DTI faces ‘difficult’ task of evaluating bids for NSC plant

The National Steel Corp. Evaluation Committee will have a hard time comparing the proposals submitted by Voest Alpine, Cathay Pacific Steel Corp. (CAPASCO) and Allengoal Steel Fabrication & Trading.

Voest Alpine offer is merely to rehabilitate and operate the mothballed NSC plant in Iligan.

CAPASCO, on the other hand, has submitted a lease proposal with a purchase option.

Allengoal, for its part, has basically submitted its earlier lease proposal.

However, Trade and Industry Secretary Manuel Roxas II had admitted that the evaluation process would not be a simple comparison on "apples to apples." Rather, he said, it would be a comparison of "apples and oranges."

"The Evaluation Committee had agreed to a liberal interpretation of the terms of reference for analyzing the offers," Roxas said.

Allengoal’s offer remains the same which is a lease price of P20.5 million per month plus 40 percent of net profit of NSC, the percentage negotiable upwards.

The rent, according to Allengoal, would be payable in arrears within five days from the start of the next calendar month.

The lease period would be two years and the leased assets would include the cold mill, the electrolytic tinning line, the billet steel-making plant, the hot mill No. 2 and the support facilities.

Allengoal is offering a performance bond of P75 million to cover damage to equipment and it assured that operating organization would include ex-NSC employes.

The Allengoal proposal allows for pre-termination by mutual agreement in case of sale of assets to third party investor but with reimbursement of unrecovered portion of rehabilitation plus cost of money.

However, Allengoal stresses that its current proposal is "without prejudice to and without abandoning the motion filed with the Securities and Exchange Commission on Implementation of lease agreement previously signed."

CAPASCO did not offer a lease price but it wants a five-year lease including a six months grace period for rehabilitation of the plant and start-up.

It would lease the cold mill facility, the electrolytic tinning line facility, the billet making facility, the hot mill facility, auxiliary facilities, offices, buildings, guest houses, recreational and training facilities, office equipment and furniture.

It assured that it has funding of up to P2 billion, but did not offer a performance bond.

CAPASCO, however, has offered that within 36 months, it may exercise an option to buy 50 percent of debt at a 50 percent discount, but wants a right to match other offers beyond the specified period.

It also assured that to the maximum extent possible it would hire qualified ex-NSC employees.

However, CAPASCO’s condition is that the lease agreement must be honored by the owners of NSC in the event the ownership issue is resolved.

It also wants a rationalization of the tariff structure of the steel industry and implementation of dumping duties on steel products.

CAPASCO also wants assurance of a peaceful possession of the facilities.