Aboitiz to expand power, shipping units

Aboitiz to expand power, shipping units
By Zinnia B. Dela Peña
The Philippine Star 04/24/2006

Listed investment holding company Aboitiz Equity Ventures Inc. (AEVI) is setting aside P2 billion this year for the expansion of its power generation and shipping units, according to a top company official.

AEV president and chief operating officer Jon Ramon Aboitiz said P1 billion each has been earmarked for the continued improvement of its shipping operations and new investments in power generation.

AEV, through Aboitiz Power Corp., has teamed up with SN Power Holding Singapore, to bid for the 360-megawatt Magat Hydroelectric Power Plant in Ramon, Isabela and the Hydroelectric Power Complex consisting of the 100-MW Pantabangan Hydroelectric Power Plant and the 12-MW Masiway Hydroelectric Power Plant both located at Pantabangan, Nueva Ecija.

At least two foreign and two local firms have expressed interest to join the public bidding for Pantabangan while six potential local bidders may vie for Masiway.

These plants are among the assets being sold by the Power Sector Assets and Liabilities Management Corp. (PSALM).

The group is also eyeing to operate a 200-megawatt coal power plant to supply requirements of the Visayan Electric Co.

"There are a lot of potential power developments in Mindanao, requiring an additional 800 to1,000 megawatts of additional power," Aboitiz said.

The Aboitiz Group, through its wholly-owned subsidiary Hedcor Inc., is the pioneer and industry leader in the development, operation, and management of hydropower plants.

Hedcor Inc. is the largest developer of mini hydropower in the Philippines, operating 19 generating facilities in Benguet and Davao with 113 megawatts of total installed capacity.

Funding will come from the P2.2-billion loan facility secured from a group of banks led by Bank of the Philippine Islands.

AEVI needs between P5 billion and P6 billion for the construction of three new plants over the next two or three years. The plants located in the Visayas-Mindanao area are estimated to cost between $300 million and $500 million.

Among these new plants include a 200-megawatt coal-fired plant in Cebu and two hydro power plants in Davao. The two new plants to be set up in Davao will have a combined capacity of 76 megawatts. Construction of the first plant is expected to be completed by 2008 in anticipation of a power shortage in the Visayas and Mindanao.

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

AEVI posted a net income of P3.16 billion last year, up 29 percent from the previous year, mainly due to the strong performance of its power and banking units. Consolidated revenues grew 21 percent to P27 billion.

The 2005 net income translates to earnings per share of P0.65. Earnings before interest, taxes, depreciation and amortization rose ninepercent to P6.36 billion.

AEVI’s power business remained the holding firm’s major driver of growth, contributing P2.12 billion or an increase of 32 percent from the previous year. The generation companies pumped in P1.05 billion or 36 percent higher while distribution utilities contributed P1.07 billion, up 28 percent from 2004.

The company’s banking investments turned in P930 million last year, with Union Bank of the Philippines contributing P911 million or an improvement of 11 percent from the year ago figure of P821 million.

AEVI’s food group also increased its income contribution by 13 percent, turning in P382 million. Although volumes in its flour business were flat, its feeds and swine businesses performed exceptionally well as production efficiencies showed significant improvements.

Meanwhile, the group’s transport business under Aboitiz Transport System Corp. suffered a 79 percent drop in net income last year to P65.7 million from P310.5 million as increased costs offset revenue growth.