Meralco solicits bids in 2nd competitive selection round

By Lenie Lectura - July 16, 2019

https://businessmirror.com.ph/2019/07/16/meralco-solicits-bids-in-2nd-competitive-selection-round/

THE Manila Electric Co. (Meralco) is again soliciting bids for its power requirements, another 1,200 megawatts (MW) of capacity, via a Competitive Selection Process (CSP).

This is Meralco’s second published bid invite, following a Supreme Court decision that required all power supply agreements (PSAs) forged after June 30, 2015, to undergo CSP.

Based on the terms of reference published on Monday, a 20-year power supply contract, from September 2024, is up for bidding on September 10.

The 1,200-MW capacity must be supplied by any baseload power plant, one that usually provides a continuous supply of electricity throughout the year with some minimum power generation requirement. Baseload plants will only be turned off during periodic maintenance or upgrading.

The power plant should achieve commercial operations not earlier than March 2024 for the first unit, with full contract capacity by September 2024. In case the plant has four units, two of these must attain commercial operation date (COD) by March 2024.

If there is a delay in the COD, Meralco may terminate the PSA and forfeit the performance security. Other grounds for PSA termination include event of default, nonfulfillment of condition to effective date, certain events of force majeure, expiration of term, upon mutual agreement and change in circumstances.

The power plant must be located in not more than two plant sites and with one delivery point within the Luzon grid and nearest to Meralco’s load center. Should there be multiple units, the minimum capacity per unit is 300 MW. Meralco requires that the capacity of the plant must not be contracted with any other plant.

Also, the power plant that will supply Meralco must not experience more than 30 days of scheduled power outage and not more than 15 days of forced outage.

Interested power suppliers have until July 29 to submit their expressions of interest, purchase bid documents and pay a participation fee of P6 million.

A pre-bid conference will be held on August 9.

The bids, together with a P3.6-billion bid security, must be submitted on or before September 10. The bids will be opened on the same day.

Last Friday (July 12), Meralco published its first bid invite. The utility firm is soliciting 1,200 MW for 10 years starting December 26, 2019, up to December 25, 2029. 

Interested bidders must pay a P2,500 fee per MW of offered contract capacity, submit an expression of interest and confidentiality undertaking and purchase bid documents until July 26.

A pre-bid conference is scheduled on August 8, with submission of bids set on September 9. 

The CSP requires distribution utilities (DUs) to hold competitive bidding for their supply requirements as against securing power deals via bilateral contracts. This is meant to ensure transparency and fair competition.

Meralco is expected to publish another bid invite soon. This is the first of three invitations to bid published. The three CSPs to be conducted are in accordance with the Power Supply Procurement Plan that Meralco submitted to the Department of Energy (DOE), Meralco utility head economics Lawrence Fernandez said in a text message last week.

Meralco earlier inked seven PSAs with several power generation companies, including subsidiary Meralco Power Gen Corp. The total capacity of the seven PSAs is over 3,500MW. 

However, these PSAs were not implemented following the SC order which stemmed from allegations that the Energy Regulatory Commission (ERC) gave due preference to Meralco by extending the deadline for compliance with the CSP.