Aboitiz Group Defers Subic Coal Plant

In a briefing, Erramon Aboitiz, Aboitiz Equity Ventures (AEV) president and chief executive officer, said its power unit deferred the construction of its 300-megawatt coal plant pending the review of the demand situation in Luzon.

"We'd like to see what happens in the few quarters of this year. So we probably will be analyzing the situation toward the end of the third or early fourth quarter of this year," he said.

The executive said the company would still pursue its proposed plant in Subic after it completes its market study sometime at the end of the year.

"We will continue to develop that project and we do intend on starting the project," he said.

Before the onset of the global financial crisis, the government had forecast a power supply crunch in the Luzon grid by next year. Construction of a new power plant takes two to three years.

The Subic plant is estimated to cost approximately $500 million and is being put up by Redondo Peninsula Energy Inc., a joint venture between AP and Taiwan Cogeneration Corp.

Construction of the proposed facility was supposed to have started in October last year.

But Luzon has suffered from a glut in electricity supply owing to the global economic slowdown. The crisis hit Subic hard, as the former US military base-turned-economic zone, is host to a number of export companies.

Besides power generation, AP controls several distribution utilities including those Aboitiz said AP would focus on acquiring stat-owned plants instead of building new capacity.

"The nice thing about buying these assets is that you're increasing the capacity of the market. As these are existing plants that are already serving the market, so you're not going to create an oversupply of power," he said.

AP shares closed flat Friday at P5.40 per share while AEV's shares closed higher at P5.90 from its previous close of P5.80. By Euan Paulo C. Anonuevo, The Manila Times, Philippines