Aboitiz Power Corp. (AP) has cleared the way for a new hydroelectric power project in electricity-starved Mindanao, in the Philippines.

Erramon Aboitiz, AP president and CEO, said the company has reached a compromise agreement with the Davao City Water District (DCWD) over their conflicting water rights claim over the Tamugan River, which is the site of the firm's proposed 10 to 15MW run-of-river hydro plant.

The row stemmed from DCWD's claim that the project will threaten the city's limited water supply as the Tamugan River is the only viable source for Davao City.

The DCWD's objection to the project led to the delay in AP's application for water rights before the National Water Resources Board.