Aboitiz Equity to spend P33 billion this year on power projects

MANILA, Philippines – Aboitiz Equity Ventures Inc. (AEV) is spending P33 billion this year for investments in the power generation and distribution business, a top company official said.

In a press briefing yesterday, AEV director Erramon Aboitiz said bulk of the programmed capital budget or around P20 billion, will go to the Tiwi-Makban, geothermal facilities, which the group expects to take over on May 26. The rest of the money will be used to fund the rehabilitation of the Ambuklao-Binga, Sibulan and Cebu coal plants.

Groupwide, AEV is allotting a total of P46 billion for the continued expansion of its power, banking, transport and food units, more than four times the money spent last year.

 “While we do not expect the global economy to recover quickly, we remain confident about the prospects of AEV and its investments. The company has a strong balance sheet and excellent reputation, as we have seen in the recent various fund-raising activities of the group that will allow us to continue to tap the credit markets to fund our growth requirements,” Aboitiz said.

He said the group’s capex this year is already fully covered with the power projects to be funded through loans and equity infusions by subsidiary Aboitiz Power and its partners.

Once its power projects are completed, which are expected to come on stream this year and next, Aboitiz Power will have investments in power plants with a total capacity of 1,990 megawatts and an attributable capacity of 1,161 megawatts, doubled from the end-2008 level.

 “The prevailing conditions in the Philippine power industry allow for enormous opportunities for the company’s growth. The company will pursue this once in a lifetime opportunity of building a portfolio of assets that will be both competitive in the long term and complementary with each other by continuing to participate in the privatization of targeted generating assets and by developing greenfield projects where the opportunity exists,” Aboitiz said.

Aboitiz said the group continues to be on the lookout for power assets to be put up on the auction block, namely Pagbilao and Sual. 

The group is also looking at bidding for power barges in Mindanao and hydro independent power producers Casecnan, Roque, Bakun and Angat.

For its transport business, the group intends to increase the utilitization of assets rather than expand capacity in both passage and freight. The utilization rates on its freight capacity averaged 88 percent in 2008.

As for its food business, Pilmico started constructing a biogas recovery system in its various facilities in Tarlac. With this, the company expects to recover and use the methane gas to generate electricity and reduce gas emission into the atmosphere.

Aside from generating its power, Pilmico will receive carbon credits which it can sell in the world market. “This project is part of the Aboitiz Group’s initiative of reducing the group’s carbon footprint wherever we can,” Aboitiz said.