Olongapo SubicBay BatangGapo Newscenter

Wednesday, January 21, 2009

Aboitiz Power to borrow P1.5B more; parent to hike spending

LISTED ABOITIZ Power Corp. will borrow P1.5 billion more from the local bond market to fund its acquisition of a state-owned power plant.

The company told the Philippine Stock Exchange yesterday it might double the borrowing if there is more demand. Aboitiz Power has filed a registration statement with the Securities and Commission for the bond offer.

It proceeds of the bond sale would partially finance its 40% downpayment for the 747-megawatts Tiwi-Makban power plants in Albay and Laguna. Aboitiz Power through unit AP Renewables, Inc. bid for the geothermal plant for $446.88 million in July last year.

The borrowing is on top of a P3.9-billion bond the company issued last year still to pay finance operations and buy state power plants.

Meanwhile, in Cebu City, parent Aboitiz Equity Ventures, Inc. said it might increase capital spending this year because of ongoing power generation projects that subsidiary Aboitiz Power will pursue despite the slowing economy.

Erramon I. Aboitiz, new Aboitiz Equity president and chief executive officer, said they had yet to decide on the amount. "But it will be a lot more than in 2008," he told reporters. Last year, Aboitiz Power alone allotted P11.4 billion for three greenfield projects.

Mr. Aboitiz was also confident that demand for power would continue to increase this year. While power demand from the manufacturing sector will slide, demand from other sectors is expected to continue increasing, he added.

He noted that last year, distribution utility Visayan Electric Co., Inc. (VECO) increased electricity sales in terms of kilowatt-hours by 4.6%. VECO, owned by the Aboitiz and Garcia families, is the second biggest utility in the country and serves about 300,000 power users in Cebu City and neighboring towns.

Aside from its power projects, the Aboitiz group will also pursue the development of urban village Persimmon and business process outsourcing building iMEZ at the Mactan Economic Zone 2.

Except for the planned 300-megawatt power plant in Subic, the construction of which is being delayed, other projects will continue.

Aboitiz Power, the holding company of power generation and distribution units of the Aboitiz group, is building 42-megawatt and 34-megawatt hydropower plants in Davao. It is also part of the consortium Cebu Energy Development Corp., which is building the 246-megawatt coal plants in Toledo City, Cebu.

Mr. Aboitiz said the coal plants in Cebu would proceed, with the first of three 82-megawatt plants to be completed by March 2010. The hydro-power plant in Sibulan will be completed in September this year.

Aboitiz Power has deferred its Subic project, but Mr. Aboitiz said "the project is very much alive." Aside from these generation projects, the firm may buy the Tiwi-Makban plant in Luzon and the Tongonan and Palin-pinon plants in the Visayas.

Meanwhile, Mr. Aboitiz said they were still assessing plans to expand the Mindanao coal plant. "The biggest issue there is that the cost of a new plant is so much higher than the grid rate in Mindanao," he said. Mindanao may need 100 to 200 megawatts more by late 2009 or early 2010. The Energy department has said for 2006 to 2014, Mindanao needs 850 megawatts more to meet a 6.5% rise in demand yearly. — Ava Kashima K. Austria and Marites S. Villamor - Business World

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