PSALM leans on DOJ opinion on Naga plant’s divestment

by Myrna Velasco November 9, 2015

http://www.mb.com.ph/psalm-leans-on-doj-opinion-on-naga-plants-divestment/

The legal anchor being invoked by the Power Sector Assets and Liabilities Management Corporation (PSALM) on its decided privatization mode and the turnover of the 153-megawatt Naga thermal power plant to the new owner had been a Department of Justice (DOJ) opinion that was issued previously.

In a statement to the media, PSALM has noted that the justice department “affirmed the legality of the ‘right to top’ the adjoining properties within the NPPC (Naga power plant complex)” as linked to the privatization of the Naga thermal plant.

The asset seller firm issued this statement following a decision of the Supreme Court that voided the ‘right to top’ provision in the facility’s privatization and which had also correspondingly nullified the asset’s divestment.

PSALM has insisted that “the DOJ’s confirmation was made prior to the commencement of the NPPC sale process.”

The state-run firm has qualified though that it has yet to receive a copy of the high court’s ruling. The Office of the Government Corporate Counsel (OGCC) represented PSALM in the case.

The new owner of the plant – SPC Power Corporation – “was granted the right to top the highest bid on the sale or lease of the properties within the vicinity of the Naga land-based gas turbine power facility.”

It explained that such arrangement will “give the winning bidder the opportunity to expand, subject to the payment of a premium of 5.0% over the highest bid on these adjacent properties.”

The power plant complex in dispute is located in the vicinity of the Naga thermal generating facility in Cebu.

The original party with the highest offer in the third auction of the plant was Therma Power Visayas, Inc. of the Aboitiz group but the ‘right to top’ in the bidding terms had set preference on the ‘premium offer’ to SPC Power, hence, the latter ended up acquiring the asset.

PSALM has further noted that “the right to top” was provided in the land lease agreement (LLA) executed among PSALM, National Power Corporation and SPC Power in 2009.