Changing the rules midstream

The planned privatization of the National Transmission Company (Transco) is taking a long time coming, and it’s not helping the government any. There have already been two biddings conducted by the controversy-ridden Power Sector Assets and Liabilities Management Corporation or PSALM since 2001 — both of them utter failures — and it looks like the third bidding process set for Jan. 22 this year is going to be postponed again.

Based on the bidding procedures issued by PSALM last May 2006, the original date for bid submission deadline was Sept. 27 last year, but this was moved five times from Nov. 7 until Dec. 20 which was supposed to be the last official "deadline." To date however, no official bid date has been issued except for media pronouncements from PSALM chairman and Finance Secretary Gary Teves who said the date is being set for Jan. 22, but there has not been any official confirmation through a bid bulletin.

Among the parties who have shown interest in the transaction, three groups have been pre-qualified, among them Italian transmission operator Terna SpA in partnership with the Citadel group; Malaysian state-owned Tenaga Nasional in partnership with Ramon Ang, Henry Sy Jr. and Jose Campos Jr.; and China state-owned State Grid in partnership with a group that includes Wilson Sy and Walter Brown.

The Transco privatization should have been done a lot earlier, but the continuing delay this time is being attributed to the special accommodation being given to State Grid, which is backed by the group of Speaker Joe de Venecia. State Grid is asking for more time for clarifications and revisions to transaction documents. This is the first time for State Grid to participate in a bidding outside its own country, but the continued accommodation for this group is certainly unfair to the other bidders.

The concessions to Chinese-owned State Grid are already a cause for concern even for the Americans. Whoever controls the management and operation of Transco, being the only nationwide electricity transmission grid, should not pose a security threat to the country’s national interest.

Besides, under the law, it is a private entity, through the grant of a concession, which should operate the transmission assets of Transco, not another state-owned entity. Is the continuing delay an attempt to change the rules just to favor one bidder over the others? Speaker Joe de V can certainly keep trying to push for Charter Change, but not for this Transco bidding. We can’t keep changing the rules midstream. Here we are trying to get investors to pour in money but this repeated postponement will just erode investor confidence and give us another black eye before the international business community.

PSALM has to decide the bid date once and for all, regardless of who is asking for further extensions and whether all the three bidders are ready or not. It cannot keep on delaying or postponing since it is the credibility of government that is at stake here.

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It looks like Fil-Estate Land is off to a good start for the year with the recent increase of its capitalization from P2.8 to P5 billion. Fil-Estate was one of the hardest hit by the 1997 Asian financial crisis, and it took a lot of hard work before the company could wipe off over P1.3 billion of debts which it has been paying since 2000. Fil-Estate had to streamline operations and make a lot of painful decisions like a number of retrenchments. But as they say, sacrifices certainly pay off in time.

Fil-Estate is really bullish about the property development industry. According to its chairman Bob Sobrepeña — OFW remittances have fueled the steady boom in the property sector, and they’re on track in raising funds for new projects mainly from foreign investors who now look at the company favorably.

Pre-need company CAP, which is on an eight-year rehabilitation program, is also heavily into properties now and may even finish its rehab program ahead of schedule through its investments in real estate. Hopefully, the 400,000 planholders will finally see some light at the end of the tunnel.

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