PSALM in talks for modified approach in selling decommissioned assets

The Power Sector Assets and Liabilities Management Corp. (PSALM) expects to seal an agreement with a consultancy firm within this month for the modified approach in selling its decommissioned power plants, a ranking company official said.

"We are conducting negotiations right now. There is a need to modify whatever approach we did when we tried to sell the decommissioned power plants. We realize that our approach should not be similar to the one we are using on operating power plants. We hope this will work out. There is a foreign group based here that is interested," said PSALM vice president for assets management and disposal Froilan Tampinco.

Last April Tampinco said they might tap the services of a metal scrap disposal firm to assist them in selling the plants.

"After we have received only one bidder for Manila Thermal, we have decided to get some assistance from an entity that has expertise in scrap asset auctions to re-establish a wider network of prospective bidders," Tampinco said.

While declining to identify the firm, he said it already has a representative office in the Philippines.

The PSALM official explained that the new approach was triggered by the lack of interest shown by investors in the 200 megawatt (MW) Manila Thermal power plant, the first decommissioned power facility auctioned off by PSALM.

Tampinco said the sale of the decommissioned plants could be pushed back towards the end of the year. "We hope to gather solid interest from investors when we conduct another bidding for the decom plants towards the end of the year," he said.

The PSALM official said the failure of Manila Thermal’s auction could be attributed to the "lack of proper venue or network to sell these assets."

"The public notices for Manila Thermal were fielded out mostly in the Philippines. Maybe we need to tap a wider market to drum up more interest from international investors, specially the Chinese scrap metal firms," he said.

China, he said, would be a perfect market for these kinds of scrap metals. "There are a lot of economic activities going on in China. They may need these materials for reprocessing and rebuilding of their infrastructure."

The PSALM official said they have already received a previous offer from the same scrap assets disposal expert.

"We have not accepted the offer because of some technicalities. The firm wants to handle both the marketing and sale of the decommissioned power plants. But that is impossible and is not allowed under our mandate," he said.

He said they decided to renew talks with the same group and asked them if they are willing to offer their services with a limited scope.

"So far, initial inquiries with the group showed that they may consider it," he said.

PSALM would be selling as scrap the decommissioned plants such as Bataan and Limay Thermal power plants.

The Manila Thermal bidding failed when only one bidder showed up during the auction.

Tampinco said there were some confusions on the bidding package. "They thought that they would also be bidding for the site. But we told them it would only be the equipment that we will be selling. Most of them backed out."