[Vantage Point] How the Lopezes got, then lost CBK to the Aboitiz group

In my previous newsletter, I tackled the never-ending battle for control of Luzon’s battery. More than a decade later, the Aboitiz group has taken the Caliraya-Botocan-Kalayaan (CBK) hydroelectric complex from the grip of the Lopez group.

The history of CBK proves an old saying in infrastructure investing: the builders rarely become the long-term owners. 

Few strategic assets in Philippine history have traveled a more remarkable path — passing from Argentine engineers to Japanese financiers, then to the Lopez family before ultimately landing in the hands of the Aboitiz group. Its ownership history mirrors the evolution of Philippine capitalism itself.

After years of legal warfare, political confrontation, diplomatic maneuvering, and media battles, Argentina’s Industrias Metalúrgicas Pescarmona Sociedad Anónima (IMPSA) emerged victorious in the late 1990s’ struggle to rehabilitate and operate the CBK complex. 

The Argentine engineering giant survived court challenges, congressional scrutiny, allegations of favoritism, and an aggressive public relations campaign mounted by interests determined to stop the project. Yet winning the contract proved easier than keeping it.

The Philippine economy that greeted IMPSA at the turn of the century bore little resemblance to the one envisioned when the original proposal was submitted. 

The Asian Financial Crisis had overhauled regional capital markets, drastically reducing long-term financing for infrastructure projects. CBK itself had never been an ordinary hydroelectric facility. It demanded continuous investment, engineering expertise, watershed management, and patient capital. Unlike conventional power plants, its value lay not only in generating electricity but in providing flexibility and stability to the Luzon grid.

As rehabilitation risks diminished, ownership evolved beyond its Argentine roots. That transition followed a familiar pattern in global infrastructure finance: original developers often give way to institutional investors seeking stable, long-term returns. In CBK’s case, Japanese capital filled that role. Through CBK Power Company Ltd., Japanese interests, including Sumitomo Corporation and affiliated investors, became major participants in the ownership structure, transforming the project from an engineering venture into a multinational infrastructure platform backed by long-duration capital.

While public attention drifted elsewhere, the Lopez group never lost interest in the hydro complex. That persistence reflected a strategic vision extending well beyond the politics of the original controversy. Publicly, the battle had been framed around procurement rules, pricing, and nationalism. Beneath those arguments lay a more important reality. The Lopezes understood that CBK represented something far more valuable than another generating asset.

Its pumped-storage capability made it unique within the Philippine power system. By pumping water into elevated reservoirs during periods of low electricity demand and releasing it during peak hours, CBK could effectively store energy long before battery technology became fashionable. 

Today, the concept seems obvious. More than two decades ago, however, only a handful of industry insiders appreciated its significance.

Lopez family’s insight

At the time, the industry’s attention remained fixed on expanding baseload generation. Coal plants were rising, Malampaya natural gas was transforming the sector, and demand growth dominated planning. Energy storage and grid balancing were viewed as engineering concerns rather than strategic assets. The Lopezes saw further ahead. They recognized that CBK’s true value extended beyond installed capacity because it provided something increasingly scarce: operational flexibility over the Luzon grid.

That strategic insight explains why the family never abandoned its interest despite losing the original political battle. Through restructurings, acquisitions, and ownership changes, the hydro complex gradually found its way into the Lopez orbit. It became one of the great ironies of Philippine corporate history. The family that fought unsuccessfully against IMPSA ultimately acquired the very asset it had once tried to prevent from falling into foreign hands.

For the Lopezes, it marked the culmination of a campaign that had stretched across more than a decade. The Argentine engineers gradually disappeared from the Philippine energy landscape. Japanese investors institutionalized the project’s financial structure. The political passions of the Estrada years faded into history. CBK, however, endured, and eventually belonged to the Lopez group.

Their victory coincided with a profound shift in global electricity markets. The rise of renewable energy fundamentally changed how power systems operate. Solar and wind generation introduced greater volatility into electricity grids, making reliability, flexibility, and storage increasingly valuable. Electricity markets no longer rewarded only those capable of producing the cheapest power. They increasingly rewarded those capable of keeping complex grids stable.

Almost overnight, the characteristics that once made CBK a niche asset became strategic advantages. The hydro complex was no longer simply another hydroelectric plant. It had effectively become Luzon’s largest battery. The value proposition the Lopezes recognized years earlier was finally becoming obvious to the broader market. By the time the government moved to privatize the facility, investors no longer viewed CBK merely as dams and turbines. They saw one of the country’s most important balancing assets, positioned at the center of a power system steadily shifting toward renewable energy.

Beyond corporate transactions

CBK’s journey — from IMPSA to Japanese investors, then to the Lopezes, and now to the Aboitizes — is more than a succession of corporate transactions.

It’s the story of how Philippine capitalism continually reinvents itself around its most strategic assets, and why the fiercest battles in the power sector have never been fought over electricity alone, but over who controls the infrastructure that keeps the nation’s economic heartbeat alive.

Yet history was not finished with CBK. Just as the Lopez group finally secured the hydro complex after years of persistence, the economics of the global power industry began to change beneath its feet.

Renewable energy transformed the rules of electricity markets, turning pumped-storage facilities from niche engineering assets into strategic cornerstones of modern power grids. That shift ultimately explains why the Aboitiz group was willing to outbid everyone else for CBK.

In my next newsletter, we will examine why the country’s oldest hydroelectric complex may also be its most valuable energy asset, and why Aboitiz believes Luzon’s largest battery is worth far more than what it paid for it.

I welcome your views on these and other issues where decisions made in power shape the country’s economic future.

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