Power Sector Assets and Liabilities Management Corp. (PSALM) president Nieves Osorio admitted that the third round of comments may take a little more time as the prospective bidders would need to go back to their respective boards.
Osorio raised this concern after Finance Secretary Margarito Teves announced that the bidding for the TransCo concession may proceed next month.
"It’s a very complex transaction. We allowed the bidders two rounds of comments, but during the first round of comments
the various consortiums were not really formally established, but there were informal relationship — expectedly their comments were not consolidated. It was only in the second round of comments when we got all their comments, which took us more than two weeks to study and to respond to them," she said.
"And so based on the second round of comments, I sought the board’s approval that we give them a third round. They have always stressed that TransCo is a complex transaction pointing out the 25-year concession and the amount of investment needed," she added.
Osorio said there are a number of legal and commercial concerns being raised by the potential bidders.
"While Secretary Teves announced the bidding date as Jan. 22, I’m listening to the bidders as to when it will be comfortable for them to hold the bidding. They’re writing us now their own proposals, but I’d like to see it first and relay their comments to the board. After the third round of comments, our team can look at them and see whether their comments can be accommodated or not, and based on that they will have now the final transactions documents — which will spell out the commercial and legal concerns," Osorio said.
She hinted that at the rate the TransCo bidding procedure is going, the bidders may ask for more time.
"Only after they realize the commercial aspect of the transaction will they go back to their own board. That’s why the date on when we will hold the bidding will depend on them — as one investor can do it faster and the other slower — depending on the circumstance they are in," she stressed.
One concern that has been addressed already by PSALM and the bidders is the franchise. "They have accepted the fact that the structure is that the winning concessionaire will file for the congressional franchise," she said.
Osorio, however, recognized the issues on securing the TransCo franchise.
"We have to address that and set the time that we will allow them to obtain a franchise depending upon the award date. We will have to face reality when the bid date is finally set and it will depend on when we will award it as well," she said.
Another possible source of delay, she said, is the confirmation from the government on who will pay for TransCo’s debts.
"We are also still working out the comfort letter from the DOJ (Department of Justice). It’s supposed to be a confirmation letter that PSALM-TransCo will be able to meet its obligation. Normally, that should come from the Secretary of Finance and the Department of Justice will have to opine. So you don’t only deal with DOF, you also have to deal with DOJ," Osorio said.