September 14, 2014

AP's Pagbilao expansion to begin construction

Pagbilao Energy Corp, the project company between Aboitiz Power Corp (AP) and TeaM Energy Corp, yesterday formally launched the 420MW Pagbilao 3 coal-fired power project in Quezon that is targeted to be operational by November 2017. The Pagbilao 3 project is an expansion of AP’s existing 700 MW Pagbilao coal-fired power plant.

The estimated cost of the project is P44b. AP is planning to infuse up to P5.5b into the project, of which P4.1b will be sourced from the net proceeds of the P10b retail bond that was issued early this month. The EPC contractor is a consortium comprised of Mitsubishi Mitsubishi Hitachi Power Systems Ltd, Daelim Industrial Co Ltd, DESCO Inc and Daelim Philippines Inc.

Our take: As we noted earlier (see Daily Wealth Take dated 28 Aug 2014), AP has several power projects lined up for completion in the next three years that should start contributing to profits by 2Q15. The first project that it expected to be completed is the 300MW Davao coal project, with the first 150 MW unit targeted by March 2015 and the second 150MW unit to follow in June 2015.

Also expected for completion by end-2Q15 is the 14MW Sabangan hydro in Mt. Province. Another hydro project, the 68MW Manolo Fortich hydro plant in Bukidon is expected to be completed by end-2016.

By 2017, two coal-fired power projects should begin operations, namely the 300MW Cebu coal (80% owned) by 3Q17 and the 400MW (net) Pagbilao 3 expansion (50% owned) by 4Q17. Should these projects proceed as schedule, we estimate AP’s attributable capacity will increase by approximately 820MW to almost 3,150MW by 2017 from 2,330 MW. – WealthSec