Meralco trims sales growth forecast from 7.1% to 5%

Power distribution giant Manila Electric Co. (Meralco) has lowered it sales growth forecast this year to only five percent, from an original target of 7.1 percent, a company official said yesterday.

In an interview, Meralco vice president for utility economics Rodolfo Quetua said the sales growth projection is much lower than the actual sales growth of 7.8 percent last year.

According to Quetua, they have reduced the sales growth for this year due to several economic and political factors. "We have decided to revise our (sales growth) forecast following a series of events," he said.

He said for the first quarter of this year, they have noted that there was a decline on their sales growth due to political uncertainties (apprehension of President Estrada and People Power 3).

The Meralco official said there was also a slowdown in the export market and a very high power rate in residential and commercial sector.

"We have factored in these scenarios. So at present, we think there is a need to lower the sales growth (projection)," he said.

It will be noted that Meralco has cut its capital expenditure and deferred new projects worth up to P2 billion this year.

For this year, Meralco had originally allotted about P8 billion but later on reduced it to only six and P6.5 billion.

As of today, the power distribution firm already spent about P1.86 billion for its capital expenses.

The company had earlier indicated plans to reduce its capex due to inability to get its request to increase its rate by 30 centavos per kilowatt hour. The application, which was filed April 2000, for the rate hike is still pending at the Energy Regulatory Board (ERB).

The delay has resulted in Meralco’s return-on-rate-base (RORB) slipping from 5.5 percent in 1999 to 4.9 percent at present.

The first quarter performance of Meralco was also affected by the delay in the approval of the distribution tariff hike.

Meralco reported a decline in net profit of 48.4 percent to P394.37 million, from P764.07 million for the same period last year.