Floor price for Malaya assets slashed to P2.19B

The floor price for the sale of the 650-megawatt Malaya power plant and the land it sits on in Rizal province was slashed by more than half as the state-run Power Sector Assets and Liabilities Management Corp. (PSALM) gears up for another try at privatization.

PSALM announced that the minimum bid price is now set at P2.19 billion or almost 49 percent of the P4.48 billion that was required for the previous bidding.

Conducted last year, the previous bidding was declared a failure due to a lack of interested bidders.

In a statement, PSALM said its board of directors approved the new minimum bid price based on factors such as book value of the asset, the zonal value of the land, the substantial losses incurred and continue to be incurred by PSALM in maintaining the Malaya assets.

Also considered were the effects of the COVID-19 pandemic on marketability, the electricity demand, and “the need to have a justifiable price that would lead to a successful public bidding.”

“We need to privatize the Malaya power plant this year so that the proceeds of the sale can be used to settle maturing obligations this year and minimize PSALM’s borrowings,” PSALM president and chief executive Irene Besido Garcia said.

Engaged as consultants for the latest privatization attempt of Malaya was Isla Lipana & Co. Pricewaterhouse Cooper Global Network.

The deadline for submission of bids was set on Sept. 23.

Malaya has been put on auction twice before in 2019, first in September and then again last November.

Last February, PSALM said the Ayala group’s AC Energy, Panasia Energy Holdings and Denki Power expressed interest in acquiring Malaya, which is currently operational and being dispatched by the National Grid Corp. of the Philippines (NGCP)as a “must run unit” or MRU.

This means that NGCP calls on Malaya to operate and provide electricity during shortage in supply arising from power plant outages, and help ensure system reliability of the Luzon grid.

Based on the Department of Energy’s directives, Malaya is no longer required to run as an MRU once it has been privatized.

The four-decade old power plant underwent rehabilitation in 1995 through a 15-year rehabilitate-operate-manage-mantain agreement with Korea Electric Power Corp.