Business Mirror
SUNDAY, 09 OCTOBER 2011 17:20 PAUL ANTHONY A. ISLA
THE government-run Power Sector Assets and Liabilities Management Corp. (PSALM) said on Friday it will defer the privatization of the Naga power plant complex in Cebu.
Emmanuel Ledesma Jr., PSALM president and chief executive, said in a statement that the PSALM board decided to grant the request of the Joint Congressional Power Commission (JCPC) to conduct a further review of “the allegedly unfair and illegal condition” known as a “right to top” the highest bid previously granted to SPC Power Corp. (SPC) in the land lease agreement executed by and among PSALM, the National Power Corp. and the SPC in 2009.
PSALM received said letter request from the JCPC on Sunday through Sen. Sergio Osmeña III, Rep. Henedina Abad and Rep. Lorenzo Tañada III. PSALM recalled that the land lease agreement was executed by and among the parties pursuant to the asset purchase agreement on the Naga land-based gas turbine (LBGT) plant acquired by SPC through public bidding in 2009.
In the agreement, PSALM said the SPC was granted the right to top the highest bid on the sale or lease of the properties within the vicinity of the LBGT plant in order to give the winning bidder of the LBGT plant the opportunity to expand, subject to the payment of a premium of five percent over the highest bid on said adjacent properties.
PSALM said the Naga complex is in the vicinity of the LBGT plant.
“The invitation to bid on the Naga complex published in July 2011 generated the interest of 10 bidders, which was eventually reduced to 5 as the participants were required to comply with certain bid requirements,” Ledesma said.
He added that it is apparent that despite the disclosure made to the bidders of the existence of said right to top in favor of SPC, the bidding exercise still resulted in continued interest from existing bidders to win the Naga complex.
Ledesma said PSALM was able to structure the sale of the capacity and the assets of the complex in such a way that PSALM will still be able to secure the most optimal value for the asset despite the existence of said right to top.
He said despite the interest generated, the PSALM board deemed it prudent to defer the bidding and to address all concerns in the interest of transparency and propriety.
In July this year PSALM commenced the new round of bidding for the appointment of an independent power producer administrator to manage the contracted capacity of the Naga complex in line with its continued efforts to implement its mandate under the Electric Power Industry Reform Act.
PSALM has even set the deadline for the submission of bids today, Oct. 10.
The Naga complex consists of the 106.8-megawatt (MW) Naga coal thermal power plants 1 and 2 and the 39-MW Naga diesel power plant in Naga, Cebu. The plants are under a rehabilitate-operate-maintain-and-manage agreement/energy conversion agreement with Kepco Salcon Philippines Corp., which is set to expire in March next year.
(Paul Anthony A. Isla)
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