At the Threshold of Fresh Synergies: Meralco in 2010
Roberto M. Paterno
MERALCO is an investor-owned electric utility serving roughly a quarter of the estimated 94 million population of the Republic of the Philippines.
It was organized as the Manila Electric Railroad and Light Company 107 years ago in 1903 to provide electric light and power and an electric street railway system to Manila and its suburbs. The facilities that Meralco built to provide these two services represented for many years the largest single investment of American private capital and know-how in the whole of East Asia.
For a little more than four decades, Meralco provided Manilans their first modern mass public transportation system with electric streetcars which in the twenties were supplemented by busses. World War II destroyed the railway system beyond rehabilitation and Meralco gave up its transportation business in 1948, concentrating thenceforth on providing electricity. The electric service it provided powered much of the postwar rehabilitation and early industrialization of the young republic that became independent in 1946.
In 1961, in a move considered daring at that time, a group of Filipino investors led by the entrepreneur Eugenio Lopez Sr. bought Meralco from its American owners, the first major American enterprise to be so 'Filipinized.' During the decade that followed, the new Filipino management built electric generating and distributing facilities at an unprecedented pace to meet the burgeoning needs of its franchise area; this was made possible by earning the confidence of international credit institutions like the Ex-Im Bank of the United States, the Ex-Im Bank of Japan, the International Finance Corporation (IFC), Kreditanstalt fur Wiederaufbau (KFW), and other banks, insurance companies, and major American, German and Japanese suppliers.
Meralco was the first Philippine company to issue mortgage trust indenture bonds successfully in the US financial market on Wall Street. Meanwhile, an enlightened human resource management regime ensured industrial peace and employee loyalty at home. In 1969, Meralco became the very first billion-peso company in the Philippines. This was all the more remarkable because much of it had been achieved without recourse to government guarantees.