Lopez’s First Gen bags 2 hydropower projects

The Philippine Star 09/09/2006

The Power Sector Assets and Liabilities Management Corp. (PSALM) declared yesterday the Lopez-owned First Gen Corp. as the winning bidder for the 100 megawatt (MW) Pantabangan and 12-MW Masiway hydropower plants in Nueva Ecija.

PSALM president Nieves L. Osorio said First Gen submitted a bid of $129 million, besting the only other bidder SN Aboitiz Power Corp. (SNAP), a partnership between Aboitiz Power Corp. and SN Power Holding Singapore which bid $112 million.

First Gen’s bid was way above the reserve price of $80 million set by PSALM for the two hydropower plants.

The Pantabangan facility is located in San Jose, Nueva Ecija and is composed of two 50 MW units. Both were commissioned in 1977.

Masiway power facility, on the other hand, is located near Pantabangan plant and was commissioned in 1981.

First Gen also won the action for the 1.6 MW Agusan hydropower plant for $1.53 million last year.

"We are very happy with the offers. Clearly, this is the result of good competition and continued interest in Philippine power assets," Energy Secretary Raphael P.M. Lotilla said.

Osorio said the energy sector welcomes the success of the bidding. "We will work to sustain this as we are set to move forward with the privatization of power assets. Next to be offered is the 360-MW Magat hydroelectric complex in Isabela and the 25-year concession of TransCo (National Transmission Corp.)," she added.

SNAP and First Gen submitted their bids before the 12:00 pmdeadline set by PSALM, the agency tasked by the government to privatize the assets of the National Power Corp. (Napocor).

The terms of the sale are contained in the asset purchase agreement (APA) between the winning bidder and PSALM. First Gen will also sign a land lease agreement with PSALM, and the Operation and Maintenance agreement with the National Irrigation Administration for the non-power components.

The APA for the Pantabangan-Masiway facility requires the winning bidder to deliver at least 40 percent of the purchase price as upfront payment payable on or before the closing date. The balance of 60 percent may be paid in 14 equal semi-annual payments with an interest of 12 percent per annum compounded semi-annually.

The winning bidder is also required to post a performance bond of $2.58 million, equivalent to two percent of the purchase price. The performance bond will be reduced every year equivalent to two percent of the aggregate amount of the deferred payments.

In addition, the winning bidder will be required to post a deferred payment security deposit equivalent to at least the next deferred payment in the form of cash, currently dated manager’s check or an irrevocable stand-by letter of credit acceptable to PSALM.

Representatives of the Philippine Chamber of Commerce and Industry and Procurement Watch, a non-government organization, attended the bidding as observers.

Aside from Masiway and Pantabangan, PSALM will also bid out 300-MW Magat facility and the 275-MW Tiwi and 425.73-MW Makiling-Banahaw geothermal complexes. Pantabangan-Masiway is the second major power asset to be bid out by PSALM this year. PSALM bid out the 600-MW Calaca coal plant in April, which resulted in a failure after the offers fell short of the reserve price set for the plant.

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Prospective buyers of Mirant assets to start due diligence

The Philippine Star 09/05/2006

Prospective bidders of Mirant Philippines Inc.’s assets are expected to start their respective due diligence on Sept. 12, industry sources said yesterday.

The sources said Mirant Corp. has already concluded accepting indicative bids from interested groups.

It was learned that the interested groups, which had expressed deep concern over major issues confronting the sale, have submitted lower than expected bids of Mirant.

Among the main issues raised by interested parties is the National Power Corp. (Napocor)’s claim for Mirant to secure government’s approval before proceeding with the sale.

Another bone of contention is the fate of the employees of Mirant Philippines, particularly the rank-and-file, who reportedly have not been offered a severance package.

"There have been major issues that we raised, like the government consent issue and the employees, and we’ll see how Mirant will tackle them as we move forward," an official from an interested group said.

The Joint Congressional Power Commission (JCPC) has also expressed concern over the issue of consent.

According to sources, these two major concerns are more complicated than the unpaid real estate taxes and contractual obligations with Napocor as these would be settled by adjusting valuation of the sale.

It was learned that among those that have submitted their indicative bids for Mirant’s equity in the Philippines last Aug. 31 were the group composed of Marubeni Corp., Tokyo Electric Power Corp., and First Gen Corp.; consortium of Korea Electric Power Corp., Chubu Electric Power Co. and Tractebel/Suez; and the group of One Energy, China Light and Power, Mitsubishi Corp.

The Aboitiz group reportedly did not submit its indicative bid. An Aboitiz insider earlier described Mirant as a "monster that we (Philippines) created. It is so big (to handle)."

Mirant’s assets in the Philippines are valued at $2.4 billion to $2.8 billion. Mirant’s assets in the country include its interest in three generating power plants, namely Pagbilao, Sual and Ilijan.

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