MANILA, Philippines -- French power firm Suez Energy has pulled out of a $787 million deal to take over a Philippine power station, citing a deterioration of the plant, the government said Monday.

Emerald Energy Corp. (EEC), the vehicle used by Suez Energy to bid for the 600-megawatt coal-fired power plant at Calaca north of Manila, submitted the highest bid in a government auction for the plant in October 2007.

The Power Sector Assets and Liabilities Management Corp. (PSALM), which has been assigned to sell off government power assets, said the company pulled out citing a "deterioration in the condition of the Calaca plant."

"One of the conditions for the turnover of the power plant is that it should be delivered to the winning bidder in the same condition as it was during the bidding date," PSALM said in a statement Monday "

"With EEC?s observation, it gave notice of termination of the Asset Purchase Agreement for the sale of the plant.

"Despite the turn of events, PSALM remains committed to privatizing one hundred percent of the government?s generation assets," the statement said.

The statement added that PSALM will prepare the Calaca plant for re-bidding.