PSALM to sell Naga plant

State-run Power Sector Assets and Liabilities Management Corp. is set to bid out by July this year the 148.3-megawatt Naga power plant in Cebu, as part of the government’s efforts to sell all remaining state-owned power assets.

In a notice, PSALM said the Naga facilities would be auctioned off on an “as is, where is” basis, using a two-envelope bidding system.

According to PSALM, interested parties must submit letters of interest to the agency by May 27. A pre-bid conference is scheduled on June 5, while the bidding proper will be conducted on July 24 this year.

Last month, PSALM announced that it would push through with the sale of the Naga complex, following the resolution of concerns that had been raised.

The Department of Justice confirmed in an opinion dated Jan. 2013 that the “right-to-top” provision included in PSALM’s bidding documents did not violate the rules on competitive bidding.

In 2011, PSALM had to postpone the bidding—at that time, for an independent power producer administrator (IPPA) contract—because of questions on the “right to top the highest bid” granted to SPC Power Corp.

This provision was granted in 2009 through a Land Lease Agreement executed by PSALM, National Power Corp. and SPC Power.

Under this agreement, SPC has the right to top by 5 percent the highest bid price offered by interested parties for the IPPA contract.

The land lease agreement, meanwhile, stemmed from SPC’s acquisition of the 55-MW Naga land-based gas turbine (LBGT) power plant in 2009.

The agreement was provided then as an incentive to the winning bidder of the Naga LBGT, which is near the Naga power complex.

One of the lawmakers, however, then regarded this right-to-top provision as “anomalous,” saying that it would serve as a “strong disincentive.”