First Gen unit posts $2.58-M performance bond

Lopez-controlled First Gen Corp. said its unit, First Gen Hydro Power Corp. has posted a performance bond of $2.58 million or two percent of its bid price of $129 million for the 112-megawatt (MW) Pantabangan-Masiway hydroelectric power plant complex in Nueva Ecija.

In a disclosure to the Philippine Stock Exchange, First Gen said the bond is intended to "guarantee the full, prompt, faithful and complete performance by First Gen Hydro of the buyer’s obligations under the asset purchase agreement covering the Pantabangan-Masiway power plants."

Under the terms of the agreement, First Gen Hydro is required to pay upfront $51.6 million, representing 40 percent of the purchase price no later than the closing date or the date when all conditions precedent are satisfied by both the government’s Power Sector Assets and Liabilities Management Corp. and First Gen Hydro.

First Gen said the upfront payment will be followed by 14 equal deferred semi-annual payments for the remaining 60 percent of the purchase price to be paid starting on the sixth calendar month from the closing date.

First Gen topped the bid of SN Aboitiz Power Inc. – a joint venture between Aboitiz Power Corp. and Singapore’s SN Power Holding – which offered $112 million.

With the acquisition, First Gen will have a total of 1,839 MW of installed generating capacity, accounting for almost 12 percent of the country’s total installed capacity.

First Gen’s subsidiaries currently own and operate the 1,000-MW Santa Rita and 500-MW San Lorenzo natural gas-fired power plants in Batangas City, the 225-MW Bauang diesel power plant in La Union, and the 1.6-MW Agusan hydroelectric plant in Bukidnon.

PSALM is the government agency tasked to handle the privatization of the power generation and transmission assets of the National Power Corp. (Napocor).

The Pantabangan-Masiway plant was practically the first big ticket item sold by PSALM since it started the privatization of Napocor assets in 2004.

Next to be auctioned off are the 360-MW Magat hydroelectric complex in Isabela and the 25-year concession of TransCo (National Transmission Corp.).

The government is eyeing to raise between $4 billion to $5 billion from the sale of dozens of power plants owned by Napocor and by leasing the electricity grid run by TransCo as part of a broader power and fiscal reform program.