Aboitiz Power picks Taiwan firm to build Subic plant

Aboitiz Power Corp. (APC), the power generation arm of the Aboitizes, has awarded a $500-million contract to a Taiwanese firm for the construction of a 300-megawatt (mw) power plant in Subic.

In a disclosure to the Philippine Stock Exchange (PSE), APC said its subsidiary Redondo Peninsula Energy Inc. issued the letter of award to Formosa Heavy Industries Corp. (FHI) for the supply of the boiler, steam turbine, generator and related services.

Redondo Peninsula Energy is a joint venture owned equally by APC and Taiwan Cogen International Corp., a subsidiary of Taiwan Cogen Corp.

The contract will allow FHI to start the construction of the power facility in Redondo Peninsula, Subic Bay.

APC said FHI will be required to make a five-percent downpayment worth $10 million on or before April 30, 2008.

FHI is a subsidiary of Taiwanese conglomerate Formosa Plastics Group. With over 40 years of development, the group is now the largest private enterprise in Taiwan whose units include Formosa Chemicals & Fibre Corp., Formosa Petrochemical Corp., and more than 20 other investments in Taiwan, the United States, China and Indonesia, in addition to several large educational and medical organizations.

According to APC, the award serves to fix the price and delivery time of the equipment amid an environment of rising prices and longer delivery period of raw materials.

After receiving the necessary approvals, the project is scheduled to start construction this year.

The Subic-based power plant is expected to start operations by 2011.

After posting a substantial improvement in its earnings performance in 2007, APC intends to push through with major acquisitions and construction of power  plant projects.

As of end-2007, the company posted a net income of P4.1 billion, a substantial growth of 124 percent from P1.8 billion in 2006. 

Recently, APC purchased the 40-percent stake of Tsuneishi Holdings (Cebu) Inc. in Balamban Enerzone Corp. for approximately P178 million.

The improvement in income performance of APC in 2007 was also on the back of a consolidated revenue growth of 25 percent year-on-year, from P8.7 billion to P10.8 billion.

APC’s non-recurring income of P785 million was due to foreign exchange net gains resulting from the revaluation of dollar-denominated loans and placements of some of its subsidiaries. 

But the growth in non-recurring income came with a robust recurring earnings of P3.4 billion with bottom line year-on-year growth of 81 percent.

Bulk of APC’s income came from its power distribution business which was up 52 percent to P1.5 billion in 2007, as total electricity sales grew seven percent year-on-year, from 2,507 gigawatthours (gwh) to 2,673 gwh.

Sales contributions from APC’s acquisitions during the year further increased sales 11 percent to 2,790 gwh.