San Miguel bags Limay power plant

MANILA, Philippines - San Miguel Corp. (SMC), the largest food and beverage company in Southeast Asia, finally acquired its first power plant yesterday after offering $13.5 million for the 620-megawatt (MW) Limay combined cycle facility in Bataan.

Its unit San Miguel Energy Corp. (SMEC) bagged the diesel-fired power plant through a negotiated sale with the state-run Power Sector Assets and Liabilities Management Corp. (PSALM).

PSALM is selling state power assets as part of a wider reform program aimed at cutting government-owned National Power Corp.’s heavy debt and making the energy sector more efficient.

Encouraged by the acquisition, SMEC officials said they will join another bidding later this week to buy the output of two big coal-fueled plants.

“Yes, I think we will,” SMEC director Lubin Nepomuceno told Reuters when asked if the company will participate in tomorrow’s auction for the output of the Pagbilao and Sual power stations, which have a combined capacity of 1,700 MW.

The agency is holding a second auction for the Sual and Pagbilao electricity contracts after rejecting bids at the first tender in June, saying offers were below the reserve price.

PSALM  said it accepted SMEC’s offer after its exceeded the government’s reserve price for the plant, which was not disclosed.

The successful negotiated sale was PSALM’s fourth attempt to privatize the Limay plant. The power facility remained unsold after public biddings in July 2008 and January 2009 and negotiations held in March 2009, primarily due to lack of interest from investors.

SMEC has been bidding for the power assets of Napocor but was unsuccessful in bagging one until yesterday.  The group participated in previous biddings for the Sual/Pagbilao IPP contracts, Calaca and the concession contract of the National Transmission Corp. (TransCo).

Commissioned in 1993, the Limay power plant comprises two 310-MW modules, The plant is designed to meet the base-load demand of the Luzon grid.

PSALM had extended its operations and maintenance agreement with Alstom Philippines Inc. to ensure the maintenance of the plant until its eventual turnover to the winning bidder.