HONG KONG—Infrastructure conglomerate Metro Pacific Investments Corp., the local unit of First Pacific Co. Ltd., is prepared to spend $10 billion in capital expenditures in the Philippines between 2015 and 2020 to expand its power, water, infrastructure and hospital businesses.
Metro Pacific chief finance officer David Nicol said in a news briefing the company’s ability to deliver the five-year programmed spending would depend on whether or not the government would honor its commitment to implement tariff adjustments in water, toll road and rail businesses.
Under the plan, Metro Pacific earmarked P401 billion for the committed projects of core businesses. The figure could go up by another P78 billion, as conglomerate explores new projects for water and toll road units, Nicol said.
The bulk of the spending, or at least P219 billion, will be funded through cash-flow of existing operations, while P129 billion will be sourced through debt and P53 billion through new equity.
“A central point for us when we are looking at our future is, is that figure, the P219 billion, a reliable number over that period for all these businesses? A critical component of that is, are we getting our tariff increases or not. Can we rely on that because that is the single biggest component in terms of financing these projects,” Nicol said.
“One of the challenges the business is facing is that we want to spend the P478 billion or the $10 billion over the next few years, but we should have the confidence that the tariffs will come through as expected,” Nicol said.
He said of the total spending from 2015 to 2020, some P170 billion would be allocated for power business, P106 billion for water utility such as bulk and wastewater projects, P65 billion for expansion of toll road business and the remaining P16 billion for acquisition of more hospitals.
“These investments are something we desperately need,” Nicol said.
Nicol said without the tariff adjustments, the company’s capacity to invest would be limited to its cash-flow.
He said in the case of the toll road unit, the group posted core earnings before interest, tax, depreciation and amortization of P6 billion in 2014, which was not enough to cover its planned capital expenditures.
The group’s toll road unit is programmed to spend P12 billion in 2016, P6 billion in 2017, P15 billion in 2018, P14 billion in 2019 and P6 billion in 2020.
Nicol said to help fund these projects, the group was looking to tap the debt market and explore opportunities to sell a portion of its stake in hospital, water and toll road businesses by getting new investors or by initial public offering.
Nicol said Metro Pacific aimed to keep majority ownership in these companies.