Aboitiz Group mulls $500-M power plant proj

Hoping to replicate the success of its power distribution business in Subic, Aboitiz Equity Ventures(AEV) plans to build three new plants in the Visayas-Mindanao area estimated to cost a combined $500 million.

AEV president and chief executive officer Jon Ramon Aboitiz said the company is looking at the construction of a 200-megawatt (MW) coal-fired plant in Cebu and two hydropower plants in Davao.

Aboitiz said the company may tap new borrowings or issue treasury shares to fund its planned capital investment.

The two new plants to be set up in Davao will have a combined capacity of 76 MW. Construction of the first plant which shall have a capacity of 46 MW, will begin early next year.

For the Cebu coal power plant, AEV has invited Mirant Phils. Corp. and Korean Electric Philippines Co. (Kepco) as partners. The plant is expected to be operational by 2008.

"With the impending power shortages in 2008-2009 in the Visayas-Mindanao area, and with the National Power Corp. (Napocor) no longer building power plants, the responsibility of ensuring adequate supply for the future now rests with the distribution utilities. This situation presents us with opportunities. Today, we are in discussions to begin to build power plants to supply our distribution utilities," Aboitiz said.

AEV, through its subsidiary Aboitiz Power Corp.(APC), operates 16 power plants which have a combined capacity of 111 MW. Most of these plants are hydropower plants.

In Feb. 2005, the board of directors of AEV approved the sale of all treasury shares held by the company and some of its subsidiaries amounting to approximately 890 million shares, representing 15.6 percent of the company’s stock.

No fixed timetable or price was set for the sale of the treasury shares and would be dependent on the company’s capital needs moving forward. These shares were purchased in the late 1990s when the stock was trading at depressed prices.

"Aside from bringing in additional capital to fund our investment program, we think the release of these shares will enhance shareholder value by increasing the liquidity and trading of its share by increasing its free float," Aboitiz said.