Aboitiz seen to win bidding for Subic power supply deal

Aboitiz Equity Ventures Inc. (AEV) has practically won the bidding for the privatization of the power supply for the Subic Bay Freeport after it submitted the lowest financial bid and passed the technical expertise evaluation, a company official said yesterday.

In a disclosure to the Philippine Stock Exchange, AEV assistant corporate secretary Elsa Divinagracia said the joint venture with its wholly-owned subsidiary Davao Light and Power Co. (DLPC) submitted a financial offer of P0.5975 per kilowatt-hour, the lowest among all bids, for running the power distribution system (PDS) of the Subic area on a rehabilitate-operate-transfer (ROT) scheme.

A month ago, the AEV-DLPC joint venture submitted its technical and financial bids to the Subic Bay Metropolitan Authority (SBMA) for the power supply and distribution of the franchise area generating an average annual income of P589 million.

Under their arrangement, AEV will own 60 percent of the joint venture and DLPC the remaining 40 percent. The latter, however, will assume operational control of the new firm, backed by its 75 years of experience in the electricity distribution business.

Divinagracia said in accordance with its instructions to bidders, the SBMA bids and awards committee (BAC), will now submit its recommendation to the SBMA board of directors.

"The SBMA board of directors shall subsequently make a decision on the award of the distribution management services agreement (DMSA) through a board resolution in favor of the lowest bidder," she noted.

The AEV official added the DMSA will govern the ROT and this agreement will be signed by SBMA and the joint venture for a period of 25 years.

AEV’s entry in Subic will further expand the reach of its power units under the Aboitiz Power Corp. (APC) umbrella, which already span the entire archipelago from Northern and Central Luzon to the Visayas and Mindanao islands.

APC, the biggest contributor to AEV’s income, has a nationwide network of distribution facilities: DLPC and Cotabato Light & Power Co. in Mindanao; the Visayan Electric Co.; the Benguet-based Luzon Hydro Corp. and Hydro Electric Development Corp.; Northern Mini Hydro Corp. and PhilHydro Corp.; and the San Fernando Electric Light & Power Co. in Pampanga.

In addition, AEV also has two power generating plants, the Western Mindanao Power Corp. and Southern Philippines Power Corp.

DLPC, the third largest power distribution utility in the country, holds the franchise for the electricity distribution requirements of Davao City and its vicinity that include the towns of Panabo, Carmen, Sto. Tomas and Dujali.

It is one of the cornerstones in AEV’s income stream, contributing more than P350 million in the group’s profits last year and is considered one of the most efficiently run power firm, with systems losses at only 8.75 percent, way below local standards.