San Miguel unit to get ALECO

Business World Online

Posted on August 13, 2013 11:40:43 PM

A SAN MIGUEL Corp. unit will likely be awarded a contract to provide electricity to Albay, which was hit by a blackout last month after the government disconnected the province over nearly P4 billion in unpaid bills.

San Miguel Energy Corp. (SMEC) was the sole bidder for a 25-year contract to run Albay Electric Cooperative, Inc. (Aleco), Energy Secretary Carlos Jericho L. Petilla yesterday said, during an Aug. 7 auction.

“There is one bidder and that’s San Miguel. Aleco conducted the bidding and is currently evaluating the bid,” Mr. Petilla told reporters on the sidelines of a budget hearing at the Lower House.

“I believe San Miguel is already the winning bidder given the absence of other bidders. On August 22, there will be a formal announcement from Aleco,” he added.

Asked to detail SMEC’s offer, Mr. Petilla replied: “I cannot say at the moment. Let Aleco announce it after the deliberations because I don’t want to preempt them.”

“However, the terms that are already clear is that San Miguel will not own Aleco. They will just run it and shoulder the debt and pay monthly concession fees.”

A turnover is expected within the year. SMEC officials were not immediately available for comment.

Mr. Petilla noted that three firms, including Manila Electric Co. (Meralco), initially expressed interest to join the auction.

“The three others wrote a letter to the department explaining their side even before the bidding. They mentioned the enormity of the P4-billion debt that will be shouldered,” he said.

Meralco President Oscar S. Reyes confirmed that the company had withdrawn from the auction.

“Meralco informed Aleco ahead of the Aug. 7, 2013 bid submission date that Meralco would not be able to participate in the bidding for the concession,” he said in a text message.

Mr. Petilla last month said the government was proposing a rehabilitation plan for Aleco that would involve a takeover of operations and maintenance.

Albay was disconnected from the country’s power grid on July 31 due to its unsettled financial obligations. Power was restored the following day after Aleco agreed to settle June 2013 obligations amounting to P19 million. -- C. A. M. C. Feliciano  source