AMID questions raised about the terms of the preferential sale granted to SPC Power Corp. on its way to acquire the 153.1-megawatt (MW) Naga Power Plant, the Power Sector Assets and Liabilities Management Corp. (PSALM) on Thursday turned over the controversial facility to its new owner.
“SPC Power is the new owner and operator of the Cebu-based power facility,” declared Emmanuel Ledesma Jr., PSALM president and chief executive officer, after the turnover rites.
Ledesma added that the Operation and Maintenance Service Contract (OMSC) of the Naga power facility lapsed last September 25.
He said PSALM and SPC formally closed the Naga plant on September 23 in Makati City during which the two companies exchanged their closing documentary deliverables in simple ceremonies.
PSALM conducted the bidding for the Naga power plant on March 31, 2014, wherein Therma Power Visayas Inc. emerged as the highest bidder with an offer of P1.09 billion. SPC came in second with a bid of P859 million.
The condition of the sale, however, provides that SPC has the “right to top” the price of the winning bidder for the Naga plant by 5 percent, as provided under the Land Lease Agreement executed between PSALM and SPC for the Naga Land-based Gas Turbine in 2009.
On May 20, 2014, SPC wire-transferred to PSALM’s account a total of P1.14 billion, which is five percent higher than Therma Power’s P1.09 billion bid.
PSALM issued the Notice of Award (NoA) and the Certificate of Effectivity (CoE) to SPC together with an original executed copy of the Final Transaction Documents on July 30, 2014.
The documents consisted of the Asset Purchase Agreement (APA) and the Land Lease Agreement (LLA) for the sale of the Cebu-based power plant.
As this developed, Sen. Sergio Osmena filed a petition for certiorari with the Supreme Court, arguing that SPC’s right to top Therma Power’s winning bid should be held invalid as it defeats the purpose of a fair and transparent bidding for a government asset.
Osmena’s high court petition became the basis for Therma Power’s letter to PSALM, asking the regulatory body to recall the NoA issued to SPC.
PSALM, however, said the NoA was in accordance with the decision of the PSALM Board of Directors in its meeting on July 25, 2014.
“The CoE prompts SPC to fully comply with and complete all the conditions for the closing of the sale of the Naga Power Plant,” Ledesma explained.
He added that SPC delivered on August 8 its performance bond, which is required upon the effectivity of the APA and valid until the date of the turnover.
The Naga Power Plant consists of the 52.5-MW Cebu 1 and 56.8-MW Cebu 2 coal-fired thermal power plants, and the 43.8-MW Cebu Diesel Power Plant 1 composed of six 7.3-MW bunker-C fed power units.
Situated in Colon, Naga City, Cebu, these power plants use a combination of coal, bunker C oil, and diesel as fuel.