Aboitiz group bags power supply contract for Subic

Aboitiz Equity Ventures Inc. (AEV) and its subsidiary Davao Light and Power Co. (DLPC) announced yesterday that they have been awarded by the Subic Bay Metropolitan Authority (SBMA) a 25-year contract to provide power at the former American military base.

In a disclosure report to the Philippine Stock Exchange, AEV said the SBMA board had approved the award of the contract during its meeting last April 25. The contract is not a franchise agreement but solely a distribution agreement.

The AEV-DLPC joint venture submitted the lowest financial bid of P0.5975 per kilowatt-hour. Among the conditions in the bidding is to bring down the current P1/Kwh electricity rate.

AEV owns 60 percent of the joint venture while DLPC holds the balance of 40 percent.

The franchise area over the SBMA covers the Subic Freeport Secured Area. It serves the Central Business District, the Gateway Area, the Subic Port District, and the Kalayaan and Binictican housing area.

From 1997 to 2001, total electricity demand at SBMA grew at an annual average growth rate of 3.33 percent. The system peak demand grew from 23.9 megawatts (MW) in 1997 to 32.8 MW last year. The SBMA power distribution system generates an average annual revenue of P589 million.

DLPC is Aboitiz Power Corp.’s leading distribution utility and the third largest in the country. The United States Energy Association has recognized it as one of Asia’s most efficient utilities.

DLPC’s franchise area covers Davao City, Panabo City and the neighboring municipalities of Carmen, and Tomas.

Last year, it sold over 1,061 gigawatt hours of electricity. The company’s systems loss, on the other hand, was 8.9 percent which has been consistently lower than the government mandated level of 9.5 percent. Peak demand grew by 3.7 percent to 193,750 Kwh in 2002.

DLPC is the first utility in the country to operate on a full supervisory control and data acquisition system, which allows for monitoring of distribution facilities by remote control.

AEV chief operating officer Erramen Aboitiz added they are holding talks with Mirant Corp. to join the consortium.

"They bring an added dimension to our consortium whose aim is to supply Subic with reliable and competitive power. We believe this alliance with Mirant who is already supplying 50 percent of the bulk power requirements of Subic will ensure our consortium can and will deliver optimal electricity making Subic more competitive moving forward."

Aboitiz said the consortium is extremely pleased to contribute to SBMA’s efforts of developing Subic to become a world-class destination for tourism and industry by providing its locators with dependable and competitive power. "This development is consistent with our strategic intent to strengthen our presence in Luzon and will provide us with another opportunity to leverage on our core competencies to create long-term value for all our stakeholders," he said.