Meralco to spend US$40M for stake in Ghana power utility

Philippine electric distribution giant Manila Electric Company (Meralco) will cough up US$40 million on planned equity acquisition at an electricity distribution firm in Ghana.

“We are required to have 30-percent, but we can bring that down to 19-percent in the JV (joint venture),” Meralco President Oscar S. Reyes said.

The US$40 million investment, he qualified, will be spread over time – prospectively over five years depending on the cash call of their co-venturers.

He expounded that Meralco is working with Millennium Development Authority (MiDA) and the Electricity Company of Ghana Ltd. “for proper transfer by first quarter or second quarter of 2019.”

Reyes noted the utility firm sent its legal team in Ghana to complete the documentation processes prior to the signing of shareholder agreements or joint development agreements as well as the eventual firming up of financial agreements.

He said Meralco will be willing to reduce its targeted equity participation if there are other parties in the consortium “who will be interested to increase their share.”

This is already the second investment foray of Meralco in the African continent – the first one was for it being a technical partner to Ibadan Electricity Distribution Company of Nigeria.

Meralco’s entry into Ghana’s electricity distribution system had been initially hobbled by drawbacks because of a complaint lodged by Chinese firm BXC Co. Ltd. after MiDA announced its preference for the Philippine power utility firm over the other bidder.

Reyes said Ghana is seen as an attractive proposition because there is a need for capacity addition and that country’s demand for electricity has also been continuously expanding.

Meralco has been continuously seeking investment opportunities offshore – and had so far cemented its initial base in Africa; while still reassessing options in other markets, including targets in Southeast Asia.