SMC drops bid for Limay power plant, eyes Calaca

MANILA, Philippines - San Miguel Corp., the largest food and beverage conglomerate in Southeast Asia, has dropped its bid for the Limay diesel-fired power plant in Bataan and instead turned its sight on the 600-megawatt (MW) Calaca coal-fired power plant in Batangas.

Power Sector Assets and Liabilities Management Corp. (PSALM) president Jose Ibazeta told reporters at the sidelines of the Manila Overseas Press Club (MOPC) Energy Night last Wednesday that San Miguel has decided to join the eight other bidders for Calaca.

“San Miguel is no longer in the list of bidders for Limay. I think they will go for Calaca,” he said.

But the PSALM official said there are still two other bidders for Limay despite the drop of interest of the food giant.

According to Ibazeta,PSALM will put Calaca on the negotiation table by next month. “We have scheduled it by June this year,” he said.

For the Calaca bidders, he said there are at least four local bidders and the rest are foreign groups.

San Miguel has been diversifying into energy-related businesses. It recently bought majority shares in Petron Corp., the country’s largest oil refiner, and acquired a significiant stake in Manila Electric Co. the biggest power distributor in the country.

Earlier this year, the government’s share in Petron was sold to UK investment fund manager Ashmore Group which was later entered into a buyout deal with San Miguel.

Meanwhile, Calaca mining bidder Emerald Energy Corp. (EEC), formerly Calaca Holdco, Inc. decided not to push through with the acquisition of the power plant. EEC won the bidding on Oct. 16, 2007 at a bid of $786.53 million.

PSALM will now sell the power facility through a negotiated bid after two failed bidding processes. Ibazeta, however, admitted they do not expect to receive the same bid price as EEC.

The coal plant, located in San Rafael, Batangas approximately 115 kilometers south of Metro Manila, has to generating units. Unit 1 and 2 commenced commercial operation on Sept. 11, 1984 and July 15, 1995, respectively.

The Calaca plant has utilized a mixture of high quality and lower quality coal for Unit 1 and lower quality coal for Unit 2.

The units currently operate with load restrictions due to various operational and maintenance reasons, resulting in low capacity factors and poor availability.