Aboitiz Power to spend P8B over 2 years for expansion

Aboitiz Power Corp., the holding firm for all power generation and distribution assets of the Aboitiz group is setting aside P8 billion until next year for its subsidiaries’ expansion projects as well as its working capital requirements.

In a registration statement filed with the Securities and Exchange Commission, Aboitiz Power said it is spending P2.68 billion for its capital expenditures this year and the balance of P5.33 billion for next year.

Bulk of the programmed capital budget will go to the group’s proposed Sibulan facility, which will consist of two mini-hydroelectric plants in southwest Davao with a combined generating capacity of 42.5 megawatts (MW). The project, slated for completion in 2009, is estimated to cost P5 billion, to be financed by a mix of debt and equity contributions.

Other projects of the group include the P4.2-billion Tamugan-Suawan hydropower plants with a combined generating capacity of 30.5 MW, which are expected to be completed in 2010.

As part of its growth strategy, Aboitiz Power is considering bidding for the 175-MW Ambuklao-Binga hydroelectric plants in Benguet, the 245-MW Angat Dam hydroelectric plant in Bulacan, the 112.5-MW Tongonan geothermal plant in Leyte and the 192-MW Palinpinon geothermal plant in Negros Occidental.

The group is also looking at acquiring privately-owned power generation facilities that may be put up for sale by other power generation companies.

The company is also considering entering into an agreement with a strategic partner with experience in hydroenergy for the acquisition of power plants which use hydrocarbon energy sources, including coal-fired and bunker-fired.

Aboitiz Power is looking to bid for the 600-MW Masinloc coal-fired power plant in Zambales that the government is expected to bid out later this year and to acquire a minority stake in STEAG State Power Inc. which owns and operates a 232-MW coal-fired power plant in Misamis Oriental.

Funding for Aboitiz Power’s capital budget will come from the proceeds of its planned initial public offering (IPO) of 1.8 billion shares to be sold at a maximum price of P4.67 per share worth a total of P8.4 billion.

Since its incorporation in 1998, Aboitiz Power has accumulated interests in power generation facilities with a total installed capacity of 686 MW as of end-2006.

Last December, the company and its Norwegian partner SN Power, through their joint venture company SNAP, won the bidding for the 360-MW Magat hydroelectric plant in Isabela.

The company also acquired ownership interests in a 50-MW thermal plant in Mactan island and a 70-MW thermal plant in Cebu City.

Among the companies under Aboitiz Power include Davao Light & Power Co. Inc., Visayan Electric Co. Inc., Hijos de F. Escaño Inc., Cotabato Light & Power Co., Subic Enerzone Corp., San Fernando Electric Light and Power Co., Pampanga Energy Ventures Inc., and Aboitiz Energy Solutions Inc.