Sale of 2 Napocor plants okayed

The Power Sector Assets and Liabilities Management Corp. (PSALM) has approved the sale of the first batch of National Power Corp. (Napocor) assets, consisting of the 210-megawatt (MW) Navotas 1-3 and four-MW Talomo plant.

"We have been given the go-signal to dispose of these two assets because they are already clean. This means there are no pending issues on their contracts," PSALM president Edgardo del Fonso said.

PSALM is mandated to handle the privatization of the assets of Napocor.

Del Fonso said they will be issuing a formal invitation to bid by November, with the actual bidding set on Dec. 19. Before the scheduled bidding, he said interested parties can review the information memorandum and conduct their respective due diligence.

However, the PSALM official declined to give details on the projected proceeds from the sale of the first batch of assets.

He said based on initial feedback from prospective bidders, most have expressed keen interest on larger generating assets such as Sucat, Masinloc and Calaca.

Del Fonso said of the 32 firms that have signified interest in the generating assets of Napocor, 15 have already given indications on which assets they would likely buy. Of the 15, at least seven firms have indicted strong interest for the 400-MW Sucat power plant.

"Some of them have multiple interests in buying a number of assets," he said.

Del Fonso said for now, the sale of each generating asset is patterned after the National Transmission Corp. (Transco) process. "Each generating asset will be sold separately. If there will be only one bidder for a generating asset, then it will be considered a failure. After two failed biddings, it will be sold through negotiated deal just like what we will be doing for Transco," he explained.

The privatization of Transco will be done through a negotiated deal after two failed biddings. Singapore Power Corp. is the sole bidder for Transco.

On the other hand, Del Fonso said PSALM will conduct one-on-one consultations with interested parties to solicit further feedback on the sale process for the rest of the generating assets of Napocor.

"We will have to consult them on the final groupings of the assets," he said.

PSALM will be disposing of some 32 Napocor generating assets originally valued at a total of $2.5 billion.

PSALM vice president Froilan Tampinco, however, admitted that the value of the generating assets will likely change depending on the new groupings.

"The new valuation of the assets is currently being done. The value will depend on whether these assets will be sold individually or by group. We have to consider the impact of the new groupings on the value of the assets," he said.

PSALM has decided to proceed with the sale of the generating assets while pursuing a negotiated deal with Singapore Power Ltd., the only company that showed interest to buy the transmission assets of Transco. Originally, Transco’s assets should be privatized first before proceeding with the sale of the generating assets.

Aside from Navotas and Talomo, the power plants being considered to be sold within the year are: the one-MW Loboc and 22-MW Bohol power plants.

Based on initial plan, PSALM will start the sale of the 620-MW combined cycle power plant in Limay, Bataan by Jan. 2004.

PSALM has also started preparing for the sale of 600-MW coal-fired Masinloc power plant last August and expects to complete the disposal process by Feb. 2004.

As part of the earlier proposed structure, PSALM also readied the sale of 75-MW Ambuklao and 100-MW Binga hydropower facilities last July and also expects to complete the sale by Feb. 2004.

These two power facilities are part of the Luzon-Angat package/cluster of assets. The other power plants included in the Luzon-Angat package are the 245-MW Angat power plant, the 100-MW Pantabanagn power plant, and the 12-MW Masiway power plant.

The 400-MW Sucat diesel-fired power plant is slated to be placed on the auction block by early next year. The preparation for the sale of this plant actually started last March.

The 100-MW Pinamucan power plant is also one of the individual assets to be auctioned off by early 2004. It was originally located in Batangas but will be transferred to Dingle, Iloilo. The transfer is expected be completed within 10 months.