PSALM vice president Froilan Tampinco said one of the main issues raised by the potential bidders is the government’s position in providing financing guarantees.
The meetings were aimed at soliciting the views and concerns of the prospective investors to be able to come up with the appropriate asset groupings that would be acceptable to both the government and the buyers.
But Tampinco said PSALM immediately ruled out the possibility of the government providing such guarantee.
"The government most likely can’t give guarantees because there are none to speak of now. It’s like in the previous regime where there were guarantees included under the BOT contacts or government loans for that matter. They are somewhat inquiring for financing. But we are disposing of the assets. We have no guarantees to provide," Tampinco said.
PSALM started talks with at least 13 interested investors who have submitted their feedbacks on the proposed generation assets’ groupings.
A total of 37 foreign and local firms had earlier expressed interest in the purchase of the generating assets. Of these 34 sought out the information memorandum on the sale but only 17 firms formally submitted the list of their preferred assets.
"We met with only 13 because some were not available during the scheduled meetings and we can’t blame them because the meetings were held here in the Philippines. For those who failed to submit their feedbacks or notices, they are still entitled to bid for the assets, Tampinco said.
Based on the approved privatization plan by the PSALM board, two diesel-fired power plants will be sold next month, the first among the 32 power plants that Napocor will privatize within this year.
By Dec. 19, PSALM will start bidding out the Navotas I and Talomo power plants.
Tampinco said PSALM had already issued bid notices for the Navotas plant. There were three firms that have earlier expressed interest but Tampinco said only two have so far accepted the bid notice. For the Talomo plants, he said two firms are willing to bid for it.
According to Tampinco, PSALM expects to finalize the groupings for the generation assets within the month. "We will consolidate all comments and recommendations discussed during the preliminary meetings together with our financial advisors and come up with a strategy that needs to be put in place to address the concerns of the investors," he said.
He said aside from the issue of guarantee, other concerns raised by the prospective investors involved the transition supply contract (TSC) and the initial set of genco groupings. "One grouping we had was the cluster of hydro plants. They asked us why we put together the multipurpose with the other hydro plants and that we should separate them," Tampinco said.
The government has lined up for sale four power plants which have a combined capacity of not more than 300 megawatts – Navotas 1, Talomo, Bohol and Loboc.
A number of big power on point and investment firms have also signified interest to join the privatization of the assets, among them Mirant Corp., J.P. Morgan Chase & Co., Chubu Electric Power Co., Mitsubishi Corp. and Marubeni Corp.
PSALM decided to proceed with the sale of the generating assets alongside the privatization of the transmission assets. Based on initial plan, the government will lease out the management contract for the National Transmission Corp. (Transco) followed by the sale of the generating assets.
After two failed biddings, PSALM has yet to start the negotiated sale for the Transco assets with Singapore Power Ltd., the sole bidder for Transco.