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Philippine utility firm to spend $692m on expansion
Aboitiz Power Corp, the Philippines’ third-largest utility by market value, will triple spending this year to buy generators from the government and build new capacity to meet rising electricity demand, Bloomberg news reported.
Capital expenditure will increase to a record 33 billion pesos ($692 million) from about 10 billion pesos in 2008, President Erramon Aboitiz said in an interview in Manila. The company is a unit of Aboitiz Equity Ventures Inc, one of the oldest diversified companies in the country with businesses ranging from banking to food and transportation.
“We will invest more than we ever have,” Aboitiz said May 15 at the Manila Peninsula hotel. The privatisation of National Power Corp. “is our chance of a lifetime.”
The government had sold about 60 percent of the state utility’s capacity on Luzon and Visayas islands as at the end of 2008, and plans to sell the rest this year to boost private investment and competition in power production and distribution. Aboitiz may pick partners for its expansion, an analyst said.
“Aboitiz has been known to be conservative,” said Laura Dy-Liacco, an analyst at ATR Kim Eng Securities in Manila. “A lot of their acquisitions are through partnerships.”
Aboitiz Power has climbed 37 percent in Manila trading this year, outpacing the 23 percent gain in the Philippine Stock Exchange Index, as investors expect the company to benefit from higher electricity demand. The stock is the sixth-best performer on the index in the past 12 months.
Electricity demand in the Philippines grows about 5 percent annually and will exceed capacity in some regions starting this year, estimates by the Department of Energy show. Poor plant maintenance, public opposition to price increases and a lack of investments had left electricity supply lagging behind demand.
Aboitiz will bid for two geothermal, a hydropower plant and several mobile units with a combined capacity of 751 megawatts and has lined up new projects with 848 megawatts of capacity, the president said. Winning the auctions will help double the company’s current capacity of 1,672 megawatts.
The utility will also bid for contracts to manage private plants that sell electricity to National Power, he said.
The company’s net income slumped 62 percent to 381 million pesos in the first quarter when reduced rainfall cut output at hydroelectric plants.
Profit may recover this quarter as rains boost hydro generation and as the company recovers from customers advance payments made by its distribution units to National Power, Aboitiz said.
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