San Miguel, Aboitiz units bag Sual, Pagbilao power contracts

MANILA, Philippines - The San Miguel and Aboitiz conglomerates won in yesterday’s biddings to manage the energy supply of two huge coal-fired power plants at a combined offer of $1.763 billion, the government’s power asset overseer said.

In a statement, the Power Sector Assets and Liabilities Management Corp. (PSALM), the state agency handling the sale of the National Power Corp.’s assets, said San Miguel Energy Corp. (SMEC), the energy investment arm of San Miguel Corp., bagged the independent power producer administrator (IPPA) contract for the 1,000-megawatt (MW) Sual power plant in Pangasinan.

Meanwhile, Therma Luzon Inc., a unit of Aboitiz Power Corp, clinched the IPPA deal for the 700-MW Pagbilao coal-fired power facility in Quezon.

PSALM said SMEC and Therma Luzon were declared the two highest bidders in the rebid for the selection of IPPAs, which it described as the first of its kind in Asia and, probably, the world.

SMEC offered $1.072 billion for the management and control of Napocor’s contracted capacity in Sual while Therma Luzon was the highest bidder for the Pagbilao coal-fired power plant’s supply contracts with its offer of $691 million.

The Sual contract is the second win in a row for the San Miguel group as SMEC also successfully concluded early this week negotiations with PSALM for the sale of the 620-MW Limay combined-cycle power plant at a tag price of $13.5 million.

PSALM said the offers of the two groups exceeded the reserve price set by its board.

Both SMEC and Therma Luzon participated in the first bidding for the Sual and Pagbilao IPPA contracts held last June.

However, the bidding failed as their financial offers reportedly came up short of the floor price.

With yesterday’s successful bid, PSALM is now set to implement Phase II of its IPPA selection process, which will involve the IPP contracts of the Casecnan, Bakun and San Roque hydropower plants. The contracted capacities of these power facilities are 140 MW, 70 MW, and 95 MW, respectively.

The success of the IPPA biddings would likewise usher the era of open access, wherein bulk power users will be given an option to choose where to buy their requirements.

Under the law, PSALM should be able to privatize 70 percent of Napocor’s generating assets in Luzon and Visayas and 70 percent of Napocor contracts through IPPAs before it could proceed with open access.

The winning IPPAs will now manage the contracted capacities of Napocor in the Sual and Pagbilao power plants. Both power facilities are being operated by the Japanese-controlled TeaM Energy under a build-operate-transfer agreement.

The 1,700-MW aggregate contracted capacities of the two power plants represent around 34.7 percent of the contracted capacity of the IPP contracts for Luzon and the Visayas.