Grousing

In this country, no bidding exercise goes by without the losing bidders grousing about the results.

When government awarded the Manila International Airport service contract to San Miguel Corporation (SMC) last week, it was on the basis of an overwhelmingly superior bid put in by the country’s largest conglomerate. That did not stop the losing bidders from trying to undermine the credibility of the bidding exercise.

Fortunately, SMC’s bid was so obviously beneficial to government, all the contrived grousing quickly died down. The generous public relations outlays put in by some of the losing bidders failed to build a disgruntled constituency.

Had the bids been more tightly clustered, the public relations campaign might have gained some traction. But the losing bidders were such tightwads they undermined the seriousness of their own bids.

The main point the losing bidders wanted to peddle was that SMC controlling both the NAIA and the NMIA being built in nearby Bulakan town would be disadvantageous to the public. What the public saw instead was that the same conglomerate controlling the two airport facilities will produce beneficial synergies for the nation.

After over three decades of trying to upgrade our premier airport, things will finally be moving with SMC in charge. The conglomerate would not be contributing 6.8 percent of the nation’s GDP if it were run badly.

We hear the same grousing from losing bidders in the recently concluded competitive selection process Meralco conducted for its 1,200-MW baseload requirement. Some of the losing bidders used the same hacks to discredit the bidding: the rent-a-mob outfits disguised as consumer advocacy groups.

Power distribution is a highly regulated business in this country. It is heavily regulated precisely to protect public interests.

In contracting its power supply, Meralco must go through a stringent and transparent competitive bidding process under the eagle eyes of our energy regulators. Considering prevailing market conditions and commodity pricing, Meralco won approval to set reserve price for the bidding at P7.15 per kWh for the bulk electricity supply.

South Premiere Power Corporation (SPPC) submitted the best bid at P7.07 per kWh and was awarded the contract. The second lowest bid was submitted by a joint venture between Limay Power and San Roque Hydropower at P7.10 per kWh. Both bids were below the reserve price set.

A third bidder, First Natgas, submitted a shockingly expensive bid of P8.45 per kWh – way above the reserve price setting for the bidding. Had First Natgas won the bid, Meralco consumers will be forced to pay nearly P2 more for the electricity they consume. Awarding the supply contract to SPPC obviously serves the public interest.

The beauty of competitive bidding lies in its starkness. No one will argue with the numbers submitted. The bids are won or lost entirely on the numbers the bidders turn in.

On close review, the real question is why First Natgas bid so high. Both SPPC and First Natgas generate electricity using natural gas. First Natgas, a subsidiary of First Gen, should in fact have a price advantage owing from the recent signing of a long-term Gas Sales and Purchase Agreement from Malampaya. SPPC, for its part, used predominantly imported LNG – theoretically making their operation more vulnerable to price fluctuations in the global market.

Over the last three years, when the international market was unsettled because of the war in Ukraine, the highest rate First Natgas charged for the electricity it generated was P6.60 per kWh. This was when it was constrained to blend imported LNG into its fuel mix. This is according to the generation charge tables at the Meralco website.

It is a wonder then that First Natgas bid P8.45 per kWh in the last Meralco bidding exercise. There is no known industry forecast predicting a spike in the price of natural gas – even considering all the troubles in the Middle East.

One can only conclude that First Natgas gambled on a profit windfall in the event their inflated bid won the supply contract. The profit windfall for the private company would have been humongous – but consumers will harvest the bitter result of a higher energy price regime.

Avdiivka

The tyrant Putin must be very happy these days.

The critic he fears most, Alexey Navalny, died in a freezing jail with no convincing account of what happened. The vital, although thoroughly demolished, Ukrainian town of Avdiivka fell into Russian hands.

The tyrant makes no public mention of Navalny and ordinary Russians expressing their grief are brutally attacked by Putin’s police. Over the past days, over 400 Russian citizens have been arrested for bringing flowers to makeshift memorials honoring the brave anti-corruption activist. From hereon, the Putin regime will be even more reliant on wholesale repression to maintain itself in power.

The capture of Avdiivka, on the other hand, did not come easily for Putin. Russian forces paid dearly for the minor territorial gain. They began assaulting the town in October, using suicidal infantry assaults to drive the Ukrainian defenders out. Surrounded on three sides, the Ukrainian army decided to withdraw to more defensible positions.

Russian casualties outnumber Ukrainian losses 7-to-1. The casualty toll from what has been described as “meat grinder” attacks does not impress Putin, apparently.

The Ukrainian army has been put on “active defensive” mode because of serious shortages in ammunition. US support for Ukraine has been stalled by diehard pro-Trump Republican politicians seeking nothing more than to score partisan points.