AEV bent on acquiring Chevron geothermal assets

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ABOITIZ Power Corporation parent Aboitiz Equity Ventures (AEV) is bent on acquiring the geothermal assets of Chevron in the Philippines and Indonesia as the perfect match to the company’s rising renewable energy (RE) portfolio.

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“It’s a perfect marriage in a sense that, as you look at most geothermal projects, they are both steam. So our planning is also integrated—general and administrative costs can be combined—and strategic thinking, moving forward, will also be aligned,” Chief Financial Officer Manuel R. Lozano said in an interview.

“Today it’s a little bit more challenging, because we’re two separate companies with separate goals operating the two ends of the geothermal site. So having one integrated unit will at least be easier to manage,” he said.

Chevron has a 40 percent interest in Philippine Geothermal Production Company, Inc. (PGPC) which develops and produces steam energy for third-party-owned and -operated Tiwi and Mak-Ban geothermal power plants in southern Luzon. The power plants have a combined generating capacity of 692 megawatts (MW). Chevron also has an interest in the Kalinga geothermal prospect in Northern Luzon.

AboitizPower subsidiary AP Renewables Inc. operates the 458-MW Tiwi Geothermal Power Plant, a part of the Tiwi-MakBan geothermal facilities that were acquired by AP Renewables from the state-run Power Sector Assets and Liabilities Management Corp. (PSALM) in May 2009.

“We’re still evaluating it. We were interested. We’ve been to the Indonesian and Philippine assets, but the final decision has not yet been made as of today. Hopefully, soon the bidding will be completed,” Lozano said.

“As far as I know the sellers want to do it by the end of the year. So we are beholden to their timeline. We’re close to making a decision but it’s not yet final,” he added.

He noted several consortiums are also interested, including a couple of Japanese companies. “Some of them have local components. It’s a big asset so it’s hard for one entity to bid for it. I suspect it will be consortiums.”

Lozano said AEV is in talks with other companies to create a consortium with four potential foreign partners. “I think the consortium will be finalized together with the bid.

The Philippine assets are much smaller compared with Indonesia, consisting mainly of the steam field. “They don’t own a power plant. They own the steam in Tiwi-Makban which sells to our Aboitiz Power Plants, Lozano said.

Lozano said the company will fund the acquisitions through loans and internal cash.

“We’ll borrow no matter what. It’s just a question of how much are we going to borrow. We haven’t been given the floor price yet. Hopefully, in the next few months the numbers will start coming in,” he added.

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