MANILA, March 29, 2006
 (MANILA TIMES) By Niel V. Mugas, Reporter - MANILA Electric Co. (Meralco), the Philippines largest electricity distributor, said it reduced its losses last year despite the Lopez family-led firm having to set aside money for additional losses in the event the Supreme Court rules against the company’s unbundling of its rates.

In a disclosure to the Philippine Stock Exchange, Meralco reported a net loss of P411 million, 79.7 percent down from losses of P2.03 billion in 2004. The company said it used Philippine Financial Reporting Standards/ Philippine Accounting Standards (PFRS/PAS) in computing its finances.

Without the provision for probable losses amounting to P5.90 billion and the adoption of the new accounting standards, Meralco would have registered a net income of P4.43 billion.

The company’s revenues shot up 14.9 percent to P174.27 billion last year. Electricity sales amounted to P170.85 billion, or 15.9 percent higher than in the previous year.

Gigawatt-hour sales increased by 0.6 percent despite the expected slowdown in consumer demand due to the successive generation rate increases and the implementation of the expanded value-added tax law.

Electric use by commercial customers rose 3.6 percent, propelled by retail trade which grew by 16.8 percent with the opening of five new SM malls, and the expansion or renovation of existing malls, including Robinsons Galleria, Robinsons Manila and Greenhills Virra Mall.

Industrial sales remained flat growing by 0.2 percent as rising rates and fuel prices burdened the industrial segment.

Residential sales contracted by 2.2 percent on rate hikes, fuel price spikes, the reduction of interclass cross subsidy and the expanded VAT.

Purchased power cost last year rose 19.5 percent to P148.87 billion. This was primarily due to the 19.8-percent increase in the average cost of purchased power per kilowatt-hour.

Operation and maintenance expenses increased 12.5 percent to P10.41 billion owing to net provisions for various tax assessment and legal claims, increase in contractors’ services and increase in pension cost and other long-term employee benefits.

Meralco also set aside some P7.86 billion as liability for the settlement agreement with sister firm First Gas, P3.74 million of which was classified as a current liability in accordance with the payment terms.

Capital expenditures were meantime limited to only P5.28 billion last year.

System losses were cut to 10.21 percent, Meralco’s lowest since 2001, following the implementation of its system loss management program in May last year.

This resulted to a reduction in the firm’s unrecoverable purchased power cost by P1 billion, based on the 9.5 percent ceiling.

Parent firm’s net income up

Meanwhile, Meralco parent, First Philippine Holdings Corp. (FPHC), said its profits rose by more than half last year.

In a separate disclosure to the PSE, FPHC said its net income last year rose to P4.9 billion from the previous year’s P3.3 billion.

Revenues rose P15.1 billion to P55 billion, as against the previous year’s P39.9 billion.

FPHC is the holding firm of the Lopez family’s interests in power, infrastructure, property, among others.

Besides Meralco, its other subsidiaries include First Gen Corp., which recently went public, and Manila North Tollways Corp., which holds the franchise to the North Luzon Expressway.

Chief News Editor: Sol Jose Vanzi

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