By Myrna M. Velasco
State-run Power Sector Assets and Liabilities Management Corporation (PSALM) is seeking the imprimatur of the Commission on Audit (COA) for it to bring down the privatization value of the 650-megawatt Malaya thermal power plant from its initially-set bid price of ₱4.4 billion.
PSALM President Irene Joy B. Garcia noted that the facility’s book value “is really low,” hence, the interested bidders in the asset were not able to meet the reserve price.
“For Malaya, it’s already past its commercial life. There are two units, only unit 2 is working – and then unit 1 last year, it was also damaged, we were just able to make it run eventually,” she said.
Given the state of the power plant’s operating efficiency, the PSALM chief executive indicated that it will be necessary for them to seek COA’s approval if “discount factors” can be resorted to so the divestment value of the facility can be lowered.
“If you look at the COA guidelines and valuation of government assets that you want to sell off, they have a lot of regulations,” Garcia averred.
She cited that for instance, “if an equipment is still operating – regardless of how old it is, as long as it is operating, you cannot go below 15% condition factor – it has to be at least 15% to 25%. If you go below that, you can get into trouble.”
The PSALM chief executive said if the “discount factors” will be considered by COA, the asset-seller firm could have a leeway to set yearly operating cost plus fuel as prospective reduction in the privatization value of the asset.
“We followed the COA guidelines and came up with ₱4.4-billion minimum bid price. Unfortunately, that is quite high from the perspective of the private sector who will be bidding – it was important for us to go through the process of bidding it because that process will tell you whether the market is actually willing to pay for that amount,” she said.
Garcia opined that while the outcomes of the previous biddings were not exactly favorable to the government, because these were failed biddings, “it was a useful exercise because it tells you that the market is not willing to pay for ₱4.4 billion for that kind of plant.”
She thus noted “the next step is for us, we need to go to COA and get for a discounting process,” primarily factoring in PSALM’s operating expenses and fuel for the plant.