I.

Executive Summary
II. Introduction
III. Profile and Background of the Business
a. About the company

AboitizPower began reporting its sustainability initiatives from a group perspective in

2009. Through the years, the company has communicated its commitment and initiatives
on corporate governance and sustainability to engage team members and external
stakeholders.
Through its ‘BetterWorld” campaign, Aboitiz’s sustainability program aims to increase
awareness among stakeholders about its existing initiatives supporting the triple bottom
line of people, planet, and profit.

AboitizPower believes in the power of balance.

In everything that we do, may it be in producing electricity from our generation facilities,
to retailing, and delivering them right into the switches of your homes, we do it with
balance. Our mission is to provide energy solutions that are reliable, reasonable and
responsible. By balancing these qualities, we address our country’s energy trilemma of
energy security, affordability, and sustainability.

A Better Future
In everything that we do, we are able to create a better future to our customers, our host
communities, and our nation.

Mission
We in AboitizPower consider it our responsibility to provide reliable and ample
power supply when needed, ensure that the supply of electricity is provided at a
reasonable and competitive price, and lastly accomplish the first two duties with
the least possible adverse effects on our environment and our host communities.

Core Values
Our Core Values guide every decision we make, every action we take.
Our Core Values of Integrity, Teamwork, Innovation, Responsibility, and Service
Excellence define who we are and these values drive everything that we do in the
organization.
We believe in Integrity.
We deliver on what we promise.
We honor our commitment.
We are accountable for our action and their consequences.
We believe in Teamwork.
We move quickly alone but move farther together.
We trust and earn trust.
We collaborate to achieve our goals.
We believe in Innovation.
We believe that change is the status quo.
We challenge prevailing assumptions when warranted and embrace better approaches.
We strive for continuous improvement.
We believe in Responsibility.
We strive to align what’s right for us with what’s right for our stakeholders.
We believe in Service Excellence.
We make it easy for the customer to do business with us.
We proactively anticipate customer needs.
We respond to concerns with a high degree of urgency, quality, and sensitivity.
We go the extra mile to delight customers.

b. Organizational Chart
 c. Product and Services

Aboitiz Power Corporation (AP) was incorporated on February 13, 1998 as a holding company
for the Aboitiz Group's investments in power generation and distribution as well as retail electricity
and other related services. Aboitiz Power Corporation (PSE: AP) is a vertically integrated
company engaged in power generation, distribution, and retail electricity services. The company’s
Generation Group harnesses power from a right-mix portfolio of renewable (hydro, geothermal,
and solar) and thermal (coal and oil) sources through 49 generation facilities across the country.
Its Hydro Group is the pioneer in the development of small to medium hydroelectric plants and
has been an industry leader over the past 40 years. Aboitiz Power’s Distribution Group is currently
composed of eight utilities, including the nation’s second and third largest, which supply electricity
to high-growth areas in Central Luzon, Visayas, and Mindanao (Driving A Culture of Values :
Aboitiz Equity Ventures Inc. Annual Report 2018, 2018). The company is the main distributor
of energy from selected light and power company of the country. Its affiliates include the second
largest distribution utility in the Philippines (Visayan Electric) which main client are the people of
Metro Cebu. The west Cebu which is powered by Enerzone Group is also part of their subsidiary
group. They also partnered with the third largest privately-owned electric utility, Davao Light.
Moreover, they have joint ventures with Cotabato Light and Power Company and San Fernando
Electric Light and Power Inc. The company ensures to provide custom-fit solutions to
customer’s growing demand for power as they invest in additional capacity to meet the increasing
needs of the country. Infrared Thermography was launched as a latest thermal imaging device
that will perform preventive maintenance which is relevant to the participating branches technical
team. According to Philippine Stock Exchange website, ownership in the Company was opened
to the public through an initial public offering of its common shares in July 2007. Since its
incorporation, AP accumulated interests in both renewable and non-renewable generation plants.
The Company holds all its investments in renewable energy through Aboitiz Renewables, Inc.
(ARI) and non-renewable energy through Therma Power, Inc. (TPI). Both ARI and TPI are wholly-
owned subsidiaries of AP. (Philippine Stocks Exchange Inc.). Surely, this growing conglomerate
proves to be one of the sought after company in the Philippines.
IV. Analysis of Business Situation

a. Economic Analysis of the Country

Philippine economic growth moderated in 2018, as the country faced both external headwinds
and high domestic inflation. Weak global trade led to slower export growth while import growth
remained robust, resulting in net export being a drag on growth. Meanwhile, private consumption
growth decelerated to its slowest pace since 2014, due to high domestic inflation and weaker
consumer sentiment. Inflation only retreated toward the end of the year, as global fuel prices
declined, rice supply increased, and in response to Bangko Sentral ng Pilipinas monetary policy
tightening. The slowdown in private consumption and the net export drag combined caused a
moderation in economic growth which slowed for the second consecutive year, from 6.7 percent,
year-on-year, in 2017 to 6.2 percent in 2018—below the government’s 6.5-7.0 percent target
range.(World Bank, 2019) Electricity generation has been a strong pressure in the government
to reduce dependency on foreign oil and gas supplies. Authors Maria Ines Rosana D. Balangue-
Tarriela and John Paul Mendoza published an article journal entitled “Updates on Geothermal
Energy Development in the Philippines”. They have stated in their paper that our country
Philippines has a big dependency in using geothermal energy for electricity generation. In
addition to this, we rank the second in the world next to United States of America which relies to
aforementioned energy resource. For the longest time, the Philippines has been dependent on
imported energy sources such as crude oil and coal, imported coal having the largest share for
electricity generation. It was only during the recent time when the country started producing small
volumes of oil (Palawan), natural gas (Malampaya) and coal (Semirara). Aside from these fossil
fuels, renewable energy sources like hydropower and geothermal also play a significant role in
meeting the electric energy needs of the country.(Balangue-Tarriela & Mendoza, 2015). On grids
where peak demand is now fully met by diesel plants, and where average cost of renewable
energy is less than the variable costs of diesel generation (which consists mostly of fuel and
lubes), electricity produced by run-of-river hydro, biomass, solar, and wind is now positioned to
compete economically and to progressively displace imported-diesel-fired generation by way of
hybridization initiatives(Ahmed & Logarta, 2017).

b. Trade Area and Cultural Analysis

c. Marketing Strategies
V. Current Financial Analysis
a. Income Statement
b. Balance Sheet
c. Cash flows
 d. Financial Analysis Results

Power Group
Aboitiz Power Corporation’s (AboitizPower) net income contribution to AEV for 2018 increased
by 6% YoY to PHP16.7 billion from the previous year’s PHP15.7 billion. Fresh contributions
from
Pagbilao Energy Corporation and Hedcor Bukidnon, Inc. for the generation business, as well as
an increase in consumption levels across all customer segments for the distribution business,
accounted for the growth in profits.

Being one of the fastest growing economies in the world,the Philippines will continue to increase
its requirement for ample and competitively-priced electricity. As such,we need to make sure
AboitizPower has enough capacitytoday and in the medium-term to address long-term
demands. We are well-positioned to responsibly provide thecountry with reliable power at a
reasonable cost. With ourpower generation group increasing its stake in GNPower’s
strategic assets in Luzon, we are on track to exceed our4,000-megawatt (MW) net attributable
target by 2020.
AboitizPower is the country’s second largest renewablecompany, the largest renewable power
player in the OpenAccess market, and is the pioneer in run-of-river hydro as an energy source.
Leveraging our expertise in this area, we arebuilding up products and services under our
Cleanergy brand.
We also launched our rooftop solar venture AboitizPower Distributed Energy, Inc. (APX) in April
2018, providing our customers the option to self-generate their energy needs.
Several key projects in Luzon and Visayas were completed in 2018 and we aim to eventually
integrate these closely with the group’s existing Open Access customers.
We will continue to expand our generation portfolio of multi-fuel technology in our goal to drive
down cost and improve efficiencies. Furthermore, we will continually explore both onshore and
offshore acquisition opportunities where it makes sense.

2018 Business Highlights:

Contributed PHP16.7 billion to AEV, up by 6% YoY from PHP15.7 billion in 2017

• Listed PHP10.2 billion Fixed Rate Bonds on the Philippine Dealing & Exchange Corp. (PDEx),
the second tranche of our PHP30 billion Shelf Registration Debt Program, for acquisitions,
future investments, and refinancing existing debt Generation Business Group
• Increased attributable net sellable capacity by 291 MW
• Inaugurated the 420-MW Pagbilao 3 baseload power plant in Quezon and the 8.5-MW Maris
Canal hydro in Isabela
• Launched APX, our rooftop solar business unit
• Completed the commissioning of the 73.3-MW Manolo Fortich hydro in Bukidnon and the
340-MW baseload power plant in Toledo, Cebu
• Acquired and took over the 153.1-MW Naga Power Plant Complex in Cebu
• Signed a Geothermal Resources and Supply Services Agreement with PGPC for the supply of
steam and the drilling of new production wells in our Tiwi-MakBan geothermal power plants
• Started signing framework agreements with host communities for the proposed Alimit
Hydropower Complex in Ifugao
• Piloted digital analytics in our Davao thermal power plant in an effort to further improve the
overall performance of our facilities
• Achieved 20 million safe manhours without lost-time injury for Therma Visayas, APRI, and
SacaSun, and two million safe manhours without lost time injury for Therma South.

e. Planned Growth of the business

2019 Business Plans

Generation Business Group

- Start commercial operations of the 340-MW Therma Visayas baseload power plant in
Toledo, Cebu.

• Finish construction of the 19-MW La Trinidad hydropower plant in Benguet

• Complete all the necessary framework agreements for the proposed Alimit Hydropower
Complex in Ifugao

• Sign more contracts under RCOA

• Expand the Cleanergy portfolio by exploring more opportunities in solar and hydropower
generation

• Maximize the Cleanergy portfolio in line with the Renewable Portfolio Standards, to participate
and capture a significant size of the Green Energy Option Program market

Distribution Business Group

• Achieve 100% emergency response within 30 minutes, 100% restoration time within one
hour, and increase by 50% same-day connections and reconnections for all utilities
• Complete the 890-meter phase 3 of VECO’s UDS in Cebu City; set up more satellite offices for
faster handling of customer requirements
• Sign a five-year partnership program between Davao Light and the Davao City government to
replace all sodium lamps in the city with LED, reducing the city’s energy consumption without
compromising services
• Aim to further reduce Cotabato Light’s feeder loss cap from 6.5% to 6.25% in 2019 and to
achieve 100% household electrification in two years. Its peak demand increased by 8% in 2018
vs. 2017 and is expected to hit 32.1 MW in 2019
• EnerZones to get certifications for Environment, Health, and Safety

VI. Conclusion and recommendation

For the past few years, major developments has been taken place in the Philippines
power energy. Expansion programs shows signs of favorable outcome in the installed
geothermal power plants in the Philippines. The Philippine Department of Energy (DoE)
oversees the exploration and exploitation of geothermal concessions in the country, while
practically the whole geothermal industry is now run by private corporations from
government-controlled entities. As a result of industry-wide privatization efforts, three (3)
major players emerge in the redefined Philippine geothermal energy landscape. These
are - a) Chevron Geothermal Philippines Holdings Inc. (CGPHI) who took over the
geothermal steamfield operations of Unocal Philippines in Makiling-Banahaw (Makban)
and Tiwi; b) Energy Development Corp. (EDC), which now owns and operates steamfield
and power plant facilities at Leyte, Bacon-Manito (Bacman), Palinpinon, Northern Negros
and Mindanao; and c) Aboitiz Power Renewables Inc. (APRI), owner and operator of the
power plant assets of National Power Corp. (NPC) in Makban and Tiwi.(Ogena, 2011). A
discussion paper from University of the Philippines School of Economics highlighted the
market power in the Philippine power market. In their study, they have discussed the
model of electricity industry emerged from simple generation of power plants to a retail
consisting of metering, billing, and collection of payments. In this regard, plants have been
restructuring their business and join to the wholesale electricity market. In a competitive
pool, generators compete to supply electricity by submitting price-quantity offers
indicating the amount of electricity they are willing to generate at various prices during a
trading period. The pivotal supplier data show that in 2007 many plants, including small
ones, became pivotal suppliers during peak hours, creating opportunities for the exercise
of market power..(Danao, 2009)

Aboitiz Power Corporation Inc. grew in the aftermath of the privatization of the
government’s power generation assets since 2005. Its current portfolio of power
generation assets include hydroelectric and thermal plants, the latter based on
geothermal power as well as coal (De la Fuente, 2012a). Its power generation assets are
located from the northern to the southernmost parts of the country. Perhaps to refocus its
business and also to finance its aggressive acquisition of NAPOCOR’s power assets, it
sold its shipping and logistics assets, Aboitiz Transport System, to Negros Navigation.
The Aboitiz group since its early beginnings had been a highly diversified but regional
business. At this stage in its history, its focus as a business appears to have shifted to
power generation and concomitant with this, it has become national in geographic scope.

(Paul, Gutierrez, & Rodriguez, 2013). The Philippines needs a vision and strong policy
support. In addition to this energy assessment, it is necessary to assess the trade-offs
across other sectors from investment in sustainable energy. This energy assessment
also requires strong links across other sectors of the Philippine economy in order to
identify and define the impacts of alternative development strategies. (Mondal,
Rosegrant, Ringler, Pradesha, & Valmonte-Santos, 2018) Promotion of renewable
energy will be a significant leap in our country’s aim to integrate clean development
mechanism. With this, it could uphold strong economy of the Philippines for the next years
to come.

VII. References.

Ahmed, S. J. (IEEFA), & Logarta, J. (ICSC). (2017). Electricity-Sector Opportunity in the

Philippines The Case for Wind-and Solar-Powered Small Island Grids Electricity Sector
Opportunity in the Philippines. (May), 27. Retrieved from http://ieefa.org/wp-
content/uploads/2017/05/Electricity-Sector-Opportunity-in-the-Philippines_May-2017.pdf
Balangue-Tarriela, M. I. R. D., & Mendoza, J. P. (2015). Updates on the Geothermal Energy
Development in the Philippines. World Geothermal Congress 2015, (April), 4.

Danao, R. A. (2009). Market Power in the Philippine Power Market.

Driving A Culture of Values : Aboitiz Equity Ventures Inc. Annual Report 2018. (2018).
Retrieved from https://aboitizpower.com/

Mondal, M. A. H., Rosegrant, M., Ringler, C., Pradesha, A., & Valmonte-Santos, R. (2018). The
Philippines energy future and low-carbon development strategies. Energy, 147, 142–154.
https://doi.org/10.1016/j.energy.2018.01.039

Ogena, M. S. (2011). PHILIPPINE GEOTHERMAL INDUSTRY UPDATES 2011. (November),

7–9.

Paul, B., Gutierrez, B., & Rodriguez, R. A. (2013). Diversification Strategies of Large Business
Groups in the Philippines. Philippine Management Review, 20, 65–82. Retrieved from
https://search.proquest.com/openview/f196242050d9627695cfc6a5066e3ff7/1?pq-
origsite=gscholar&cbl=2032722

Philippine Stocks Exchange Inc. (n.d.). Company Information. Retrieved October 22, 2019, from
https://edge.pse.com.ph/companyInformation/form.do?cmpy_id=609

World Bank. (2019). Philippines Economic Update Safeguarding Stability Investing in the
Filipino. (April).
A Case Study: Aboitiz Power Corporation

A Case Study Presented to

The Faculty of the Graduate School

Lourdes College, Cagayan De Oro City

In Partial Fulfilment of the

Requirements for the Degree of

Master of Science in Hospitality Management

(MSHM)

JUNE FLOY L. BONGCAWIL

AL GLEEN R. LAGRAMA

DAWN T. MALACASTE

MARY ANNE L. OBED

GEM MARIE R. CLET

ANTHONY B. DAGANG, PH.D,

Instructor

October 2019