Corporate News

By Victor V. Saulon, Sub-Editor

AboitizPower to form consortium to bid for Chevron assets

Posted on October 28, 2016

ABOITIZ POWER CORP. (AboitizPower) is in talks with foreign partners to form a consortium that will bid for Chevron Corp.’s geothermal energy assets in the Philippines and Indonesia, the finance chief of the company’s parent firm said.

“We’re already in talks. To be honest it [forming the consortium] is close. So when the bid comes out, by then the consortium will be formed,” Manuel R. Lozano, chief financial officer of Aboitiz Equity Ventures, Inc. (AEV) told reporters on the sidelines of the group’s press conference to present it third-quarter results on Wednesday night.

“As far as I know the sellers want to do it within the year. We are beholden to their timeline. We’re pretty close to making a decision.”

Chevron could raise $3 billion from the sale of its Asian assets, previous news reports said, although Mr. Lozano declined to give an estimate on the possible acquisition cost, describing the process as “tough.”

“That’s one of the things we’re working on now. This is a complicated asset. There are many assets, actually. There’s the Philippine asset. Indonesia is many different facilities, it’s not just one. Frankly, that’s our biggest challenge now -- how much we are willing to bid,” he said.

He confirmed that the group was looking at both the Philippine and Indonesia assets, possibly with AboitizPower as the vehicle for the bid or a new subsidiary to be created under the energy and power company.

He assessed the Philippine assets as much smaller, as it is just composed of a steam field, which currently sells its output to AboitizPower unit AP Renewables, Inc.’s Tiwi-MakBan geothermal facilities in Albay.

“The ones in Indonesia are a broader set of assets. They have power plants. They have steam. They have quite a lot,” Mr. Lozano said.

He said the company was talking to “at least two, possibly three or four” potential foreign partners. Although the company would want a strong partner, he said it was also looking at domestic Indonesian partners.

“So it really depends on how much each one is willing to put in terms of the equity,” he said. “We’d like to have a significant enough amount where we’re not just seen as a passive minority.”

Mr. Lozano admitted it would be hard for AbotizPower to be a full majority owner in Indonesia as it does not have any presence in that country, although the company is looking at a stake that would allow it to be part of the decision making process.

“We have people that we’re talking to who also want to have a significant stake. I suspect you’ll find maybe two major shareholders in each of the consortiums and then some others joining in at smaller stakes. But in our case, at least two of us -- two major shareholders,” he said.

AboitizPower’s advantage over other local bidders is its experience in geothermal energy, Mr. Lozano said.

“We want to really be in Indonesia. We believe in that market. We’re already looking at our own geothermal potential and even hydro projects. So for us, it’s a strategic asset,” he said.

He said the AboitizPower has enough cash to support the acquisition, although this would not be enough as the company has also bought into two coal-fired power plants in Mariveles, Bataan. The move is awaiting the approval of the Philippine Competition Commission, which reviews deals worth more than P1 billion.

“We’ll borrow no matter what. It’s just a question of how much,” Mr. Lozano said.

AboitizPower is the biggest contributor to AEV’s income. As of September, its share accounted for 63% of the holding firm’s bottom line.