PSALM sets auction of Manila thermal plant

To further fasttrack the privatization of National Power Corp.’s generating assets, the Power Sector Assets and Liabilities Management Corp. (PSALM) has decided to offer within the year the decommissioned Manila Thermal Power Plant (MTPP).

PSALM said it would officially open the third round of bidding for MTPP, located at Isla de Provisor in Paco, Manila, as it takes advantage of the positive feedback from investors on the government’s privatization program.

PSALM was earlier having second thoughts on selling the retired plant after offering it as scrap asset. But now it said it hopes to attract more investors in the MTPP auction by including the land in the sale.

PSALM indicated that the MTPP would be sold on an “as is, where is” basis, which would include the plant equipment, auxiliaries and accessories as well as the land.

The two-hectare land is located in a prime area, being near SM Manila and other commercial centers. The size of the land is also ideal for industrial purposes.

The bid invitations stated that PSALM would be accepting letters of interest (LOI) from prospective investors until Oct. 10.

In addition to the submission of the LOI, interested parties will be required to execute a confidentiality agreement and an undertaking, and pay a non-refundable fee of $500 not later Oct. 12. Investor groups meeting these requirements will be issued the bidding package for the MTPP.

A pre-bid conference is set on Oct. 24, while the bidding proper will be held on Dec. 19 at PSALM’s Makati City office.

Since the plant is already retired, PSALM expects bidders engaged in the construction or steel manufacturing business, or those eyeing the scrap value of the MTPP’s equipment, component auxiliaries and accessories, to bid for the decommissioned facility.

Located in Ermita along the Pasig River, the MTPP has two identical generating units, each with a capacity of 100 megawatts. Unit One was commissioned on September 1965, while Unit Two was commissioned on October 1966.

Both units substantially contributed power to the Luzon grid until they were retired in January 2000. All plant systems are intact and all major equipment properly maintained and preserved.

The first two biddings for the MTPP – held in the first quarter of 2005 and the last quarter of 2006 – failed primarily due to lack of investor interest. On the off-chance that the December bidding will again fail, PSALM may resort to conducting a third party auction for the decommissioned plant.

This means PSALM will tap a third party auctioneer that will provide a comprehensive asset disposal service. This will involve formulating an appropriate sale strategy and methodology for the MTPP and the other retired power plants for sale.

This will also include the administration of an inventory of the assets, the preparation of the assets, the strategic conduct of the auction, and the removal of the assets from their respective sites.