Utilities Unbundled issue 13

Power packed

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AboitizPower CEO Erramon Aboitiz – winner of EY Entrepreneur Of The Year® (Philippines) – believes utilities should make a real difference to their sector and the future of their country.

“Entrepreneurship is not about blind optimism; it is about being innovative and trying something new while at the same time managing and balancing the associated risks.” - Erramon Aboitiz, CEO, AboitizPower

AboitizPower has experienced transformational growth in the last five years. Its share price of US$0.13 on listing in 2007 has soared and in November 2012 was trading at around US$0.82.14

“The privatization of assets by the National Power Corporation was a once-in-a-lifetime opportunity; it was something we did not want to miss out on,” says Erramon Aboitiz, the company’s CEO since 1998.

The company took an unusual approach to financing acquisitions by raising capital first. “Throughout our IPO road show, investors would say: ‘You have a strong balance sheet, why do you need to raise the capital now? You should be leveraging your balance sheet.’

“We explained that in emerging markets like ours, the windows to raise capital are often narrow and fragile. We wanted to eliminate that risk and do it ahead of time.”

Commitment to sustainability

AboitizPower’s acquisitions boosted its balance sheet and brought more affordable and reliable electricity to the Philippines, in line with the company’s guiding principles:

  • Provide reliable and ample power supply when needed
  • Ensure electricity is supplied at a reasonable and competitive price
  • Accomplish these with the least adverse effect on the environment and communities

“This vision guides everything we do,” Aboitiz explains. “All three are important. Achieving just one or two is not sustainable in the long term.”

Aboitiz’s power-generation portfolio includes a 40% stake in renewables, with several hydroelectric and geothermal assets as well as fossil-fired power plants. The company has also pioneered Cleanergy, its own brand of clean and renewable energy.

Filipino users will be able to choose their own energy providers when Open Access launches on 26 December 2012. “We have long considered this the ‘holy grail’ for the deregulation of the electricity market in the Philippines,” says Aboitiz. “It will increase competition and drive down prices.”

What do customers really want?

AboitizPower starts with the question “What do customers really want?” and adjusts the business to suit that thinking. This spirit of innovation led Aboitiz to be EY Entrepreneur Of The Year® (Philippines) 2011.

“To me, entrepreneurship means taking risks and doing things that have perhaps not been tested or are in the early stages. Entrepreneurship is not about blind optimism; it is about being innovative and trying something new while at the same time managing and balancing the associated risks.”

Domestic focus for now

AboitizPower has close to 2,000MW of new projects on the drawing board, including the 250MW expansion of run-of-the-river hydro and a pumped storage facility. The company is also exploring the use of liquid biomethane to power transportation vehicles.

For now, says Aboitiz, the company is staying within Filipino borders. “We have our hands full with projects for the medium term. We are looking forward to supporting the economy’s energy demands and making our country more competitive by reducing the cost of power. This is our ultimate goal.”

For more information, contact Ben van Gils.

  • 14 Source: Thomson Reuters Datastream.

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