MANILA, Philippines—State-run Power Sector Assets and Liabilities Management Corp. (PSALM) has again postponed the bidding for the independent power producer administrator (IPPA) contract covering the 146-megawatt Naga power plant complex in Cebu.
PSALM president and chief executive officer Emmanuel R. Ledesma, Jr. said the corporation’s board of directors, following a meeting last Friday afternoon, decided to grant the request of the Joint Congressional Power Commission (JCPC) to defer the bidding, which was originally scheduled for Monday.
The JCPC, Ledesma explained, wanted to further review the “right to top the highest bid” granted to SPC Power Corp. in 2009 through a Land Lease Agreement executed by PSALM, National Power Corp. and SPC.
Under the agreement, SPC has the right to top by 5 percent the highest bid price offered by interested parties for the IPPA contract.
“The PSALM board deemed it prudent to defer the bidding and to address all concerns in the interest of transparency and propriety,” Ledesma said.
The request for deferment, which was contained in a letter that PSALM received last Thursday through JCPC co-chairs Senator Sergio Osmeña III and Representative Henedina Abad, stemmed from the inquiries made Rep. Lorenzo Tañada III regarding this “right to top” provision.
Tañada regarded this provision as “anomalous,” saying that it will serve as a “strong disincentive” to the point that the government will not be able to maximize the privatization value of the Naga complex.
Ledesma, however, pointed out that despite the disclosure made to bidders of the existence of this “right to top” provision, there was still interest in the IPPA contract for the Naga power complex, which consists of a 106.8-MW coal thermal power plant and a 39-MW diesel facility.
The number of interested parties, however, has been reduced to five from the initial 10 that have expressed interest to participate in the IPPA contract bidding.
“PSALM was able to structure the sale of the capacity and the assets of the complex in such a way that PSALM will still be able to secure the most optimal value for the asset despite the existence of said (provision),” Ledesma stressed.
The land lease agreement, which contains the questioned provision, 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, giving it the “right to top the highest bid” on the sale or lease of the properties within the vicinity, on condition that it pays a premium of 5 percent.
The 146-MW Naga power complex is near the LBGT Plant.