San Miguel to sell off Limay power plant

Business Worold Online
Posted on October 02, 2011 09:33:45 PM


SAN MIGUEL Corp. is selling its 620-megawatt (MW) Limay diesel power plant in Bataan amid moves to control other generation assets.
San Miguel President and Chief Operating Officer Ramon S. Ang confirmed the planned divestment in a text message to BusinessWorld yesterday, adding that the firm “will finalize the sale soon”.


San Miguel, now the country’s largest power trader, bought the Limay power plant in 2009 from the state-run Power Sector Assets and Liabilities Management Corp. (PSALM) after submitting a lone offer worth $13.5 million.


Before this, attempts to auction off the plant had failed four times, earlier reports show.


PSALM Vice-President Conrad S. Tolentino said San Miguel can go ahead with the sale.


“Limay is a sold plant fully paid for by Panasia Energy Holdings, Inc.,” Mr. Tolentino said in a text message yesterday, referring to the San Miguel’s wholly owned subsidiary.


“Other than compliance with applicable laws, PSALM’s sale contract does not impose conditions on the buyer after it pays in full,” Mr. Tolentino said.


SMC Global Power Holdings Corp., the conglomerate’s energy unit poised to conduct an initial public offering, had not listed the Limay power plant among its assets in the prospectus provided to interested investors.


The prospectus further noted in the discussion of operational results for 2010 that the figures “excluded results of operations attributable to the Limay power plant... since the Limay power plant will not contribute to results of operations in future periods.”


San Miguel had earlier wanted to convert the Limay power plant to use liquefied natural gas (LNG). The conversion was expected to cost about $1 billion as the plant’s capacity had to be doubled as well to make the conversion feasible.


Government-owned Philippine National Oil Co.- Exploration Corp. originally wanted to enter a joint venture to convert the power plant.


However, the conglomerate shelved the plan in March this year.


The planned divestment comes as San Miguel had said it was looking to bid for other state power assets including the Naga coal plant.


Proceeds from SMC Global Power’s planned share sale was, meanwhile, intended to be spent on developing new power plants as well as acquiring existing generation facilities.


San Miguel’s power businesses had driven profit growth in the first half according to earlier reports. Its consolidated operating income was up by 136% to P31.5 billion while consolidated net income jumped by 72% to P10.8 billion reportedly due to performances of Petron Corp., SMC Global Power and Manila Electric Co. -- Emilia Narni J. David