MPIC sets P653-B capex for next 5 years

November 17, 2017 - 3:27 PM
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MPIC's logo. BUSINESSWORLD FILE IMAGE

SYDNEY — Metro Pacific Investments Corp. (MPIC) will be setting aside P653 billion in capital expenditures for the next five years, as it continues to grow its toll roads business both in the Philippines and across the Southeast Asian region, as well as undertake projects under its power, water, hospital, and rail businesses.

The Philippine unit of the First Pacific group said the capex allocation from 2018 to 2022 forms part of its commitment to deliver high quality infrastructure projects that will take advantage of the Duterte administration’s “Build, Build, Build” program.

“(We) are very, very much focused on fixing fundamental challenges in society and with society’s infrastructure,” MPIC Chief Finance Officer David J. Nicol told reporters in a briefing here on Thursday.

Mr. Nicol said the company continues to look for areas where they can potentially submit unsolicited proposals to the government.

“Our strategy is to continue to find areas where infrastructure is inadequate, and continue submitting those proposals to government. We are focusing primarily in the Philippines, although as you have heard from our toll roads guys and water guys, there is some ASEAN focus developing. But overall the weight of that business will be in the Philippines,” Mr. Nicol said.

The power segment, the largest contributor to MPIC earnings, will have a capex of P400 billion to support the expansion of Manila Electric Company’s (Meralco) power generation capacity through coal resources, Global Business Power Corp. (GBP)’s foray into renewable energy sources, as well as a solid waste management facility in Quezon City.

MPIC is now awaiting the results of the Quezon City government’s evaluation for the P16-billion integrated solid waste management facility, which can convert 3,000 tons per day of municipal solid waste into 42 megawatts (MW) of baseload renewable energy.

For the toll roads business under Metro Pacific Tollways Corp., MPIC is pouring in P125 billion until 2022, given that it is currently constructing six projects. Half of the projects are set to create extensions to the North Luzon Expressway, the Cavite-Laguna Expressway, the Cavite-C5 South Link, as well as the Cebu Cordova Link Expressway, MPTC’s first project in the Visayas region covering 8.25 km to be built by 2020.

The company has also submitted three unsolicited proposals, one of which is the Cavite-Tagaytay-Batangas Expressway to extend the Cavite-Laguna Expressway leading to Tagaytay and Nasugbu, Batangas.

“We thought we could get original proponent status hopefully before the end of the year, complete the (Swiss) challenge process early next year, and move to the implementation stage later next year. We think the first section going to Tagaytay is already viable, it can be constructed already,” MPTC President and Chief Executive Officer Rodrigo E. Franco said during the same briefing.

Maynilad Water Services, Inc., meanwhile, will spend P45 billion in the next five years for the development of bulk water projects in the Philippines and pursue projects in the ASEAN region.

The rail business, under Light Rail Manila Corp., will have P70 billion to upgrade and maintain the Light Rail Transit Line-1. The amount also includes any funds it would need should it be allowed to take over the Metro Rail Transit Line-3.

Metro Pacific Hospital Holdings, Inc will be spending P13 billion over the five-year period as it expands its capacity to 10,000 beds through acquisitions, and for the establishment of more clinics and specialty treatment centers.

In addition to the five-year spending plan, MPIC also has unsolicited proposals worth a total of P167 billion. Should the government award these projects to the company, the conglomerate’s spending until 2022 could reach P820 billion.

SPENDING FOR 2018

Of the five-year capex, P100 billion will be used in 2018, almost twice the P56 billion that MPIC committed to spend this year.

Broken down, MPIC’s capex for 2018 would include P12 billion for water, P38 billion for toll roads, P21 billion for Meralco, P17 billion for rail, P6 billion for hospitals, and P6 billion for logistics.

Including other First Pacific units in the Philippines such as PLDT, Inc. and Philex Mining Corp., Mr. Nicol said the capex for next year would reach around P145 billion.

MPIC will fund the aggressive capex program though a combination of equity partners, P90 billion of which will come from the company itself, through value crystallization in its portfolio, banks, and a potential bond offering.

By 2021, the company said the power business will continue to be the biggest contributor to earnings at 42%, albeit lower than the current 52%, as the toll roads segment will have grown to 34% from the present 23%. Water will contribute 15% of earnings, down from the current 20%, while hospitals and other segments will still have 5%.

MPIC is one of three Philippine units of Hong Kong-based First Pacific, along with PLDT and Philex Mining. Hastings Holdings, Inc. — a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. — maintains interest in BusinessWorld through the Philippine Star Group, which it controls.

Shares in MPIC lost 18 centavos or 2.67% to P6.57 each at the stock exchange on Thursday.