SMC, K-Water tie up for power project

MANILA, Philippines - Diversified conglomerate San Miguel Corp. (SMC) has partnered with Korea Water Resources Corp. (K-Water) for the operation of the 218-megawatt Angat hydropower plant in Bulacan, a ranking official from the Korean firm said.

K-Water vice-president for overseas business division Byung Hoon Yune said the company has partnered with San Miguel which, in turn, may also take in other Filipino investors.

“San Miguel is the partner for the special purpose company (SPC) formed for the operation and maintenance of Angat plant. San Miguel and maybe other Filipino investors will get the 60 percent of SPC and K-Water will get the 40-percent equity,” Byung told reporters.

He said San Miguel would handle the management while K-Water will technically operate and maintain the Angat plant.

K-Water and San Miguel expect to close the transaction within 270 days, he added.

The Power Sector Assets and Liabilities Management PSALM, the government corporation tasked to manage the assets and liabilities of state-owned power assets, conducted a bidding for the $440.88-million facility in 2010.

K-Water topped the bidding but was unable to take over the plant due to thorny issues including court hurdles raised by non-government organizations (NGO) on the foreign takeover of power assets.

The Supreme Court upheld last year the privatization of the power plant but K-Water had negotiated with the government for a lower price tab on the facility, saying it wanted the same level of benefits expected in its 2010 bid.

Energy Secretary Carlos Jericho Petilla and K-Water officials have been in talks for months before finally reaching an agreement.

In the end, K-Water agreed to the original bid price of $440.88 million.

“I don’t think its too high a price. I think it’s very proper and profitable for K-Water specially. Because K-Water is not a private company driven solely by profit,” said.

For his part, PSALM president Emmanuel Ledesma Jr. said the government welcomes the entry of K-Water into the Philippine power sector.

The privatization of Angat, once completed, would be the first successful power asset sale under the Aquino administration, as mandated under the Electric Power Industry Reform Act of 2001.

K-Water will tap an initial $500 million bridge loan from the Korean Exim Bank to jumpstart the take-over Byung said.

“The bridge loan shall be $500 million that’s for one year. It’s just for the payment,” Byung Hoon Yune said.

He said K-Water is eyeing the take-over before the end of the year.

K-Water is optimistic that its investments in Angat is only the beginning of future projects in hydropower.