Aboitiz Power takes 34% stake in STEAG power plant for $92M

Aboitiz Power Corp. (APC), the investment arm of the Aboitiz group in power generation, will invest $91.91 million (about P4.2 billion) in the 210-megawatt Mindanao coal-fired power plant run by German firm STEAG GmbH.

In a disclosure to the Philippine Stock Exchange (PSE), APC said it has signed a deal with STEAG for the purchase of the 34-percent interest in the facility.

“With the conclusion of the share purchase agreement, Aboitiz Power Corp. will become equity partners with majority stockholder STEAG GmbH, Germany’s fifth largest power  generator,” APC said.

APC said ING Bank NV served as its financial advisor for tthe acquisition. The closing of the transaction is targeted on or before Nov. 30 this year.

STEAG still control the majority 55- percent stake in the Mindanao coal-fired facility while the remaining 11 percent is held by State Investment Trust Inc.

The coal-fired power plant started commercial operation in January this year and is now contributing at least 16 percent to Mindanao’s power supply.

The construction of the facility entailed total investment of $305 million, financed through loans from the Japan Bank for International Cooperation (JBIC) and with lead arranger Kreditanstalt fur Weideraufbau (KFW), Bayerische Hypo-und Vereinsbank AG and Dresdner Bank AG and local bank Banco de Oro.

The project is covered by a 25-year power purchase agreement with state-run National Power Corp. The project’s construction was deferred for about three years due to the over capacity  in the power sector at that time.

Seeing the need to add more capacity in the Mindanao area, STEAG intends to expand its capacity by 150 MW.

The expansion is backed by a possible ready market with the proposed construction of a $1-billion shipbuilding facility in the Phividec Industrial Estate in Misamis Oriental by Korean giant Hanjin Heavy Industries & Construction Co. Ltd.