Aboitiz to start marketing supply deals for Pagbilao

MANILA, Philippines - The Aboitiz Group will start marketing supply contracts for the Pagbilao power plant, immediately after becoming the independent power producer (IPP) administrator for the 700-MW facility, Aboitiz Power Corp. president and CEO Erramon Aboitiz said.

“We were given part of the TSCs, so part of the capacity is being covered with TSCs, but not the whole capacity. So we really need to go out and market the power,” he said. At present, only 40 percent of the 700-MW capacity of Pagbilao is covered by TSCs or transition supply contracts.

He said they would also try to tap the Manila Electric Co. (Meralco) for a possible additional supply agreement.

Aboitiz said aside from Meralco, they are also eyeing other potential buyers of power from the Pagbilao power plant.

“We’re talking to the different industries and electric cooperatives and maybe we’ll offer more to Meralco. We’ll look around. We still haven’t started it and clearly our economy is growing,” he said.

According to Aboitiz, they are also negotiating with some coal suppliers for Pagbilao.

“We’re studying that and we’re meeting some coal consultants to agree on a strategy. Hopefully, in the next few weeks we could come up with a strategy,” he said.

As an IPPA, Therma Luzon Inc., the vehicle used by the Aboitizes to bid for Pagbilao, will be given the right to source the fuel requirements of the power plant.

Aboitiz said if needed, they would also be raising funds for the fuel requirement of Pagbilao.

“We need financing for the coal. So we have to work with banks to get some credit lines for that,” he said.

Being an IPPA, Therma Luzon would not need to raise the entire $691 million bid offer for the IPP contracts of the coal-fired power plant.

On top of a performance bond of $38 million, Therma Luzon will pay the Power Sector Assets and Liabilities Management Corp. (PSALM) $42 million a month until they complete the $691-million offer over a certain period or until the contract expires in 2025.

“We raised it by about $42 million of present value from our first bid offer. What we did was we increased the monthly amortization. It’s not upfront. The only thing we put upfront is a performance bond of $38 million and then after that you make it based on monthly payments,” he said.

Aside from the Pagbilao IPPA, he said they may also bid for other Napocor contracts.

“We’re still looking at the different hydros – Angat and the different IPPAs – San Roque, Casecnan, and Bakun,” he said. — Donnabelle Gatdula