacific, through FP Power Assets Ltd. (FPPA), a wholly owned subsidiary, and MPG shall each subscribe to and pay for shares of FPMP, under a 60-40 equity sharing, respectively.

FPMP entered into a share-purchase agreement with GMR Infrastructure (Singapore) Pte. Ltd. and GMR Infrastructure Ltd. for the acquisition of the majority shares of GMR Energy.

It will pay $488 million and some adjustments for time value after March 31 for the 70-percent stake it will acquire in GMR Energy. The remaining 30 percent in GMR Energy are owned by Petronas.

GMR Energy is in the advanced stage of construction of a 2x400-MW Liquefied Natural Gas (LNG) Combined Cycle Combustion Turbine Power Plant located on Jurong Island, Singapore.

Pangilinan said funding is not a problem for First Pacific and Meralco.

“Well, Meralco and First Pacific have the funds necessary to close. We’re now looking at, as part of the total consideration, borrowing some of the acquisition funding. We don’t know the exact quantum yet. But we have the funds necessary to close it on due date, most likely, we’ll refinance with some leverage post-closing,” Pangilinan said.

The deal is expected to be closed in the next 30 days, from the March 5 announcement.

December this year is the expected start of commercial operations of the power plant in Singapore. The off-take of the plant shall be a combination of vesting contracts with the SP Power Assets Ltd., retail market contracts and merchant-supply operations.

“It’s with the government of Singapore though its trading arm but only about 30 percent of the output would be covered by what they call the vesting contracts. The rest would be merchant or retail type of operations, but it’s, our distinct impression about the Singapore mart, a very orderly market,” Pangilinan said.