PSALM sets pre-bid meeting for Calaca power plant

The Power Sector Assets and Liabilities Management Corp. (PSALM) will hold a pre—bidding conference by the end of this month for the 600—megawatt (MW) Calaca coal—fired thermal power plant.

This will be PSALM’s second attempt to sell the plant after a failed bidding last June when one of only two bidder withdrew its proposal to acquire the plant.

The group that backed out is Japanese firm Mitsui Co. Ltd. and Phil—Mal Petroenergy Corp., a joint venture between businessmen Eduardo Alinarog and WTK Holdings of Malaysia.

The group said it backtracked before the deadline for submission of tenders because Calaca was being sold without a transition supply contract (TSC).

The only other bidder was First Gen Luzon Power Corp.

The Calaca power plant in Calaca, Batangas is the first major asset in the government’s bidding line—up for this year.

This time though, two new foreign firms are willing to bid for the plant despite the absence of a TSC, a PSALM official said.

"They intend to buy the plant even if we offer it as a merchant plant," said Froilan Tampinco, PSALM vice president for asset management and electricity market.

The bidders favor a TSC attached to the asset being sold because this assures them of a ready market. At the same time, a TSC would be favorable to the government since it is likely to get better prices for its power generation plants already on the auction block.

Tampinco said the three bidders could still participate in the pre—bid slated on Aug. 31 at the PSALM office. A due diligence conference will be held from Aug. 16 to Oct. 7.

Interested bidders are required to submit a letter of interest to PSALM on or before Aug. 23. Failure to submit one will not allow the party to participate in the bidding. A two—envelope bidding system will be adopted.

Bidders also need to pay $1,000 in participation fee, execute a confidentiality agreement with PSALM and post a bid security worth $9 million. The bid security of the winning bidder will be replaced by a performance security to guarantee prompt and complete performance of obligations.

PSALM to date has sold six of the more than 30 power plants lined up for sale, with proceeds amounting to $566.95 million or P31.75 billion.

These, however, represents only 11 percent of the generating assets of the National Power Corp. Napocor.

The assets sold are the 3.5-MW Talomo hydroelectric plant (HEP) in Talomo, Davao City; the 1.6-MW Agusan HEP in Manolo Fortich, Bukidnon; the 1.8-MW Barit HEP in Buhi, Camarines Sur; the 0.4-MW Cawa-yan HEP in Sorsogon City, Sorsogon; the 1.2-MW Loboc HEP in Bohol; and the 600-MW Masinloc power facility in Zambales.

PSALM is targeting to sell 50 percent of Napocor’s generating assets by mid—2005. Following the schedule, the magnitude of the sale would be at 70 percent by the end of the year.

The Department of Energy (DOE) is urging private electric distributors such as the Manila Electric Co. (Meralco), electric cooperatives and large power users to enter into TSC with the Napocor and PSALM.

PSALM has obtained the creditors’ consent for the full privatization of five of the six power plants, four of which—the Talomo, Barit, Loboc and Agusan hydroelectric power plants—have already been turned over to the wining bidders.

The other power plants scheduled to be privatized this year are the hydroelectric plants — 75-MW Ambuklao and 100-MW Binga which will be offered as one package, 12-MW Masiway, 100-MW Pantabangan, 360-MW Magat, 246-MW Angat, and 0.8-MW Amlan; geothermal plants — 275-MW Tiwi and 410-MW Makban as one package, 150-MW Bacman, 192.5-MW Palinpinon, and 112.5-MW Tongonan; and bunker oil—fired 850-MW Sucat, 146.5-MW diesel—fired Dingle and the package of 620-MW combined cycle Limay and Bataan thermal site.

PSALM needs to speed up the disposal of Napocor assets in time for the operation of the wholesale electricity spot market (WESM) and open access slated in the middle of next year.