By Myrna M. Velasco
With only one party submitting a bid, state-run Power Sector Assets and Liabilities Management Corporation (PSALM) yesterday declared a failed bidding of the 650-megawatt Malaya thermal power plant in Rizal province.
Based on the auction outcome provided to the media, the only party that submitted a bid was AC Energy, Inc. of the Ayala group; while other qualified bidders FGEN Reliable Energy Holdings, Inc. of the Lopez group and DMCI Power Corp. of the Consunji group did not show up.
Another expected bidder D.M. Wenceslao & Associates, Inc. had sent its “regrets” to the government’s asset-seller firm; and had withdrawn from the bidding “due to current market conditions and uncertainty of supply of fuel.”
The privatization of the Malaya thermal plant – that had lumped the facility’s site into the package – should have been the biggest divestment play of PSALM this year, but unfortunately, the parties had not been that keen enough in advancing their interests in making tangible offers.
PSALM went to the extent of engaging a third party consulting firm PricewaterhouseCoopers (PwC) to do the valuation of the asset and in drawing up the reserve price just to ensure its divestment success – but the initial try still failed.
As designed, the sale of the Malaya plant is on “as is, where is” basis – and the entire package includes the property where the facility is sited.
Under government procurement laws, it will take two failed biddings before a state-owned firm like PSALM can enter into a negotiated deal with a “willing and qualified buyer” of the asset.
PSALM President Irene Joy B. Garcia announced that the company “plans to schedule a second round of bidding for Malaya as soon as possible,” with her adding that they will present to the Board “the relevant dates so we can get approval to proceed right away.”
She enthused “it is quite heartbreaking to declare a failure of bidding after much work has been put into this privatization activity, including getting a third party valuation.”
Garcia qualified though that they will still target to do the second round of bidding for the privatization of the Malaya asset by this year – and that the company’s team “will work harder to make sure that we accomplish this goal.”
For the prospective taker, the Malaya plant may still be continually operated as a ‘peaking plant’ or it may also be converted into a gas-fired power facility – which was actually the previous privatization design thought out by the Department of Energy.
Prior to its targeted divestment, the Malaya thermal plant is depended upon for the Luzon grid as a “must-run unit” or the facility that can be called by the system operator for dispatch when grid supply runs tight.
PSALM is not just eyeing to divest the remaining assets of the National Power Corporation (NPC), it is also lining up several real estate assets for sale so it can raise proceeds that can help defray its mounting liabilities.