SMC bags Ilijan contract with $870-million bid

MANILA, Philippines - San Miguel Corp. (SMC), the largest food and beverage conglomerate in Southeast Asia, has won the right to manage the contracted capacity of the 1,200-megawatt (MW) Ilijan natural gas-fired facility in Batangas.

The diversifying conglomerate submitted yesterday the highest offer of $870 million in the bidding conducted by the state-run Power Sector Assets and Liabilities Management Corp. (PSALM).

Trans-Asia Oil and Development Corp. offered the second highest bid at $804 million while units of First Gen Corp. and Aboitiz Power Corp. submitted the third and fourth highest bids, respectively.

By submitting the highest bid, SMC will become the independent power producer administrator (IPPA) for Ilijan’s contract.

With the successful bidding of the Ilijan contracts, PSALM will be able to hurdle close to the 70-percent privatization threshold for IPP contracts in the Luzon and Visayas grids this year.

Located in the Southern Luzon province of Batangas, the Ilijan IPP plant is being operated by Korea Electric Power Corp. (Kepco) through KEPCO-Ilijan Corp.

Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) requires PSALM to privatize at least 70 percent of the contracted capacities of the IPPs in the Luzon and Visayas grids, which is the remaining precondition to the implementation of open access and retail competition.

Aside from Ilijan, PSALM intends to put on the auction block the Unified Leyte and Malaya contracts this year. The Ilijan natural gas plant has a take-or-pay contract with its gas suppliers.

By bagging the IPP contracts of Ilijan, SMC will control one of the highest power capacities in the country and will also further diversify its power portfolio.

The SMC group also manages the contracted capacities  of 1,200 MW Sual coal-fired power plant and the 345-MW San Roque hydropower facility both in Pangasinan.

It also runs the 620-MW Limay diesel-fired power plant in Bataan.

SMC also has a significant stake in Manila Electric Co. (Meralco), the country’s largest power distributor.