Powering a better future

Posted on October 02, 2011 11:19:58 PM


The Philippines recently topped the list of Asian countries with the highest residential power cost. This fact, coupled with rising concerns brought about by climate change, are placing companies in the power sector under great pressure to provide consumers with stable, affordable and environment-friendly energy. One Filipino power company that understands the vital and strategic importance of this reality is AboitizPower Corp., led by Erramon I. Aboitiz.


Mr. Aboitiz, 55, began working in the Aboitiz Group in 1978 as a corporate staff member after graduating from Gonzaga University in the USA with a Bachelor of Science degree in Business Administration. After gaining experience in marketing and construction, he pursued a career in treasury and finance at Aboitiz & Company (ACO). ACO is the precursor and main shareholder of Aboitiz Equity Ventures, Inc. (AEV), which in turn is the majority owner of AboitizPower. It was during this time that he began working with the Aboitiz Group’s main power holdings: the distribution utilities of Davao Light & Power and Cotabato Light & Power.
He assumed the position of CFO of ACO in 1988, expanding the scope of his responsibilities to include other Aboitiz Group business units such as power generation and banking.
In 1998, AboitizPower was incorporated with Mr. Aboitiz as president and CEO. Since then, it has grown from a production capacity of 22 megawatts (MW) with 420,000 power distribution customers to a capacity of 3,137 MW with 720,000 customers.
After the company was listed on the Philippine Stock Exchange in 2007, Mr. Aboitiz ushered in AboitizPower’s era of growth. He spearheaded the initial public offering that gave the company the resources to strategically acquire privatized generating assets. Since then the company has acquired, among others, the 360-MW Magat Hydro Plant in Isabela and the 467-MW Tiwi-MakBan Geothermal Plant in Albay, Laguna and Batangas. The acquisitions elevated AboitizPower to a national power industry player, with generation and distribution assets throughout the Philippines.
“We have been reshaping AboitizPower to ensure we capitalize on current developments by positioning our business and organization for a more challenging future. As the Aboitiz Group pursues its growth ambitions, we will continue to be driven by our corporate values of professionalism, passion, integrity and innovation,” he says.
Mr. Aboitiz propelled the rise of AboitizPower by articulating a strong acquisition strategy through raising capital and debt at the right moment and under the right conditions. This allowed the company to actively participate in the privatization of government-owned generating assets. His vision was to assemble a portfolio of assets that would allow AboitizPower to grow from being a predominantly distribution business to one that had a substantial generation component and capability to provide to end users.
Upon assuming control of Magat Hydro in 2007, AboitizPower and partner SN Power of Norway upgraded it from a baseload plant (minimum capacity) into a high-capacity power generator to meet peak demands. This same partnership also successfully rehabilitated upon acquisition Ambuklao Hydro, which had been non-operational since 1999, and commissioned it in 2011. Ambuklao Hydro now provides the Luzon grid with 105 MW of power.
AboitizPower reoriented its corporate identity in 2009 in anticipation of industry deregulation that would give consumers the freedom to choose their electricity suppliers. The company relaunched Cleanergy, which was originally born in 2001. Cleanergy is AboitizPower’s brand of clean and renewable energy harnessed from its hydroelectric and geothermal power plants. Through its subsidiary Hedcor, Inc., where he was the long time president, AboitizPower also pioneered the construction of small hydroelectric power plants around the country. From this expertise, it gained the capability to build plants of under 15 MW in 12 to 16 months.
Mr. Aboitiz believes that by offering choices to consumers, AboitizPower can someday become the preferred power provider. His beliefs are the foundation of the company’s guiding principle of having a balanced mix in their power generation portfolio, which can lead to countrywide energy stability, and a tailor-fit offering to its customers.
Today, AboitizPower lists 21 hydroelectric plant units (total generating capacity of 715.5 MW), two geothermal facilities (467 MW), three coal-fired plants (1,178 MW), 12 thermal plants (777 MW), and seven distribution companies.
In 2010, these assets allowed the company to increase capacity to 3,137 MW, an 18% increase over the previous year, and power sales to 9,762 gigawatt-hours, a 111% increase from 2009. It has plans for new hydroelectric plants (total capacity of 85 MW), and is developing three coal-fired plants that will use clean coal technology (1,300 MW). By implementing clean coal technology, the facilities’ Circulating Fluidized Bed system will produce power with considerably less adverse effects to the environment.
Mr. Aboitiz’ dedication to sustainability extends beyond his plans of providing clean energy for the country. It also encompasses corporate social responsibility through the Aboitiz Foundation, which he chairs. In 2010, the foundation allocated P106 million to various projects such as education (infrastructure building, scholarship, computerization programs), enterprise development (microfinance, capability-building activities), corporate and other donations, and primary health and childcare nationwide (construction of water systems, medical and dental missions, street education classes).
In recognition of the innovative thinking and insight that brought AboitizPower to the forefront of the power industry, Mr. Aboitiz was awarded First Place for Best CEO in the Institutional Investor magazine’s 2011 All-Asia Executive Team Rankings. Also in 2011, Asiamoney magazine named AboitizPower its 2010 Best Managed Large Cap Company for the Philippines. Asiamoney also recognized Mr. Aboitiz its 2010 Top Executive of the Year for the Philippines for his role as president & CEO of AEV.
While looking forward to more opportunities, Mr. Aboitiz has not lost sight of what he believes in. “If you look at what our objectives are, what our roles and responsibilities are as a power generator, it’s basically to supply ample electricity when it’s needed, to do so at a competitive cost and to do so with the least adverse effect to our environment. The mindset of being a responsible power generator is where you hopefully give the customer the option of buying renewable power,” he sums up.
The winners of the Entrepreneur Of The Year Philippines 2011 will be announced on October 12, 2011 in an awards banquet at the Makati Shangri-La Hotel. The Entrepreneur Of The Year Philippines will represent the country in the World Entrepreneur Of The Year 2011 in Monte Carlo, Monaco in June 2012. The Entrepreneur Of The Year is produced globally by Ernst & Young.
The Entrepreneur Of The Year Philippines is a program of the SGV Foundation, Inc. with the participation of co-presenters De La Salle University, Department of Trade and Industry, Development Bank of the Philippines, Philippine Business for Social Progress, Philippine Stock Exchange and the Schwab Foundation for Social Entrepreneurship. BusinessWorld is featuring each of this year’s finalists.