MVP says Meralco keen on projects in Vietnam

By Neil Jerome C. Morales, The Philippine Star

Posted at Oct 31 2012 07:55 AM | Updated as of Oct 31 2012 07:35 PM

MANILA, Philippines - Manila Electric Co. (Meralco), which is pursuing power generation projects in the Philippines, is also keen on putting up power plants in Vietnam, one of the emerging markets in Southeast Asia.

The country’s largest power distributor is looking at 150 to 600-megawatt (MW) power plants in Vietnam through joint venture deals, the company’s top official said.

“They have several projects that are on the [back] burner so we said that we would be interested in looking at the opportunities there,” said Meralco chairman Manuel V. Pangilinan.

“The size of the projects range anywhere from a minimum of 150 MW to about 600 MW,” he said.

Executives of regional conglomerate First Pacific Co. Ltd., the Hong Kong-based parent firm of Meralco, conducted a three-day business mission to Vietnam two weeks ago.

First Pacific noted that Vietnam’s growth prospects, demographics and increasing urbanization create a favorable environment for investments in water distribution, mining, hospital, energy, infrastructure, media, food and agribusiness.

“We will probably take modest steps first in Vietnam. Of course the numbers have got to work for us,” Pangilinan said.

To date, Meralco, through subsidiary Meralco PowerGen Corp., is looking at generating 2,700 MW of electricity in the Philippines from now until 2020.

Pangilinan said the potential business arrangements in Vietnam are reasonable.

“The advantage of this is that there is an offtake arrangement that may be possible under their regulatory regime,” Pangilinan said.

Pangilinan said the power generated can be bought by government through state-run Vietnam Electricity.

Vietnam, like the Philippines, is an emerging market in Southeast Asia that continues to record robust economic growth amid woes in the euro zone and the US.

Executives of First Pacific earlier said the conglomerate is open to taking minority stakes in businesses in Vietnam, a deviation from its normal tack of taking control of businesses it wants to acquire.

“We will take a minority, a significant minority,” Pangilinan said, adding that it will partner with private firms in that country.

“We do not have first-hand experience of how business operates in Vietnam, especially the regulatory aspects of it so it is better to take certain baby steps,” he added.

In the Philippines, Meralco has set an an aggressive target of building two 600-MW coal-fired power plants worth up to $2.6 billion and four 375-MW liquefied natural gas power plants through joint ventures.

This will ensure reliable and more affordable power supply to Meralco’s customers.

Meralco is indirectly controlled by First Pacific and partly owned by San Miguel Corp. In the Philippines, First Pacific is the controlling shareholder of telecommunications giant Philippine Long Distance Telephone Co., infrastructure holding firm Metro Pacific Investments Corp. and Philex Mining Corp.

Meanwhile, First Pacific unit Philex Petroleum Corp. is interested to look at more gas fields in Vietnam.

“They seem to have gas fields in Vietnam. Maybe they have an indigenous source of gas as well,” Pangilinan said.

To date, Philex Petroleum holds a 27-percent stake in British firm Pitkin Petroleum Plc that has an exploration activity in Vietnam.