Aboitiz says it won the auction for Naga plants

by Alena Mae S. Flores – January 11, 2016 at 11:20 pm

from Manila Standard

Aboitiz Power Corp., one of the country’s largest energy companies, said Monday it should be declared the winning bidder for the 153.1-megawatt Naga power plant complex in Cebu province, after the Supreme Court voided the deal with SPC Power Corp.

“I think it should be us. If top-up was nullified, then I think we won the bid,” Aboitiz Power chief executive Erramon Aboitiz told reporters.

The Supreme Court earlier issued a decision nullifying the right of SPC Power to top the winning bid on the Naga power plant complex.

SPC Power previously won the land-based gas turbine bid together with the right to top the winning bid on adjacent properties in an open bidding held by the Power Sector Assets and Liabilities Management Corp. in 2009.

SPC Power then exercised the right to top the offer of Aboitiz Power, after PSALM conducted the bidding in March 2014. Therma Power Visayas Inc., a unit of Aboitiz Power, emerged as the highest bidder with an offer of P1.09 billion.

SPC offered the second highest bid of P859 million for the Naga facility during the 2014 bidding, but the company exercised its right to top the offer of Therma Visayas.

SPC Power together with PSALM was supposed to file a motion for reconsideration with the high tribunal last year. “We’ll await for the MR. If the MR is consistent with the original ruling, then I really think it should be awarded to us,” Aboitiz said.

“We won the bid. I don’t know, but lawyers have a different way of looking at things,” he said.

PSALM sought clarification from the Office of the Government Corporate Counsel regarding the SC decision.

“Our sale was done in good faith based on legal opinion that the right to top was valid so securing a clarification may be in order,” PSALM president Lourdes Alzona said earlier.

The Naga power complex 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.

These power plants use a combination of coal, bunker C oil and diesel as fuel.

Senator Sergio Osmeña III filed a case with the Supreme Court in 2014 seeking to stop the sale of the Naga power plant complex in Cebu to SPC Power and nullify the stipulation in the lease agreement.

Therma Visayas also asked PSALM to hold the turnover in abeyance, pending the resolution of the case filed by Osmeña. The turnover of the facility to SPC, however, pushed through.

The SC said in its decision the property was outside the leased premises covered by the agreement. It said the contention of SPC regarding right of way and operational requirements “are clearly not analogous to a lessee’s legitimate interest on the property being leased.”

The court also said SPC had never operated the Naga land-based gas turbine.

“We hold that the grant of right to top to SPC under the LBGT-LLA is void as it is not founded on the said lesses’s legitimate interest over the leased premises,” it said.

The court also debunked SPC’s argument that the privatization of the Naga power plant complex was more advantageous to the government because it resulted in a higher price (P54 million more) than Therma Visayas’ winning bid.

“Whatever initial gain from the initial price obtained for the NPPC compared to the original bid price of TPVI is negated by the fact that SPC’s right to top discouraged more potential buyers from submitting their bids, knowing that even their most reasonable bid can be defeated by SPC’s exercise to right to top,” it said.

The court said attracting more bidders was still the better means to secure the best offer for the government.

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