LNG investment, pandemic drag Meralco net income for Q1


The Manila Electric Company (Meralo) recorded a 54 percent drop in reported net income amounting to P2.61 billion in the first quarter of the year, compared to last year’s P5.7 billion reported net income for the same period, due to impairment of the company’s liquefied natural gas (LNG) investment in Singapore.

Meanwhile, overall revenues were down by 7 percent to P70.02 billion at end-March this year while electricity revenues went down by 8 percent to P67.9 billion due to lower pass-through charges.

Total volume of energy sold for the first quarter stood at 10,879 gigawatt hours (GWh), which increased by 5 percent compared to the same period last year. This was due to warmer temperatures, according to a report.

Electricity demand for the first quarter reached 7,614 MW last March 10, six days before the implementation of the enhanced community quarantine (ECQ). However, it declined beginning March 16, with as much as 40 percent in a single day during ECQ.

Victor Genuino, Meralco first vice president and head of customer retail services and corporate communications, said Meralco is seeing the full effect of ECQ in energy sales this month.

“We’re going to see a very sharp decline coming particularly from our commercial customers. Industrial has ramped up a bit. For commercial, we also see a bit of uptick coming from food, but when it comes to real estate, retail trade and hotel—which are key drivers for commercial sales—we don’t see much growth there. So, April sales are expected to be lower than what we’ve seen in March,” he was quoted in a report.

Meralco Chief Financial Officer Betty Sy-Yap expects “more than [a] 10 percent decline in volume over the original budget for the year.”

Meralco Chairman Manuel Pangilinan said “the full tragedy of Covid-19 [coronavirus disease 2019] has yet to unfold.”

The second quarter figures would be lower than what Meralco reported for the first three months, Pangilinan added.

“Too early to give earning outlook for the full year. So far, what we are experiencing in April is a decline in our build volume. That’s likely to hold true for the entire second quarter so with the lower volumes and lower revenues, it is likely that the second quarter results will come in below the first quarter results. Below the P5.8 billion we’ve seen for the first quarter,” he said.

However, Meralco said that recovery in the overall business environment will take place in the second half of 2020.

Pangilinan highlighted that the demand peak last April 22 was at 5,491 MW, recorded for the first time since the start of ECQ. The usual demand ranges from 3,500 MW to more than 4,300 MW.

“We do hope that the second half will be better and we’re looking forward to that,” said Pangilinan.

Meanwhile, Meralco President Ray Espinosa assured continuity of its service.

“Our business continuity and resiliency plans and the dedication of our employees and personnel have allowed us to continue delivering reliable and affordable power and to swiftly respond to service outages and interruptions in this time of great public need,” said Espinosa.

Meralco claimed force majeure and resulted in a reduced fix cost for certain baseload plants, which cut the April generation charges by P129.4 million, which translates to P0.0506 per kilowatt hour. Without this, April’s generation charge would have been P0.0259 per kWh higher than in March 2020.

“Yes, we invoked [force majeure]. We sent notice to our suppliers. We arrived at an amicable settlement on how to address the Force Majeure,” said Espinosa.