RP rejects San Miguel, Aboitiz power plant bids

MANILA, Philippines - Two prominent business groups in the Philippines failed to secure power generation contracts being offered for sale by the government. San Miguel Energy Corp. (SMEC), a unit of San Miguel Corp. (SMC), and the Aboitiz Power Corp. (APC) failed to secure contracts that would have allowed them to run and own power plants that provide electricity to the National Power Corp. (Napocor), the Philippines’ largest power producer. The two companies failed to meet the reserve prices set for the Sual and Pagbilao power plants, the Power Sector Assets and Liabilities Management Corp. (Psalm) said. As a result, the two companies also failed to become independent power producer administrators (IPPAs) for the two power facilities, said Psalm, which is tasked to sell the government’s power assets. Although SMEC and Therma Luzon Inc., the vehicle used by APC, passed technical and financial requirements set by Psalm’s Bids and Awards Committee (BAC), their offers for the Sual and Pagbilao’s contracted capacities came up short. Both facilities have a combined capacity of 1,700 megawatts. Of the two, SMEC submitted the higher combined bid price at $1.59 billion – $1billion for Sual and $590 million for Pagbilao – while Therma’s proposed price was at $1.46 billion – $812.946 million for Sual and $648.8 million for Pagbilao. APC has yet to make a decision whether it would participate in the second round of bidding for the same contracts, Luis Miguel Aboitiz, APC senior vice president, said. “No decision. They have not announced a second round and we do not know if the terms are different," he said. Despite the failed bidding, Psalm expressed confidence that IPPAs would be appointed before the year ends as it begins preparations for a new round of bidding. Psalm is also set to implement Phase II of its IPPA selection process, which will involve the IPP contracts of the Casecnan, Bakun, and San Roque hydropower plants. The contracted capacities of these power facilities are 140 MW, 70 MW, and 95 MW, respectively. The Sual and Pagbilao power plant sale would have been the first bidding of IPPAs, ushering the era of open access, wherein bulk power users – such as companies and businesses – would be allowed to choose where to buy their requirements. Besides being required to sell 70 percent of Napocor’s generating assets in Luzon and Visayas, Psalm is also mandated to sell 70 percent of Napocor supply contracts through IPPAs before proceeding with the open access. Sual and Pagbilao are both operated by Team Energy under a build-operate-transfer agreement. Their aggregate contracted capacities of the two power plants represent around 34.7 percent of IPP contracts’ capacity for Luzon and the Visayas. A bidder could only win one IPP contract to check concerns regarding market dominance, Psalm said. The third phase in the IPPA selection process will involve the sale of the 1,200-MW contracted capacity in the Ilijan natural gas plant, which has a take-or-pay contract with its gas suppliers. Psalm is expected to earn revenues worth P13 billion from IPPs’ privatization. - GMANews.TV