PSALM amends privatization terms for Malaya plant

Published October 7, 2019, 12:00 AM

by manilabulletin_admin

By Myrna M. Velasco

With government-enforced changes on the privatization terms, Aboitiz Power Corporation has indicated that it is considering to participate in the rebid process for the 650-megawatt Malaya thermal power plant.

Irene Joy Besido-Garcia
PSALM President Irene Joy B. Garcia

Luis Miguel Aboitiz, chief strategy officer of Aboitiz Power Corporation, said “if there are changes in the terms, we will review them and we might decide to participate in the bidding.”

Malaya’s sale auction last month ended up in a failure of bidding as there was only one party that submitted an offer; while the other bidders had not advanced up to the submission of tenders. The rebid schedule for the Malaya plant is November 22 this year.

Asset seller firm Power Sector Assets and Liabilities Management Corporation (PSALM) President Irene Joy B. Garcia acknowledged that the company had already secured the approval of the PSALM Board for the targeted rebid for the Malaya plant.

“For this second round of bidding for the Malaya power plant, I was able to secure the PSALM Board’s approval of the terms and schedule last September 25,” Garcia said.

The PSALM chief expounded “there are some changes in the second round that hopefully will make the privatization activity successful,” but she has not given all specific details on such modifications in the terms of the Malaya power facility’s sale package.

Several interested parties previously sounded off that “some terms in the bidding package had been too restrictive,” hence, some groups just opted to withdraw from joining the auction.

It has been assessed that the value of the Malaya plant actually lies more on the site rather than the existing power-generating facility. Taking cue from that, some of the bidders are looking at its potential for real estate development or for other power plant installations – such as solar farm – given that hurdles on shipment of fuel to the site could be a dilemma especially when the water draft is low.

Garcia stressed “it is imperative for us to really analyze and revisit the terms to try to avoid another failed bidding.”

For the reserve price on the asset, the PSALM president indicated that this will be set at least five days before the bid submission date.”

“The reserve price will be set by the Board nearing the bid submission date to make it as accurate as possible vis-a-vis the condition of the plant. Once set by the Board, we will disclose the reserve price,” Garcia said.

She emphasized that if the second round of auction will still attract just one bidder, PSALM can proceed into declaring “failure of bidding,” then it can already subsequently enter into a “negotiated sale” with a qualified party based on the government’s privatization and procurement rules.