PSALM turns over Angat power plant to K-Water

Business Mirror

Published on Tuesday, 03 September 2013 19:34

Written by Lenie Lectura

AFTER more than three years since it won the bidding for the 218-megawatt (MW) Angat hydro power plant, Korea Water Resources Corp. (K-Water) gets to finally take over the operation and management of the facility that sources power from the Angat dam in Bulacan. 

At the turnover ceremony of the issuance of certificate of effectivity (COE) by the Power Sector Assets and Liabilities Management (PSALM) Corp., the South Korean firm said it has 270 days from issuance of the COE to close the transaction. 

“Everything should be done in 270 days. The real operation and maintenance from K-Water shall start by the end of this year,” said K-Water Vice President for Overseas Business Division Byung Hoon-yune. 

K-Water, which placed a bid of $440.8 million for the facility, raise funds to pay PSALM and rehabilitate the power plant.

“Because we don’t have much time, we have to borrow $500 million as bridge loan for one year and, after that, we will start project financing with the Korean Exim Bank and Filipino banks,” said Yune. 

“The bridge financing will be substituted by the project financing. We shall do our best to make [the bridge loan] happen within the year,” said the K-Water executive. 

K-Water is partnering with San Miguel Corp. (SMC) to undertake the administration, rehabilitation, operation and management of the power plant. The companies agreed to form a special purpose company (SPC) which, Yune said, will be 60-percent owned by SMC and 40 percent by K-Water. 

Yune revealed that SMC may take in another Filipino company in the SPC. “Right now, San Miguel and maybe other Filipino investor will get 60 percent of the SPC and K-Water will get the remaining 40 percent,” he said. He declined to provide additional details citing a confidentiality agreement the parties signed. 

Specifically, SMC will “take part in the management. Financially, they will control the SPC and K-Water will technically operate and maintain the Angat plant,” clarified Yune.

SMC and K-Water are expected to finalize the creation of the SPC in 90 days.      In 90 days, we have to sign the shareholders agreement and the share purchase agreement. In that case, we can close the deal, he added. 

The hydroelectric plant is composed of four main and five auxiliary turbines. Units 4 and 5 are owned by the Metropolitan Waterworks and Sewerage System, which has also bid out the rehabilitation of the generating facilities.   source