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By Euan Paulo C. Añonuevo, Reporter
THE Philippines’ stalled power-sector
privatization program received a fresh shot in the arm, after the
Aboitiz group on Wednesday won the bid for the Tiwi-Makban
geothermal facility.
A unit of Aboitiz Power Corp. (AP) posted the
highest bid for the first state-owned plant to be auctioned off by
the Power Sector Assets and Liabilities Management Corp. (Psalm)
this year.
AP Renewables tendered a $446.89-billion bid for
the 747.53-megawatt facility, besting Lopez-controlled First Luzon
Geothermal Energy Corp.’s offer of $368.44 million.
The Tiwi-Makban facility is the third
state-owned plant that the Aboitiz group acquired under the
government’s asset-sale program. The group earlier won the auction
for the 175-megawatt Ambuklao-Binga and 360-megawatt Magat
hydroelectric facilities.
Luis Miguel Aboitiz, AP vice president, said the
company plans to tap a staple financing offered by Psalm to bankroll
its new acquisition.
Under the scheme, AP will pay 40 percent of its
winning bid while the remaining will be paid to Psalm in seven years
at a 12.5-percent interest. Aboitiz said AP may still consider other
payment options for the facility.
“We have to either use whatever funds we have
in AP and whatever the balance we can borrow. We still have a very
strong balance sheet,” he said.
The Tiwi-Makban geothermal facility, which will
be turned over to the Aboitiz group in a month, is composed of the
289-megawatt Tiwi plant located in Tiwi, Albay and the
458.53-megawatt MakBan plant straddling the Laguna and Batangas
provinces.
Psalm, which is tasked to privatize plants owned
by National Power Corp. (Napocor), attached a 475-megawatt supply
contracts to the Tiwi-MakBan sale, providing the facility’s new
owners with a ready market for its output.
Despite the substantial supply contract, a
number of groups, which originally numbered nine, opted to drop
their bids for the facility.
Aboitiz said that the lukewarm reception from
investors as well as the low offers the Tiwi-Makban’s auction drew
was due to the steam supply the winning bidder would have to secure
from Chevron Geothermal Philippines Holdings, Inc., which operates
the geothermal field where the plant is situated.
Under the contract with Chevron, Tiwi-Makban’s
owner would have to pay for the steam produced from the geothermal
fields at a price benchmarked with coal prices.
With the increasing price of the commodity, he
said that operating the geothermal plant may not be as attractive as
it would have been otherwise.
Because of this, he added that AP plans to
negotiate with Chevron.
With the sale of the Tiwi-MakBan power complex,
Psalm has now sold 14 of Napocor’s 31 plants, or a total 2,597.93
megawatts of capacity for its Luzon and Visayas generating capacity.
Froilan Tampinco, Psalm vice president for asset
management and electricity trading, said the Tiwi-Makban auction
will bring the government closer to the target mandated by the
Electric Power Industry Reform Act of 2001 (Epira).
The law requires the sale of at least 70 percent
of Napocor’s generating and contracted capacity before open access
can start in the power sector. Under the open-access scheme,
consumers can choose their suppliers and so bring down their
electricity bills, which are the second highest in Asia next to
Japan.
Following the Tiwi-Makban sale, “the
privatization level will now be about 68 percent. Our next offer,
the Bohol-Panay diesel plants, should give us over 73 percent by
October,” Tampinco said.
The successful sale of the Tiwi-Makban comes at
the same time the auction for another plant, the 620-megawatt Limay
combined cycle power plant failed, after the Psalm was left with
only one interested bidder who submitted the documentary
requirements on time.
Last week, the bidding for the 0.8-megawatt
Amlan hydroelectric plant also failed after it drew only one
qualified bidder.
Under Psalm bidding rules, the auction for a
power plant is considered a failure if only one participates in the
process.
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