By MYRNA M. VELASCO
State-owned Power Sector Assets and Liabilities Management Corporation (PSALM) will try its luck for the third time to privatize the retirable 650-megawatt Malaya thermal power facility and its site possibly at a lower minimum bid price.
The asset-seller firm said it will kick off this new round of auction today, February 3, 2020, with the dispatch of “invitation to bid” to interested investing groups. This phase in the sale process will culminate on March 12.
PSALM said it will also hold a pre-bid conference on February 13 while the bid submission deadline and opening will be on April 15. “Only parties who submitted letters of interest and who have been issued PSALM’s bidding package will be allowed to participate in the privatization of the assets,” the company said.
At the pre-bid conference, PSALM noted it will “solicit comments and concerns that interested bidders may have relative to the bidding requirements and asset sale provisions.”
The government run firm stressed it is “determined to privatize the asset,” which it targets to dispose on “as is, where is” basis.
A major “sweetener” that PSALM has been dangling to investors in the next bidding round is the prospective downward adjustment in the minimum bid price, which in the last auction process in November was set at a high of ₱4.481 billion.
The only qualified tender cornered by the state-owned company then was from D.M. Wenceslao and Associates, but the offer was way too low at P1.0 billion vis-à-vis the reserve price, hence, even the subsequent negotiated deal failed.
PSALM earlier sought the imprimatur of the Commission of Audit (COA) on the targeted lowering of the minimum bid price – to factor in losses being incurred from the plant’s operations as well as its fuel and maintenance costs – so investors could be enticed to bid for the facility’s divestment.
The PSALM board of directors would often set the minimum bid price days prior to the bidding date, and this serves as a guide for PSALM as to what value it can dispose the asset for.
To many of the interested bidders though, they are appraising the facility almost on “scrap basis,” and it is just the plant’s site that has been presenting value to them.
PSALM insisted that it had conducted valuation studies on the Malaya plant as well as the underlying land in determining the asset’s reserve bid price.