AEV bids for Subic power supply

Cebu-based Aboitiz Equity Ventures Inc. (AEV) will bid for the privatization of the power supply for the entire Subic Bay Freeport, a franchise area with an average annual income of P689 million.

In a disclosure to the Philippine Stock Exchange, AEV assistant vice president and comptroller Melinda Bathan said the company and its wholly-owned subsidiary, Davao Light and Power Co. (DLPC) submitted yesterday their technical and financial bids for the privatization of the Subic Bay Metropolitan Authority (SBMA) Power Distribution System (PDS) on a rehabilitate-operate-transfer scheme.

Under the arrangement, a new corporate vehicle for the bidding will be formed with AEV owning 60 percent and DLPC the remaining 40 percent. The latter, however, will assume operational control of the joint venture, backed by its extensive 75 years of experience in the electricity distribution business.

DLPC, the third largest power distribution utility in the country, holds the franchise for the electricity distribution requirements of Davao City and its vicinity that include the towns of Panabo, Carmen, Sto. Tomas and Dujali. It is one of the cornerstones in AEV’s income stream, contributing more than P350 million in the group’s profits last year and is considered one of the most efficiently run power firms, with systems losses at only 8.75 percent, way below local standards.

In 2002, the publicly-listed AEV posted a record year – both financially and operationally – as it’s net income surged 40 percent to P2.2 billion, powered by the solid performances of its various business segments – power, banking and food. Last year, AEV assumed total control of shipping line WG&A after buying out its formers partners, the Chiongbian and Gothong families, for P3.65 billion.

At about the same time, AEV raised its stake in its agribusiness subsidiary Fil-Am Foods by similarly buying out its American partners Tyson Foods Inc. and PM Nutrition Co., a fully-owned unit of Purina Mills LLC.

AEV’s possible entry in Subic will further expand the reach of its power units under the Aboitiz Power Corp. (APC) umbrella, which already spans the entire archipelago from Northern and Central Luzon to the Visayas and Mindanao islands.

APC, the biggest contributor to AEV’s income, has a nationwide network of distribution facilities: DLPC and Cotabato Light & Power Co. in Mindanao; the Visayan Electric Co.; the Benguet-based Luzon Hydro Corp. and Hydro Electric Development Corp.; Northern Mini Hydro Corp. and PhilHydro Corp.; and the San Fernando Electric Light & Power Co. in Pampanga.

In addition, AEV also has two power generating plants, the Western Mindanao Power Corp. and Southern Philippines Power Corp.