MANILA - The Manila Electric Co. (Meralco), the country’s largest power distributor, remains optimistic it will conclude the refinancing of P2.5 billion worth of debts by the third quarter of the year.

“Although the P2.5-billion debt is expected to mature in January next year, we’re looking at refinancing it within the third quarter,” said Rafael Andrada, Meralco treasurer, adding that the third quarter is usually a good time to conduct refinancing.

Andrada explained that the P2.5-billion debt is part of the syndicated loan arranged by Metrobank.

He noted that they are already studying two proposals. But there is no definitive decision yet whether Meralco will tap the banks or the capital market for the planned refinancing, he added.

The company official noted that there are other loans due next year and Meralco is also looking at the feasibility of refinancing these loans. He said there are about P5 billion to P6 billion that will have to be paid by 2013.

He said Meralco can meet the capital expenditure requirements for the year without borrowing money owing to the P0.25 per kilowatt-hour (kWh) increase in distribution charge. The energy Re-gulatory Commission approved in April the increase in distribution charges to P1.2227/kWh from P0.9657/kWh.

This has been planned moved. Meralco earlier said it is looking at going to the debt market after its performance-based rate (PBR) application is approved. The PBR mechanism, said Meralco, will allow their finances to improve. Paul Isla

Creditors have not been too keen on lending to the power distributor due to the delay in approval and implementation of the PBR application.

Meralco’s liabilities have been reduced by 28 percent to P16.04 billion in the first quarter of the year from P22.37 billion in the same period in 2008. Data showed that it was able to retire some P7.9 billion worth of short-term debts as of end-March.

Short-term obligations also dropped to P2.29 billion in first quarter of the year from P10.25 billion in first quarter of 2008. Long-term loans, on the other hand, increased to P13.75 billion in the first three months of the year from P12.12 billion during the same period last year.

Meralco noted that P13.62 billion of the total long-term debts were secured overseas, while another P13 million came from domestic sources. All short-term debts were sourced here.