Aboitiz Group wants PPP to continue under new admin

THE infrastructure arm of the Aboitiz Group is hoping that the next administration will continue to use private-public-partnership (PPP) as a mode of infrastructure development across the country.“Infrastructure projects have a passive multiplier effect, thus we need to continue with our infrastructure program and with the limited fiscal space the government has, I think PPP is the way to go. Societal gains from PPP infrastructure projects are always greater than private-sector returns. So, I hope that the next administration would pursue PPP to pursue the Build, Build, Build program of the government,” said Cosette Canilao, president and chief executive officer of Aboitiz InfraCapital (AIC) during the virtual press conference Monday, April 25, 2022.Aboitiz Group allotted roughly P69 billion in capital expenditure this year, 152 percent higher than the P27 billion utilized in 2021.Aboitiz Equity Ventures (AEV) chief financial officer (CFO) Dmi Lozano said the group’s infrastructure business will get the biggest share for this year’s capex at 42 percent or P29 billion, a 337 percent hike from last year’s actual spending.“This is probably the first time that our biggest capex component is in our new sector which is infra, to help boost the growth of our newest endeavors namely economic estates, common towers, bulk water, and of course, digital initiatives,” he said.Allocation for land acquisition and new site development for AIC Economic Estates amounts to P7 billion, while P5 billion is earmarked for the expansion of AIC’s-telco tower business and another P5 billion for AIC’s other digital infrastructure projects.Meanwhile, P3 billion has been set aside for the completion of AIC’s bulk water project in Davao City this year. Once operational, this water project will supply over 300 million liters of safe and sustainable water to Davaoenos daily. The rest of the budget will be for AIC’s other projects and Republic Cement’s major maintenance and safety-related capital expenditures.2021 earningsAEV closed 2021 with a net income of P27.3 billion, up 77 percent year-on-year, which resulted in a return on equity of 15 percent, significantly higher than nine percent in 2020.According to Lozano, the group’s power business has continued to contribute the largest share of AEV’s earnings at 57 percent while financial services and real estate, contributed 23 percent and nine percent, respectively. Contribution for food and infrastructure has stood at seven percent and five percent, respectively.Moreover, the CFO noted two strategic developments that happened during the year which they expect “to make a positive impact on profits and growth for many years to come”—the completion of the Jera transaction and the selection of UnionBank as the winning bidder for the Citibank asset sale–which are “big wins for the creation of shareholder value for AEV shareholders.”OutlookMeanwhile, Lozano said the group’s long-term outlook continues to be bullish.“We approach the coming year with optimism as Covid-19 abates and vaccinations increase. We are consciously aware of the inflationary headwinds, especially from the ongoing Russia-Ukraine war and we are actively managing risks, fully aware of its volatility and the challenges of trying to mitigate all of these risks through various contracting mechanisms, cost-control measures and productivity improvements. We hope to minimize the impact on our commodity prices as both countries are significant suppliers of oil, coal, wheat and other commodities,” said Lozano.The AEV top official also added that the group is looking forward “to working closely with the new administration and keeping our country on the steady path of economic recovery.”