Mirant acquires 20% stake in Subic EnerZone

Mirant (Philippines) Industrial Power II Corp. has joined the Aboitiz group in the management and operation of the power distribution system at the Subic Bay Freeport Zone.

Mirant has taken a 20-percent interest in Subic EnerZone Corp. (SEZC), the joint venture between Aboitiz Equity Ventures Inc. and its subsidiary Davao Light and Power Co., which has been awarded the right to distribute power in the freeport under a rehabilitate-operate-transfer (ROT) scheme.

Under the agreement, AEV and DLPC will retain 20-percent and 40-percent interest, respectively. The remaining 20 percent will be taken by San Fernando Electric Light & Power Co. with 10 percent, and Pampanga Sugar Development Co. and Okeelanta Corp. each with five percent.

SEZC took over the Subic Bay Metropolitan Authority (SBMA) distribution facilities last Oct. 25. As required by the distribution management services agreement, the equity for SEZC will amount to P100 million.

AEV said the participation of Mirant, the Philippines’ largest independent power producer, will ensure a more stable power supply for SBMA and more competitively-priced power in the future.

Mirant Philippines, a wholly-owned subsidiary of the Atlanta-based Mirant Corp., owns more than 2,000 megawatts of installed generating capacity nationwide. It also owns a stake in the natural gas-fired 1,200 MW Ilijan power plant.

AEV, the publicly listed holding company of the Aboitiz Group, is one of the country’s leading conglomerates with core businesses in power, banking, transport and food.

The Aboitiz-owned DLPC, the country’s third largest private power distributor and recognized as one of Asia’s most efficient utilities, will provide the technical expertise and systems needed to operate an efficient world-class distribution network. San Fernando Electric, on the other hand, will share its resources and local knowledge in helping run the SEZC.

SEZC noted that Subic consumers will directly and immediately benefit from the ROT arrangement in terms of a 40-centavo reduction in electricity distribution rates from the current level of P1 per kilowatt hour to 59.75 centavos per kwh, one of the lowest in Luzon. This lower rate will be fixed for a period of five years.

The consortium will also spearhead the rehabilitation, restructuring and expansion of the SBMA power distribution system in the next five years at an estimated cost of P368 million.

The franchise area of the SBMA covers the Subic Freeport secured area. It serves the central business district, the gateway area, the Subic port district, and the Kalayaan and Binictican housing area and the West Ilanin forest.

From 1997 to 2001, total electricity demand at SBMA grew at an annual average rate of 3.33 percent. The system peak demand grew from 23.9 mw in 1997 to 32.8 mw last year. The SBMA power distribution system generates average annual revenues of P589 million.

The SBMA offered to bidders the privatization of Subic’s power distribution system last November with the terms of reference so designed that the bidders would offer to consumers rates below the current SBMA power distribution charge of P1 per kwh.

The privatization of Subic’s power distribution system caps SBMA’s three-pronged strategy to provide freeport locators, business and consumers with the lowest possible electricity cost.