Gagasan Steel bags Manila thermal plant

The Power Sector Assets and Liabilities Management Corp. (PSALM) has officially turned over the Manila thermal power plant (MTPP) to its new owner Gagasan Steel Inc.

In simple rites held at PSALM’s Makati office, PSALM vice president for asset management and electricity trading Froilan A. Tampinco also handed to Gagasan Steel the certificate of effectivity which obligates both PSALM and the company to execute the provisions stipulated in the asset purchase agreement (APA).

The notice of award and certificate of effectivity were issued after Gagasan paid $1.253 million, or 50 percent of the total purchase price of $2.5 million. The purchase price covers the plant equipment, components, auxiliaries and accessories of the MTPP, but excluding the underlying land.

Under the terms of the sale, Gagasan Steel will be responsible for dismantling the plant equipment and site clean up. Tampinco said that the actual start of the project and mobilization should not go beyond 270 days.

The period covers the compliance by both parties of their respective deliverables as stated in the APA and the completion of the payment of the purchase price.

As soon as the required deliverables have been met, Gagasan Steel will be given six months, subject to extension, to dismantle the plant building and equipment and clean up the site.

PSALM said Gagasan Steel should secure the necessary permits, licenses or accreditation from relevant government agencies such as the Department of Environment and Natural Resources in the dismantling of the structures and equipment as well as in the environmental clean up of the site in accordance with existing environmental laws and regulations.

PSALM’s Contract Management Group will be on hand to monitor compliance to ensure that all provisions in the APA are followed.

Gagasan Steel, an affiliate of Malaysia-based Gagasan Steel Sdn Berhad, is an import-export handler, dealer and trader of scrap metals and has been in operation since 2002. Its local clients include National Power Corp. (Napocor) and the Manila Electric Co. (Meralco).

PSALM decided to conduct negotiations with Gagasan Steel after the third auction last Feb. 6 was declared a failure. Gagasan Steel was the only bidder to pass the technical qualifications, but the firm fell short of the reserve price.

Located at Isla de Provisor, Paco, Manila, the MTPP is the first decommissioned plant sold by PSALM on an “as is, where is” basis.