Aboitiz feuds with partner over bidding for power deals

MANILA, Philippines - The Aboitiz Group is feuding with its own partner on the alleged forced bidding for supply management contracts of three hydroelectric power plants.

In a disclosure to the Philippine Stock Exchange (PSE), Philippine Hydropower Corp. (PHC), a wholly-owned subsidiary of listed Aboitiz Power Corp. (APC), has filed a complaint with the Regional Trial Court in Cebu City against Pacific Hydro Bakun Inc. (PHBI), its joint venture partner in Luzon Hydro Corp., for reportedly forcing the company’s directors to bid for the contracted capacities of three hydro plants.

APC accused PHBI and its parent company, Pacific Hydro Ltd. (PHL), for allegedly threatening and intimidating PHC and its nominee-directors in Luzon Hydro.

LHC is the special purpose vehicle formed to develop, construct and operate the 70-megawatt (MW) Bakun hydropower plant in Ilocos Sur under a build-operate-transfer (BOT) scheme with the National Power Corp. (NPC).

In particular, the complaint cited PHBI’s and PHL’s wrongful conduct, including: threatening and intimidating PHC and its nominee directors in LHC to vote in favor of allowing LHC to participate in the bidding for the independent power producer administration (IPPA) for the combined contracted capacities of the Bakun plant, the 345-MW San Roque hydropower plant and the 30 MW Benguet mini-hydro plants and spreading malicious allegations of wrongful conduct on the part of the nominee directors of PHC to third persons.

The Aboitiz camp said PHBI’s proposal for LHC to engage in the business of an IPPA for the power plants included in the bidding is outside its primary or secondary purposes and is beyond the original intent of the shareholders of LHC.

Thus PHC said PHBI and PHL cannot rightfully compel it to enter into the IPPA business through LHC. Moreover, notwithstanding PHC’s refusal to enter into the IPPA business with PHBI and PHL, such refusal did not deprive the latter of participating in the bidding if they really wanted to do so.

Pacific Hydro is a wholly owned subsidiary of the Australian Infrastructure Fund managed by Industry Funds Management, which specializes in the management of wholesale investment products across Australian and international infrastructure, private equity, debt investments and Australian listed equity portfolios.

On the other hand, PHL is the holding company of all investments of the Aboitiz Group in hydropower generation.

Prior to 2005, its subsidiaries were Hydro Electric Development Corp. Northern Mini Hydro Corp., and Benguet Hydropower Corp., which has a 50 percent stake in Luzon Hydro.

In June 2005, the hydro group’s operating companies Hedcor and Northern Mini Hydro were merged into Benguet Hydro., which was subsequently renamed Hedcor Inc.