SN Aboitiz to hike power plant’s capacity

REPORT FROM BUSINESSWORLD NORWEGIAN-FILIPINO power company SN Aboitiz Power will increase the installed capacity of the recently acquired Ambuklao-Binga hydroelectric power complex to 225 megawatts (MW) from the current 175 MW. SN Power Asia Project Director Erik Knive told BusinessWorld that the group has firmed plans to expand the 75-MW Ambuklao plant to 85 MW or 100 MW, and the 100-MW Binga plant to 125 MW. SN Aboitiz won the plant package in a bidding last Nov. 28, after submitting a bid of $325 million. "We will do this within the next two to three years. These plants are peaking plants, and since we expect high demand in Luzon, these plants will be [critical]," he said. Mr. Knive said SN Aboitiz recently raised, for its acquisition of the 360-MW Magat hydroelectric power plant last year, $380 million from project finance. This combination of dollar and peso loans took the place of the deferred payment financing and shareholder loans used as bridge financing for the transaction between April and October 2007. The creditors were the International Finance Corp., which lent $105 million, the Nordic Investment Bank, which supported SN Power’s investment, and a group of commercial banks including HSBC and Banco de Oro. For the moment the group will focus on getting Ambuklao, idle since 2000 due to siltation problems, operational and to produce up to 65 MW of power. "The additional capacity will displace coal and other non-renewable energy sources," Mr. Knive said, pointing out that the group is already in control of Magat, Luzon’s largest hydroelectric power plant. SN Aboitiz also won the plant in a government auction with a bid of $530 million. The three plants, which currently make up the heftiest Norwegian investments, make SN Aboitiz one of the country’s largest renewable power producers. "This additional capacity will displace coal and other non-renewable energy sources," Mr. Knive said, pointing out that the group is already in control of Luzon’s largest hydroelectric power plant. More investments eyed Norway-based SN Power, which entered the Philippines in 2005 via a 50-50 joint venture with the Aboitiz group, is still looking for more investments in "the world’s most deregulated power sector," he added. Managing power generators In the second quarter of 2008, the company will bid for the contracts to manage the independent power producers. "That will be a new thing, with no precedent anywhere else. We are very excited," Mr. Knive said. SN Aboitiz also wants to buy the 245-MW Angat power plant, set up greenfield projects, participate in the power market, and sign more corporate deals. "But we’re taking it step by step, but we are sure that we are on track in our expansion plans in the Philippines," he said. SN Aboitiz Power has a staff of 15 in its office in Manila, which deals with operations, power production planning and power trading. — Maria Kristina C. Conti/BusinessWorld