The Power Sector Assets and Liabilities Management Corporation (PSALM) has scaled down the reserve price for the 650-megawatt Malaya thermal power facility to P1.845 billion from P2.007 billion for the third round of negotiated sale.
This followed after the company failed on its second attempt to sell the thermal power plant. PSALM has set the deadline of submission of tenders for the third round of privatization attempt on April 23 this year.
PSALM President Irene B. Garcia indicated that there had been compelling factors that triggered such decision, including “lower electricity demand, book value of the plant and its land.”
The other elements factored in into the facility’s valuation had also included “impact of the Covid-19 pandemic on the market, the zonal value of the land, and the substantial losses incurred by PSALM from maintaining MTPP (Malaya thermal power plant.”
PSALM further noted “only interested parties that have been issued the negotiation package by the deadline, or the consortium, will be allowed to participate further in the third round of negotiated sale process for the purchased assets.”
In the “invitation to negotiate and submit offer” notice released by PSALM on Thursday (February 4), it specified that due diligence process will start on February 5; while negotiation pre-conference is scheduled on March 9 this year.
As set out in the tender notice, “the minimum offer price (MOP) for the purchased assets in this round of negotiated sale process is P1,845,222,000.”
PSALM emphasized that “a financial offer submitted lower than the MOP shall be rejected outright.”
The state-run company further apprised prospective takers that “an interested party must first submit a letter of interest (LOI)” to the PSALM privatization bids and awards committee.
“Only interested parties that submit an LOI by the LOI submission deadline shall be allowed to participate in the third round of negotiated sale process for the purchased assets,” PSALM stipulated. The LOI submission deadline is on March 5.
It added that the negotiated package for the asset sale “may be secured from PSALM upon submission of a duly executed and notarized Confidentiality Agreement and an Undertaking” pursuant to the provisions of the Electric Power Industry Reform Act.
The divestment of the Malaya plant was planned since the start of the Duterte administration, but sale processes did not turn out successful because the interested buyers found the reserve to be way beyond their respective appraisals.