Aboitiz eyes Olongapo power distributorship

MANILA, Philippines - Aboitiz Power Corp. (APC), the power generation arm of the Aboitiz Group, will bid in the privatization of the Olongapo Public Utilities Department (PUD).

In a disclosure to the Philippine Stock Exchange, APC said the bidding for the Olongapo-based utility firm will be held on June 9.

APC said its participation in the bidding is consistent with its expansion plan for its distribution business.

Olongapo PUD operates and maintains the electric, light and power systems of Olongapo City in Zambales. It sold 139 gigawatt-hours (gwh) of electricity to approximately 41,000 customers in 2008. The average peak demand in 2008 was at 28.6 megawatts (MW).

APC already runs several distribution utilities in Luzon, the Visayas and Mindanao, including Visayan Electric Co. Inc. (VECO) and Davao Light and Power Corp. (DLPC).

VECO is the second largest privately-owned distribution utilities in the Philippines, next to Meralco, in terms of both customers and annual gwh sales while DLPC is the third largest DU in the country.

APC also has stakes in Cotabato Light and Power Co., Subic Enerzone Corp., Mactan Enerzone Corp., Balamban Enerzone Corp. and San Fernando Electric Light and Power Co. Inc.

VECO and DLPC have been implementing the performance-based rate (PBR) scheme, an international rate benchmarking scheme that provides incentives and penalties for performing and non-performing utilities respectively.

Both entered their respective reset periods in end-2008 and are expected to enter the four-year regulatory period by July 1, 2010.

SFELAPCO and Subic Enerzone are part of the fourth batch of private distribution utilities to enter PBR. They are expected to enter their respective four-year regulatory period by Oct. 1, 2011.

APC’s distribution companies sold a total attributable energy of 3,322 gwh to approximately 685,000 customers last year.

According to APC, it hopes to post modest growth on its existing DUs amidst efforts to improve its operations to maintain healthy margins.

“The company’s strategy in running its utilities is one of providing world-class service at the least possible cost. Providing value to its customers allows the company credibility and the ability to successfully implement justified rate increases,” it said.

“This, along with a transparent and open relationship of over 70 years with the regulators, ensures the Company’s continued ability to successfully apply and implement rate increases,” it added

This year, APC is optimistic on the prospects for both its power distribution and generation business notwithstanding external and uncontrollable economic and business factors.

“The company believes that it is in a good position to benefit from the foreseen opportunities that will arise in the year 2010. Its sound financial condition, coupled with a number of industry and company specific developments, should bode well for Aboitiz Power and its investee companies,” it said.