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FINALLY,
after having failed in privatizing the 25-year
concession of the National Transmission Corp. (Transco),
the Power Sector Assets and Liabilities Management Corp.
(Psalm) on Wednesday declared the consortium of Monte
Oro Grid Resources Corp., Calaca High Power Corp. and
State Grid Corp. of China as the highest bidder for said
operation and management contract of the country’s
power-lines unit.
The
consortium of Monte Oro Grid Resources Corp., Calaca
High Power Corp. and State Grid of China offered a bid
price of $3.95 billion, while the consortium of San
Miguel Energy Corp., Netherlands-based TPG Aurora BV and
Malaysia-based TNB Prai Sdn Bhd offered $3.905-billion.
In an
impromptu news conference, Finance Undersecretary
Jeremias Paul said both bidders met the reserve price
set by the government, adding that the bid offers were
higher than the regulatory asset base of Transco.
“What
was sold is not an asset, but just a concession. And the
regulatory asset base, as approved by the Energy
Regulatory Commission [ERC], is already in place and is
sufficient.”
For his
part, Jose Ibazeta, Psalm president said, “the reserve
price is something that the government is happy with if
somebody will bid at that price. So if the bid offer was
similar with the reserve, the government will be happy
with that, and the fact that it was higher than the bid
price, it is more than fine.”
Ibazeta
added that there will always be questions raised as
people tend to look at the negative side, but stressed
that it is important to note that the assets remain in
the country.
“Essentially, we have a group that is willing to spend a
lot of money in order to build capital projects that
will make generators run efficiently. In time, power
rates will also go down should we have an efficient
group,” he said.
Ibazeta
said the winning bidder will have to go to Congress and
apply for a national franchise. They (winning bidder)
have a year to complete this requirement.
Upon
acquisition of a national franchise to operate,
according to Ibazeta, the winning bidder will have to
pay for the 25-percent down payment and afterwards have
20 years to pay off the balance with a little over 9
percent in interest rates.
Ibazeta
said they expect the first down payment to come in once
the national franchise has been granted to the winning
bidder.
Ibazeta
clarified that the Monte Oro Grid will be declared the
winning bidder as soon as Psalm has finished verifying
the accuracy, authenticity and completeness of the bid
documents it submitted.
Psalm,
afterward, will issue the selection notice to the
consortium to signify that it is the winning bidder for
the Transco concession.
After
verification and validation, the direct agreement, duly
executed by Psalm, will be delivered to Monte Oro Grid
as the highest bidder. The direct agreement is part of
the technical proposal submitted and executed by the
prequalified bidders, setting forth the conditions
precedent to the award of the concession and the
execution and delivery of the concession agreement and
other final transaction documents.
The
commencement date of the concession will be finalized
after Congress has granted a franchise to carry out the
concession; and Psalm has secured the consent of
financial institutions and lenders of the Napocor
pertaining to the transfer of transmission assets and
all other assets and properties to Transco as mandated
by Section 8 of the Electric Power Industry Reform Act;
and the privatization of Transco by way of concession.
To
ensure the expeditious and smooth commencement of the
concession period, Ibazeta said Psalm will assist the
concessionaire in preparing and submitting an
application for a congressional franchise for the
operation of the public utility.
“The
proceeds of the privatization of the concession will be
used to pay off the debts of the National Power Corp. [Napocor].
Since we started selling assets we have already
generated $6.6 billion, including Transco,” Ibazeta
said.
He said
the three last assets that have been sold, particularly
the 600-megawatt (MW) Masinloc coal-fired power plant,
600-MW Calaca coal-fired power plant and Transco amount
to $5.9 billion.
Monte
Oro Grid, a wholly owned subsidiary of Monte Oro
Resources and Energy Inc. (MOREI, or the parent
company), was incorporated in the Philippines on August
29, 2006, to invest and hold interest in shares of
stocks of companies engaged or proposing to engage in
infrastructure projects.
State
Grid Corp. of
China
was established on the basis of a sum of enterprises and
institutions formerly owned by the State Power Corp. of
China. State Grid of China is a large-sized enterprise
approved by the State Council to operate the business of
power transmission, transformation, distribution and
other assets of power grid.
On
December 15, 2006, Calaca High Power was incorporated to
enter into the business of operating, managing,
maintaining and rehabilitating energy systems and
services for gas, steam and electricity.
Ana
Maria Nemenzo, president of the Freedom from Debt
Coalition (FDC), said in a statement they were not
surprised that Monte Oro won the bidding because of the
alleged closeness to Malacañang of people behind it and
also of the Chinese government through Monte Oro’s
partner State Grid Corp. of China.
Nemenzo
said Walter Brown of Monte Oro Grid Resources Corp., the
so-called local partner of State Grid Corp. of China, is
reportedly affiliated with Diosdado “Buboy” Macapagal,
the brother of President Arroyo.
“We
doubt that a real bidding process took place,” she
added.
Nemenzo
noted that the Filipino people will be at the losing end
if the government pushes through with the privatization
of Transco, and that they can be held hostage by whoever
operates Transco as it will literally have “power” and
control in the flow of electricity in the country.
“Our
mandate is not simply bidding out and privatizing the
generation assets and transmission, but ensuring that
the interest of the Philippine government and its people
is protected and upheld. We thank the bidders and
appreciate their sustained interest and participation in
this bidding,” Ibazeta said.
The
government’s readiness for the Transco bidding was the
result primarily of the joint efforts of representatives
of government agencies comprising the Psalm board—the
Departments of Finance, of Energy, of Justice, of Trade
and Industry, and of the Budget and Management; the
National Economic and Development Authority, and Psalm.
Allaying
fears that Psalm could have rigged the process, Paul
said Ibazeta recused himself from discussions for the
bid price.
“We are
very happy about the successful turnout of the bidding
exercise for Transco. Psalm handled the privatization of
the government’s transmission business with utmost
transparency and judiciousness,” said Ibazeta, adding
that they strictly implemented bidding procedures and
complied with the rules governing the selection of the
winning bidder.
Of the
prequalified bidders, the consortium of Citadel Holdings
Inc. and Power Grid Corp. of India Ltd. had earlier
backed out from the bidding of the 25-year concession of
Transco. Meanwhile, the group of Two Rivers Pacific
Holdings Corp. and Terna-Rete Electtrica Nazionale SPA
also backed out from the bidding, on the day itself,
saying that the latter withdrew from the bidding for the
25-year concession to operate Transco.
Two
Rivers president Jose Ma. K. Lim said the withdrawal of
Terna-Rete prevented the group from bidding for the
Transco concession.
“The
withdrawal of Terna as a technical partner and investor
prevented us from bidding for Transco under the bidding
terms and conditions of the bid defined by Psalm,” Lim
said. |
