MANILA, Philippines – The government failed yesterday to bid out the power supply contracts of the Pagbilao and Sual coal-fired power plants as the offers of the two contending groups fell short of the reserve price.
San Miguel Energy Corp. (SMEC), a unit of diversified conglomerate San Miguel Corp., and Therma Luzon Inc. of the Cebu-based Aboitiz Group, both submitted bids for the two plants after passing the technical and financial requirements set by the Bids and Awards Committee (BAC) of the state-run Power Sector Assets and Liabilities Management Corp. (PSALM).
However, PSALM said it has declared the bidding a failure as the offers “did not meet the reserve price” set by the BAC.
The BAC declined to disclose the reserve price for the contracted capacities of the two plants, both of which are operated by the Japanese-controlled Team Energy.
In particular, the bidding involved contracts as independent power producer administrators (IPPAs) for the Sual and Pagbilao power facilities.
SMEC and Therma submitted bids of $1 billion and $812.946 million, respectively, for the 1,000-megawatt Sual facility in Pangasinan.
For the 700-MW Pagbilao power plant in Quezon, Therma this time offered a higher bid of $648.8 million compared to SMEC’s offer of $590 million.
The 1,700-MW aggregate contracted capacities of the two power plants represent around 34.7 percent of the contracted capacity of the IPP contracts for Luzon and the Visayas.
San Miguel said it was not happy with the outcome as it expected to win, considering that it offered almost twice the minimum bid that PSALM itself set.
A well-placed source from one of the bidders said they were baffled by the imposition of a reserve price for the bidding since they were only aware of a minimum bid or floor price for the two plants’ contract.
The source said the minimum bid for Sual was set at $534 million while Pagbilao’s floor price stood at $217 million.
Luis Miguel Aboitiz, APC senior vice president said they have yet to decide whether to participate in the second round of bidding of the Sual and Pagbilao contracts.
“No decision. They have not announced a second round and we do not know if the terms are different,” he said.
Despite the setback, PSALM officials said they remain confident the IPPAs will be chosen before the year ends as the agency begins preparations for a new round of bidding.
The auction would have started the IPPA bidding process which would usher in the era of open access, wherein bulk power users will be given an option to choose where to source their power requirements.
PSALM is also set to implement Phase II of its IPPA selection process, which will involve the IPP contracts of the Casecnan, Bakun, and San Roque hydropower plants. The contracted capacities of these power facilities are 140 MW, 70 MW, and 95 MW, respectively.
Under the law, PSALM should be able to privatize 70 percent of Napocor’s generating assets in Luzon and Visayas and 70 percent of Napocor contracts through IPPAs before it could proceed with the open access scheme.
The third phase in the IPPA selection process would involve the sale of the 1,200-MW contracted capacity of the Ilijan natural gas plant in Batangas, which has a take-or-pay contract with its gas suppliers.
PSALM expects to generate an estimated P13 billion for the IPPs privatization.