Gov’t weighs ‘winning offer reduction’ for Angat plant

Manila Bulletin 
Published: June 14, 2013 
One of the major conditions sought by winning bidder Korea Water Resources Corporation (K-Water) for the closing of the Angat hydroelectric plant privatization deal would be reduction in the asset’s purchase amount, hence, this is a key matter being weighed by Philippine government in the negotiating table.
Energy Secretary Carlos Jericho Petilla said “the government will always negotiate on the basis of what is good for the people of this country more than anything else.”
He did not categorically state though whether or not the government will accede to K-Water’s demand to cut its original winning offer of $440.88 million.
Petilla said he met with the team in charge of closing the Angat deal last Tuesday so he can be apprised on the latest developments about the transaction.
So far, he noted that the feedback given him was that “K-Water is still keen to close Angat.” What has not been disclosed, however, was how the government would address the “five major demands” of the Korean firm.
The Philippine government already gave in to at least three of K-Water’s requests: payment of the residual real property tax (RPT) obligations; compensation for the 15 cubic meters per second (cms) to be utilized for the Angat auxiliary units; and the signing of a memorandum of agreement (MOA) for the Water Protocol.
The major puzzle, at this stage, would be on the proposed purchase cost reduction.
In a letter to Power Sector Assets and Liabilities Management Corporation (PSALM) president Emmanuel R. Ledesma Jr., K-Water forthrightly stated that “new and additional arrangements to adjust the purchase price should be agreed upon to compensate us for the deterioration of the Angat hydroelectric power plant caused by failure to operate it in the ordinary course of business.”
K-Water officials have indicated that when all of these concerns will be resolved, they will be ready to seal the deal with PSALM on the Angat transaction.
Given the recent turn of events on the Angat transaction, it was gathered that Finance Undersecretary Sunny Sevilla was already designated as the lead person in the continuing negotiations with K-Water.
There are also concerns raised that if PSALM will not issue the certificate of effectivity (COE) for the Angat deal soon enough, it might be affected by the forthcoming leadership changeover in South Korea this year.
And since K-Water is a state-owned company, its board of directors may also change when a new Korean president will be installed.
When that happens, the new set of directors of K-Water may need to review the Angat deal and that could trigger further delays in the anticipated turnover of the facility. (MMV)  source