The distribution company Manila Electric Co (Meralco) has reduced capital expenditure for 1998 by $121 million, virtually halving the original allocation of $254 million. The cut was made in response to slower sales to industries, which make up one third of the company’s annual sales.

Meralco supplies power to the Philippines capital Manila. However, many companies in its supply region find it cheaper to generate their own power. The distribution company buys 96 per cent of its power from the National Power Corp, so it is unable to control its electricity rates.

Power from the National Power Corp costs Meralco $0.0457/kWh but from independent power producers, from whom the distributor takes 4 per cent of its electricity, the cost is only $0.0312/kWh.