Aboitiz hikes capex budget to P88 B

MANILA, Philippines - Cebu-based conglomerate Aboitiz Equity Ventures Inc. (AEV) is substantially increasing its capital expenditures to P88 billion this year to bankroll power generation projects.

Expansion programs are also slated this year for the banking, food and property subsidiaries, the company said in a statement.

The holding firm said it will spend P88 billion this year, up almost 50 percent from P59 billion in 2013.

“The bulk of expenditures, amounting to P78 billion, will be implemented by the power business as it continues to explore and build new power plants in response to the country’s need for additional power generating capacity amidst the tightening supply-demand situation for energy,” AEV said.

Subsidiary Aboitiz Power Corp. and its partners are pursuing a five-year program to increase capacity by up to 2,098 megawatts (MW) by 2017.

The power generator is already putting up three run-of-river hydropower plants equivalent to more than 27 MW: the 14-MW Tudaya I and II plants in Mindanao that will be completed by the first half and the 13.2-MW Sabangan facility in Mt. Province that will be finished early in 2015.

“The 300-MW Davao baseload plant which broke ground in 2012 is also expected to be completed in 2015 to help address the power supply shortfall in Mindanao,” AEV said

AboitizPower will also begin the expansion of its Pagbilao baseload plant and construction of its Cebu baseload plant within this year.

In 2012, Japanese-owned TeaM Energy Philippines partnered with AEV to expand the 735-MW Pagbilao coal-fired power plant at a cost of up to $700 million.

“These two projects will increase capacity in the Luzon and Visayas grids by an additional 400 MW and 300 MW, respectively, by 2017,” AEV said.

Other subsidiaries of the listed conglomerate will also expand this year.

Union Bank of the Philippines will invest P680 million for technology-related expenditures and the expansion of its branch network, in line with initiatives to ensure customer satisfaction and maximize growth in both deposit and loan accounts.

Food subsidiary Pilmico Foods Corp. is spending P2.7 billion for the expansion of its feeds and farms operations through the construction of two feedmill plants and the third expansion of its breeder and growing-finishing farms.

Property arm Aboitiz Land Inc. allotted P4 billion to open new phases for its Priveya Hills, Pristina North and Almiya projects in Cebu.

“The developer is looking at launching at least three new residential projects within the year,” AEV said.

AboitizLand earlier entered into a joint venture deal with property giant Ayala Land Inc. for the development and operation of a 15-hectare city center in Subangdaku, Mandaue City in Metropolitan Cebu.

AEV’s fuel unit, Aseagas Corp., will start the construction of a $50-million liquid biomethane plant, which will produce transport fuel from organic waste.

The plant, which will be completed in 18 months, will have a capacity of around 9,000 metric tons of biomethane per year.

In the first nine months last year, AEV’s consolidated net income slipped eight percent to P16.6 billion from P18 billion amid the decline in selling prices of electricity and the revaluation of dollar-denominated liabilities.

Adjusting for non-recurring items, AEV’s core net income fell seven percent to P16.4 billion.