Financial capability of lowest bidder in Malaya auction questioned

MANILA, Philippines - The awarding of the contract to operate and maintain the 650-megawatt Malaya Thermal Power Plant in Pililla, Rizal could face delays amid doubts on the financial capability of STX Marine Service Co. of South Korea.

Industry players urged the Power Sector Assets and Liabilities Management Corp. (PSALM) to scrutinize the financial reports of STX Marine.

The Korean company offered the lowest bid amounting to P302.149 million or below Malaya’s approved procurement budget of P451 million.

“PSALM should consider this financial condition of STX Marine in the post qualification of STX’s documents as it would be to the detriment of the public if the plant’s operations will be affected if the company is not able to execute its obligations as an O&M contractor due to lack of funds,” an industry source said.

Based on the financial records of STX Marine for 2013, the company’s total equity is only around $82.726 million.

According to PSALM’s bid requirements, the bidder should submit a computation of its net financial contracting capacity (NFCC), which must be at least equal to the approved budget contract.

The source said PSALM should carefully study the financial documents of STX Marine as it would affect its ability to maintain and operate the Malaya plant, a critical plant in times of power supply shortage.

PSALM said it would study the matter as it has the right to review the qualifications of the bidders “at any stage in the procurement process if it has reasonable grounds to believe that a misrepresentation has been made by the said bidder, or that there has been a change in the bidder’s capability to undertake the project.”

PSALM vice chair and Energy Secretary Carlos Jericho Petilla has said that the agency will probe allegations of lapses in the bid documents of STX Marine.

“We will look into it,” Petilla said.

The PSALM board, for its part, has yet to approve STX Marine’s lowest bid offer and its submission will still have to pass the post-qualification process.

At present, SPC Power Corp. operates and maintains the Malaya facility.

PSALM owns the Malaya plant pending its privatization.