Aboitiz Power to raise P6B to build hydropower plant in Mindanao

Aboitiz Power Corp. (APC) is planning to raise about P6 billion to fund the construction of another hydropower plant in southern Mindanao.

APC president Erramon Aboitiz said they would be needing such an amount to finance the 30.5-megawatt (MW) Tamugan-Suawan hydro project.

He said about 70 percent of the amount will be raised through borrowings while the balance of 30 percent will be financed by the Aboitiz group through equity infusion.

According to Aboitiz, they are currently in talks with several banks for the Tamugan project loan. “The banks have expressed interest to finance the project. We still don’t have a fixed number. We are still negotiating with our contractor.”

Once completed by 2010, the Tamugan plant and another project — the P5.1 billion Sibulan hydropower facility — will bring P1.8 billion in additional revenues for the group, Aboitiz said.

The output that would be generated by these two hydropower facilities will be sold to APC affiliate Davao Light and Power Corp. at P4 per kilowatthour.

The power purchase agreement, approved by the Energy Regulatory Commission (ERC), is unique since it would not include any foreign exchange adjustments.

“More or less the selling price is about P1.7 billion to P1.8 billion in annual incremental revenues for Sibulan and Tamugan. We have one power purchase agreement that’s already been approved by the ERC. It’s a very unique power purchase agreement with it being in pesos and has no foreign exchange adjustment. In other words, customers in Davao will not have to pay any foreign exchange adjustment –which normally in power they always have foreign exchange adjustments,” Aboitiz said.

He added that “the price of this generation is P4/kwh — but that is a delivered price inclusive of transmission cost with no foreign exchange component.”

The project would also backstop Mindanao’s power requirement particularly in the southern regions.

Aboitiz said the Sibulan and Tamugan projects are also significant because of the company’s vision to promote “cleanergy”.

“I believe that our partnership is a significant step forward in terms of the promotion, development and acceptance of more clean and renewable energy projects in the future,” he said.

Hedcor Sibulan Inc. has signed a P3.37-billion syndicated loan facility with three of the largest banks in the country, Rizal Commercial Banking Corp., Philippine National Bank and Metropolitan Bank and Trust Corp.

Aboitiz said the loan will finance the Sibulan project, with the balance pulled through the resources of the shareholders of the Aboitiz group.