More bidders line up for Masinloc power plant

The number of interested bidders for the 600-megawatt (MW) Masinloc coal-fired power plant in Zambales has increased to 21 from the previous 17, a Power Sector Assets and Liabilities Management Corp. (PSALM) official said.

In an interview with the STAR, PSALM vice president Froilan Tampinco said this is a positive development as they prepare to conduct the pre-bidding for the power plant on Sept. 1 and the bidding proper on Oct. 27.

Last month, Energy Secretary Vincent Perez announced that at least 17 companies from India, Japan, Korea, the United States and the Asean region have submitted letters of intent (LOI) to participate in the privatization of Masinloc as a merchant plant without any power sale contract.

Earlier, the Aboitiz group said it would team up with Japan Power Corp., an energy firm majority owned by the Japanese government, to bid for the power plant.

A company official said the group is now re-evaluating its bid for Masinloc – one of the biggest power plants being offered for sale by PSALM.

"We are interested to bid. Japan Power Corp. will join us in our bid to operate the Masinloc power plant. We are now in the process of reassessing our bid," the company official said.

PSALM is tasked to sell the state-owned National Power Corp.’s generation and transmission assets, the proceeds of which will be used to settle a portion of Napocor’s huge debts.

Based on the approved bidding guidelines, the interested parties will be required to post a bid security equivalent to 10 percent of the total bid price in the form of an irrevocable letter of credit, confirmed by a local bank and acceptable to PSALM’s bids and awards committee.

Aside from Masinloc, Tampinco said they are also preparing for the bidding on Sept. 29 of the 1.2-MW Loboc hydropower plant in Bohol. There are at least 10 foreign and local firms that have submitted LOIs for Loboc.

Five groups, on the other hand, have signified interest to participate in the second bidding for the 400-kilowatt (KW) Cawayan hydropower plant in Sorsogon on Sept. 24. Three of these five interested parties participated in the first failed bidding for Cawayan, the fourth plant in PSALM’s bidding schedule.

In the case of Masinloc, the winning bidder can pay 40 percent in upfront cash and 60 percent through a deferred payment scheme for the period of seven years. The winning bidder will have an option to further lower its upfront cash outlay if it will be constructing additional 100 MW to 200 MW capacity for the Masinloc facility.

As a rule of thumb in building a power facility, an investor needs to spend at least $1 million to generate a megawatt of power.

"Where applicable, the privatization bid is packaged to encourage prospective bidders to invest in additional capacity," Tampinco said.

From March to June this year, PSALM was able to sell three of Napocor’s generating assets. These are the 3.5-MW Talomo mini-hydro electric power plant which was sold to Hydro Electric Development Corp. for $391,428/MW; the 1.6-MW Agusan River mini-hydro plant sold to First Generation Holdings Corp. at $995,000/MW; and the 1.8-MW Barit mini-hydro plant won by Ramon Constancio at $266,666/MW.

Based on the accelerated sale schedule, PSALM will sell the 200-MW Manila Thermal and 225-MW Bataan Thermal by August this year. This will be followed by the sale of the 22-MW Bohol and 1.2-MW Loboc power facilities.

By Nov. 2004, PSALM will dispose of the 210-MW Navotas power plant while the 620-MW Bataan Thermal site will be auctioned by end of this year.

In early 2005, the 850-MW Sucat diesel-fired power facility will also be bid out. A t least two parties have already signified interest for Sucat, which is being planned for conversion into a natural gas facility.