Digitizes buys out partner in distribution utility

REPORT FROM BUSINESSWORLD ABOITIZ POWER Corp. on Tuesday said it would buy out the stake of Team Philippines Industrial Power II Corp. in Subic Enerzone Corp. for P92 million, giving it full ownership over the power distributor. Team Philippines, a unit of Japanese-led TeaM Energy Philippines, held 20% equity in Subic Enerzone, a company that was already majority owned by the Aboitiz group. The only other partner of Team Philippines in Subic Enerzone, Davao Light and Power Co., Inc. is an Aboitiz subsidiary. Aboitiz earlier bought a 25% equity in Subic from San Fernando Electric Light and Power Co., Inc., Okeelanta Corp., Pampanga Sugar Development Corporation and Aboitiz Equity Ventures, Inc. through a shares-for-shares swap. The swap is still pending before the Securities and Exchange Commission for approval. Full control Luis Miguel Aboitiz, Aboitiz vice-president in charge of energy assets, in a telephone interview said acquiring the stake of Team Philippines in Subic Enerzone made little difference. "The stake sale makes no difference, since we were in control of Subic Enerzone already." The sale simply gives the Aboitizes full control over Subic Enerzone, but that has been a long-standing plan, he said. "We were already discussing the sale before Mirant was sold [to Team Energy Philippines]," he said. US power firm Mirant Corp. sold its Philippine assets to TeaM Energy. Mirant had owned 2,000 megawatts (MW) worth of Philippine power assets. The sale, however, does not change the direction of Subic Enerzone, Mr. Aboitiz said. "There are no new plans or changes for Subic Enerzone. We’re just gonna grow it as the Subic ecozone grows, we are ready to meet whatever demands." Subic Enerzone operates the power distribution system of the Subic Bay Freeport Zone under a 25-year distribution management services agreement with the Subic Bay Metropolitan Authority. The company got the contract to provide power to the economic zone after it won in a competitive bidding in 2003. Mr. Aboitiz emphasized that Subic was one of the company’s higher growth areas, ranking fourth behind Cebu, Davao, and San Fernando in Pampanga. Other acquisitions Aboitiz Power recently closed another stake buyout. The conglomerate bought a 34% stake in STEAG State Power, Inc., which owns and operates a 232-MW coal-fired power plant located in Misamis Oriental, for $91.9 million last month. Mr. Aboitiz said that following the recent spate of purchases in power firms, there were no more stake acquisitions planned for Aboitiz Power in the near future. "Next up will be Palinpinon, but we are still thinking about it," he said, referring to a government geothermal power plant that is scheduled to be placed on the auction block early next year. Last November, Aboitiz Power secured approval from the Securities and Exchange Commission to incorporate Therma, Inc., which it will use to bid for the 192.5-MW Palinpinon geothermal power plant. With Norweigian partner SN Power, the company earlier this month won the 175-MW Ambuklao-Binga hydroelectric power plant complex with a bid of $325 million. The consortium already owns the 360-MW Magat hydroelectric power plant. With these three plants, SN Aboitiz Power has become the country’s largest private renewable energy company. It also plans to bid for the 245-MW Angat hydroelectric power plant in 2009. New plant Mr. Aboitiz said Aboitiz Power would likely begin its greenfield project, a 300-MW coal power plant in Subic, in the second half of next year. Together with the Taiwan Cogeneration Corp. and Redondo Peninsula Energy, Inc., Aboitiz Power is investing $420 million into the plant. The coal-fired project aims to supply the power needs of Subic Enerzone. Aboitiz Power holds the power portfolio of the family-owned group, which is also into infrastructure and transportation. Other Aboitiz power assets include the Visayan Electric Co., Inc., Hijos de F. Escano, Inc., Cotabato Light & Power Co., San Fernando Electric Light and Power Co., Inc., Pampanga Energy Ventures, Inc., and Aboitiz Energy Solutions, Inc. — MKCC