FOOD AND BEVERAGE GIANT SAN Miguel Corp. yesterday submitted the highest bid of $1.07 billion for the contract to manage the 1,000-megawatt (MW) Sual coal fired power plant, Power Sector Assets and Liabilities Management Corp. (PSALM) announced yesterday.

Another power firm, the Aboitiz?s Therma Luzon Inc., topped the auction for the 700-MW Pagbilao coal facility in Quezon with a bid of $691 million.

According to PSALM, the two highest bids met the government?s reserve price for the management of Sual and Pagbilao?s independent power producer administrator (IPPA) contracts for the two coal-fired plants.

Therma Luzon offered a lower price for Sual at $1.02 billion, while SMC, through its energy investment arm San Miguel Energy Corp. (SMEC), offered a lower $651 million for Pagbilao.

As soon as it has verified the accuracy, authenticity and completeness of the bid documents that the two companies have submitted, PSALM said it would issue a Notice of Award to SMEC and Therma, formally declaring them as the winning IPP administrators for the contracted capacities of the Sual and Pagbilao power facilities.

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

?While the technical bids of the two companies met the government?s requirements for both capacities, their financial offers came up short of the floor price,? PSALM explained.

The two companies had only slightly improved their bids in yesterday?s auction.

In June, SMEC had offered $1 billion for Sual and $590 million for Pagbilao. Thermal Luzon had submitted a bid of $812.9 million for Sual and $648.9 million for Pagbilao.

This was the first batch of IPPA contracts that were bid out to the private sector for management.

IPPs are currently contracted to supply electricity to National Power Corp. When these are turned over to the private sector, the winning bidders will manage the contracted capacities of the government in IPP plants.

The privatization of 70 percent of the government?s IPP contracts is one of the five requirements under the Electric Power Industry Reform Act of 2001 before open access and retail competition can be implemented.

With the successful appointment of the Sual and Pagbilao IPPAs, PSALM is set to enter Phase II of its IPPA selection process, which will involve the IPP contracts of the hydropower plants.

After the Sual and Pagbilao, PSALM said it plans to bid out the contracts for the 140-MW Casecnan, 70-MW Bakun and 95-MW San Roque hydropower plants.

Since these BOT projects involve other government agencies, PSALM said it might employ a different approach and commercial structure.

The third phase in the IPP administrator selection process will involve the sale of the 1,200-MW contracted capacity in the Ilijan natural gas plant, which has a take-or-pay contract with its gas suppliers.