Aboitiz scores in Cebu power plant dispute

Aboitiz-owned Therma Power Visayas Inc. edged closer to gaining control of the 153.1-megawatt Naga Power Plant Complex in Cebu after the Supreme Court (SC) denied with finality an appeal filed by the generation facility’s current operator, Salcon Power Corp. (SPC).

In similar statements to the Philippine Stock Exchange, both Aboitiz Power Corp. and SPC disclosed to decision of the high tribunal to deny the latter’s urgent motion for reconsideration filed in late October. The Supreme Court made its final notice of judgment last Nov. 28, 2016.

“In response to various motions, on Oct. 10, 2016, the SC issued a notice of judgment and resolution clarifying that the nullification of SPC’s right to top did not invalidate the entire bidding process,” Aboitiz Power said. “The SC also ordered the reinstatement of the notice of award dated April 30, 2014 in favor of Therma Power Visayas.”

To recall, SPC acquired in 2009 through a negotiated bid a 55-MW Naga plant. That same year, it entered into a land lease agreement with the Power Sector Assets and Liabilities Management Corp. (PSALM), which includes SPC’s right to top the price of a winning bidder for the sale of any property in the vicinity of the leased premises.

PSALM subsequently bid out the Naga plant located on the leased premises. On April 30, 2014 and after two failed biddings, PSALM issued a notice of award to Therma Power for submitting the highest bid for the Naga plant.

SPC then wrote PSALM of its intent to exercise its right to top the winning bid, on the condition that the land lease agreement would be for a term of 25 years from closing date. PSALM then awarded the contract to SPC, despite Therma Power’s objections that SPC did not validly exercise its right to top because of its “qualified offer”.

Senator Sergio Osmena III subsequently asked the high court to nullify PSALM’s decision allowing SPC to top the best bid for the coveted power plant and to enjoin its award to the firm “on the grounds that SPC’s right to top is against public policy.”

On September 28, 2015, the high court ruled in favor of the petitioner.