Aboitiz Power eyes banks for capex

Manila Times.net

BY KRISTA ANGELA M. MONTEALEGRE REPORTER

THE power unit of Aboitiz Equity Ventures Inc. (AEV) will resort to bank financing to fund half of its three-year capital expenditure program involving the construction of two coal-fired power plants.

In a briefing, Erramon Abotiz, AEV president, said Aboitiz Power Corp.(AP) will spend P100 billion until 2013, primarily for the construction of its Subic and Davao coal-fired power plants. The capex also covers the development of its two small hydro power plant projects in Davao as well as its distribution business.

About P42 billion has been earmarked for greenfield and brownfield developments this year.

Iker Aboitiz, AP chief finance and information officer, said about P50 billion will be raised from bank financing with P33 billion allotted for its Davao plant and the remaining P17 billion for its Subic facility

“As far as the debt markets are concerned, we do have plans of tapping it for project finance of different projects so the borrowing will not be on Aboitiz Power level but more on operating level,” the AEV chief executive said, adding that the company has no plans of tapping the equity markets.

AEV will spend P2 billion, of which P900 million will be earmarked for the expansion of its company-owned farms under wholly owned food-manufacturing unit Pilmico Foods Corp. Another P700 million is allotted for the expansion of the company’s headquarters in Cebu and P350 million for its banking group composed of Union Bank of the Philippines and City Savings Bank.

AP is awaiting the approval of the Davao City Council on the proposed 300-megawatt coal plant in Toril. The firm is planning to put up a 600-megawatt coal plant at the Subic

Freeport through its joint venture company with Taiwan Cogeneration International Corp. called Redondo Peninsula Energy Inc. (RP Energy).

The two power plants are expected to be fully commissioned between 2012 and 2014 in time for the anticipated spike in demand by 2014.

AEV’s consolidated net income dropped 26 percent to P4.6 billion in the first quarter, dragged mainly by the lower electricity prices and sales of its power unit.

AP shares rose to P29.90 on Wednesday from P29.45 each on Tuesday, while AEV shares jumped to P39.50 apiece from P38.45.