First Gen junks bid for Masinloc
The Philippine Star 07/20/2006
Publicly-listed First Gen Corp. said yesterday it is no longer interested in bidding for the Masinloc coal-fired power plant in Zambales.
"To dispel any and all further notions that First Gen remains an interested party in Masinloc, First Gen would like to categorically state that it has absolutely no intentions now, or in the future, to take part in the privatization of the Masinloc power plant," First Gen vice chairman and CEO Peter Garrucho said in a press statement.
Garrucho made this statement to counter Economic Planning Secretary Romulo Neri’s pronouncement alluding that First Gen and its affiliate firm Manila Electric Co. (Meralco)’s apparent vested interest in the Masinloc power plant resulted in the failure of the plant’s privatization.
According to Garrucho, First Gen has participated actively and in good faith in the privatization process conducted by the Power Sector Assets and Liabilities Management Corp. (PSALM).
First Gen, he said, has also invested millions of pesos in preparing for bids and conducting due diligence in the interest of participating in the PSALM bidding processes.
"Rather than criticizing First Gen, we should be credited for our role in helping PSALM’s bid processes succeed," Garrucho said.
"In fact, in the case of Masinloc, were it not for the First Gen participation, the entire bid would have been a failure. The $14 million collected from the winning bidder of Masinloc represents the largest proceeds collected by government from all its power privatization efforts in three years and this would not have been possible without the legitimizing bid of First Gen," he said.
Garrucho also pointed out that First Gen bid below the government’s reserve or minimum price and therefore it does not stand to gain from a failed bidding of Masinloc.
"As a bidder that did not meet the reserve price, First Gen is not automatically in line to win the Masinloc plant at its bid price," he said.
In defending their bid, Garrucho said they believe that their bid price must allow them to offer cost-competitive power to end-consumers.
"First Gen’s bid price reflected the market risks associated with a merchant or non-contracted power plant."
Garrucho also urged the government to properly implement the Electric Power Industry Reform Act (EPIRA).
"First Gen believes that the way forward for the industry is to uphold and implement the EPIRA that stipulates that utilities enter into transition supply contracts (TSC) with Napocor prior to being bid out," he said.
Under the EPIRA, these TSCs, he said, are meant to underpin the privatization of PSALM’s assets in order to encourage more bidders and maximize privatization proceeds.
"Implementing the EPIRA in line with its original intent will result in a vital balance being struck between maximizing the proceeds of privatization and minimizing power costs to the end-consumer," he added.
Publicly-listed First Gen Corp. said yesterday it is no longer interested in bidding for the Masinloc coal-fired power plant in Zambales.
"To dispel any and all further notions that First Gen remains an interested party in Masinloc, First Gen would like to categorically state that it has absolutely no intentions now, or in the future, to take part in the privatization of the Masinloc power plant," First Gen vice chairman and CEO Peter Garrucho said in a press statement.
Garrucho made this statement to counter Economic Planning Secretary Romulo Neri’s pronouncement alluding that First Gen and its affiliate firm Manila Electric Co. (Meralco)’s apparent vested interest in the Masinloc power plant resulted in the failure of the plant’s privatization.
According to Garrucho, First Gen has participated actively and in good faith in the privatization process conducted by the Power Sector Assets and Liabilities Management Corp. (PSALM).
First Gen, he said, has also invested millions of pesos in preparing for bids and conducting due diligence in the interest of participating in the PSALM bidding processes.
"Rather than criticizing First Gen, we should be credited for our role in helping PSALM’s bid processes succeed," Garrucho said.
"In fact, in the case of Masinloc, were it not for the First Gen participation, the entire bid would have been a failure. The $14 million collected from the winning bidder of Masinloc represents the largest proceeds collected by government from all its power privatization efforts in three years and this would not have been possible without the legitimizing bid of First Gen," he said.
Garrucho also pointed out that First Gen bid below the government’s reserve or minimum price and therefore it does not stand to gain from a failed bidding of Masinloc.
"As a bidder that did not meet the reserve price, First Gen is not automatically in line to win the Masinloc plant at its bid price," he said.
In defending their bid, Garrucho said they believe that their bid price must allow them to offer cost-competitive power to end-consumers.
"First Gen’s bid price reflected the market risks associated with a merchant or non-contracted power plant."
Garrucho also urged the government to properly implement the Electric Power Industry Reform Act (EPIRA).
"First Gen believes that the way forward for the industry is to uphold and implement the EPIRA that stipulates that utilities enter into transition supply contracts (TSC) with Napocor prior to being bid out," he said.
Under the EPIRA, these TSCs, he said, are meant to underpin the privatization of PSALM’s assets in order to encourage more bidders and maximize privatization proceeds.
"Implementing the EPIRA in line with its original intent will result in a vital balance being struck between maximizing the proceeds of privatization and minimizing power costs to the end-consumer," he added.
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