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Meralco-led consortium’s joint venture with BCDA gets PCC approval

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By Janina C. Lim, Reporter

THE Philippine Competition Commission (PCC) has approved the proposed joint venture between the Bases Conversion and Development Authority (BCDA) and the consortium of Manila Electric Co. (Meralco) and Japanese firms Marubeni Corp., Kansai Electric Power Co., Inc. and Chubu Electric Power Co., which will undertake the development of a power distribution system in New Clark City (NCC).

The joint venture will distribute power to the host of locators and facilities in the NCC in Capas, Tarlac for 25 years.

In a Commission decision dated June 25, the anti-trust agency said “the proposed transaction has been found to not likely result in a substantial lessening of competition in the retail electricity supply market within New Clark City and the distribution utility market of generated electricity through a supply agreement in the Luzon and Visayas grids.”

The PCC noted that as more businesses are expected to enter NCC, a development which government is positioning to be Luzon’s next economic growth driver, there will be more potential “contestable customers” who can choose their own power provider and not necessarily be limited to the joint venture firm.

Contestable customers are consumers with an average monthly consumption of at least 750-kilowatts (kW) and are deemed by the Department of Energy (DoE) as qualified establishments to participate in its Electricity Open Access Scheme and choose their own retail power suppliers from anywhere in the country.

“Given the development of New Clark City, the PCC expects an influx of potential locators, particularly agro-industrial and institutional clients, to qualify as contestable customers,” the agency added.

The PCC also noted that the DoE’s recent implementation of the competitive selection process (CSP) ensures competition among distribution utilities and electric cooperatives in securing supply from power generators.

“The antitrust authority views the CSP in securing power supply agreements as important competitive step that would constrain the joint venture’s ability to foreclose other power generation companies,” the agency added.

“Lastly, the PCC sees the competitive constraints posed by other generation companies to limit the joint venture company’s ability to foreclose other distribution utilities and electric cooperatives.”

The Meralco-led consortium will have a 90% stake in the joint venture company, while BCDA holds the remaining 10%.

BCDA is a government-owned and controlled corporation that engages in public-private partnerships to develop public infrastructure such as tollways, airports, seaports, and major real estate developments.

The Meralco-Marubeni consortium comprises of Meralco, Japanese conglomerate Marubeni, and power distributors Kansai Electric Power and Chubu Electric Power.

Marubeni Corp. and its consolidated subsidiaries are engaged in the handling of products and provision of services in the areas of import and export. It also conducts business investment, development and management.

The PCC has so far approved three joint ventures involving the BCDA in relation to the development of the 9,450-hectare NCC.

The others are namely the investment promotion agency’s joint venture with Malaysian firm MTD Capital Berhad for the National Government Administrative Center and with the consortium of PrimeWater Infrastructure Corp., Tahal Consulting Engineers, Ltd., Prime Asset Ventures, Inc., and MGS Construction, Inc., for the water and wastewater management of the city.

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