THE AYALA GROUP AND FIRST PACIF-ic Co. Ltd. of Hong Kong have forged an alliance with the Lopezes to bid for the strategically crucial 246-megawatt Angat hydroelectric power plant in Norzagaray, Bulacan.

Ayala Corp. and First Pacific?s local infrastructure holding firm Metro Pacific Investments Corp. each bought a third of the equity of First Gen Northern Energy Corp. (FGNEC)?a subsidiary of the Lopezes? power generation holding firm First Gen Corp., which hopes to bag the Angat power plant.

Instead of competing with the Lopezes in bidding for the Angat facility, MPIC and the Ayalas? Michigan Power Inc. have agreed to a three-way partnership?through FGNEC?to secure the bid for the hydroelectric power plant, the companies said in separate disclosures to the Philippine Stock Exchange yesterday.

MPIC and Ayala have already sent written notices to the Power Sector Assets and Liabilities Management (PSALM), withdrawing their participation in the bidding for the Bulacan plant.

PSALM is the agency tasked with the privatization of state-owned power assets.

In line with this new bidding plan, MPIC and Ayala each subscribed to 250,000 common shares of FGNEC with a par value of P1 per share. The subscriptions resulted in First Gen, Ayala and MPIC each owning 33 1/3 of FGNEC?s outstanding capital stock.

Jose Mari Lacson, head of research at Campos Lanuza & Co., said the three-way partnership made sense because it would further spread the risk and cost of investment. He said Ayala and MPIC?both breaking into the power generation business for the first time?would benefit from First Gen?s expertise in this field.

Ayala and MPIC, which are bitter rivals in the telecommunications business, are now seen in a defensive alliance aimed at protecting their water distribution businesses. The Ayalas control Manila Water Co. (MWC), while MPIC owns Maynilad Water Services Inc.

While the Angat power plant is small and old, its strategic value is related to bulk water sourcing since the dam supplies water to both MWC and Maynilad, analysts said.

Ayala and MPIC first announced their partnership when San Miguel Corp.?also one of those bidding for the Angat power plant?appeared to bag the controversial $1-billion Laiban dam project.

But the government recently dropped San Miguel?s proposed Laiban project and is now considering other options to secure an alternative water supply source for Metro Manila.