AND why has his San Miguel Corporation been excluded by the Power Sector Assets and Liabilities Management Corp. or PSALM from the chosen list of power companies bidding for the 650-megawatt Malaya thermal power plant in Pililla, Rizal?
As stated in the Electric Power Industry Reform Act of 2001 (the EPIRA law), the assets and liabilities of the National Power Corporation are to be managed by PSALM.
Apparently, PSALM had made an announcement that it would be accepting bids for the Malaya plant and that the deadline was Dec. 20.
PSALM issued the invitation to bid for Malaya in December. It allowed bidders to conduct due diligence from Dec. 6, 2016 to March 6, 2017, while a bid conference was held on Jan. 6, 2017. Actual bid submission is scheduled for March 8, 2017.
Under the Aquino regime, PSALM had designated the Malaya power plant as a stand-by must-be-used generating plant to meet any emergency deficiency or instability of supply caused by the sudden stoppage of any operating power plant in the national grid.
The Malaya plant has a 300-MW unit with a once-through type boiler and a 350-MW unit fitted with a conventional boiler.
According to the Manila Standard Business report on January 16 by Alena Mae S. Flores, “Four companies met the deadline on Dec. 20 and submitted their letters of interest for the Malaya plant assets being offered for privatization.”
But the “actual bidding is scheduled on March 8, 2017.”
SMC’s Ramon Ang claims that he did not know that Malaya would be bid out. “One day after [Dec. 20], I wrote that I want to join the bidding. The bidding is still in March but they [PSALM] don’t want me to join,” Ang said.
PSALM had earlier said it received four letters of interest from APT Global Inc., Phinma Energy Corp., Riverbend Consolidated Mining Corp. and AC Energy Holdings Inc.
The SMC head is perplexed by PSALM’s refusal to allow him/SMC to bid. “Isn’t it more advantageous to the government to allow more bidders,” he asked. San Miguel, said he, always wants to join all government auctions, “so that the state would get the best deal. Whenever, San Miguel joins the bidding, the government usually gets the best deal.” True enough, even if San Miguel does not win the bid in the end, the winning bidder often offers the highest price to the government because of SMC’s being a participant.
Alona Mae Flores wrote that “Ang cited the case of the Cavite-Laguna Expressway CALAX which generated P27 billion for the government, much higher than the other offer of P11 billion.”
San Miguel was initially disqualified from the CaLax bidding because of a typo error in its bid submission, but the company showed its P20-billion offer while the other bidder offered only P11 billion.
Ramon Ang said, “From P11 billion that was supposed to be awarded, it went up to P27 billion. It’s always good that San Miguel is joining the bidding.”
San Miguel has a pending case against a PSALM official who terminated SMC’s contract for the production capacity of the 1,200-MW Ilijan natural gas plant power plant.
San Miguel’s subsidiary South Premiere Power Corp. was trading the contracted capacity of the Ilijan natural gas plant in Batangas. In 2010, it had won the contract with its highest bid of $870 million in 2010.
We think, whatever personal reservations the PSALM officials may have about San Miguel Corporation because it missed the deadline to write a letter, the primordial factor is that such a major industrial corporation as SMC must not be excluded from this major power plant bidding activity.