AboitizPower: Government should award 153.1-MW power plant to subsidiary

by Lenie Lectura – January 11, 2016

from Business Mirror

THE government should award the contract to own and operate the 153.1-megawatt (MW) Naga Power Plant Complex (NPPC) in Cebu to the subsidiary of Aboitiz Power Corp., the power firm’s top official said.

AboitizPower CEO Erramon I. Aboitiz said he believes the government should no longer conduct another bidding because Therma Power Visayas Inc. (TPVI) had won the auction.

“We won the bid,” Aboitiz said when asked if another auction should even be an option. “But the lawyers have a different way of looking at things.”

The Power Sector Assets and Liabilities Management Corp. (PSALM) declared TPVI as the highest bidder for the NPPC with a bid of P1.088 billion, higher than SPC Power Corp.’s (SPC) bid of only P858,999,888.88.

SPC exercised its “right to top” the bid, offering PSALM 5 percent more at P1.143 billion and 33 percent more than SPC’s original bid during the previous failed auction.

Consequently, PSALM awarded the contract to SPC.

However, the Supreme Court (SC) declared null and void the right of first refusal or the right to top granted to SPC under the 2009 Naga (Land-based Gas Turbine) LBGT-LLA (Land Leased Agreement).

Consequently, the SC annulled the NPPC Asset Purchase Agreement (NPPC-APA) and land lease agreement (NPPC-LLA) executed by PSALM and SPC.

SPC had filed a motion for reconsideration (MR). “We’ll await the result of the motion for reconsideration. If the MR is consistent with the original ruling, then I think it should be awarded to us,” Aboitiz said. “But I think it should be us. If the top-up was nullified, I think we won the bid.”

PSALM, for its part, said it sought the legal opinion of the Department of Justice (DOJ) prior to any decision made by the state firm.

“For the record, the Department of Justice affirmed the legality of the ‘right to top’ the adjoining properties within the NPPC accorded to the owner of the Naga LBGT Power Plant in connection with the privatization of NPPC,” PSALM said.

The DOJ’s confirmation was made prior to the commencement of the NPPC sale process.

The impasse could result in a possible delay in the construction of a 300-megawatt (MW) coal-power plant that SPC plans to build together with Korea Electric Power Corp. (Kepco) in Naga, Cebu.

“The SC decision, if not reconsidered, will surely set back the construction and introduction of additional new 300-MW capacity in the Visayas grid, which has already thin reserves,” SPC Senior Vice President Alfredo Ballesteros said.

Kepco Philippines President and CEO Hyang-reol Lyu earlier said the power project is currently in the feasibility stage.

In 2011 Kepco and SPC already partnered for a 200-MW clean-coal power plant in Barangay Colon, Naga, Cebu. The power facility was meant to augment the power supply in the Visayan grid.

The Department of Energy earlier anticipated that the Visayas would register 1,800 MW of available generating capacity as against an anticipated demand of 1,600 MW.

“Considering the investments that we already poured in after the award and turnover of the asset, if at all, a change in rules should only be prospective and not retroactive. Business cannot develop properly if the rules change in the middle of the game,” Ballesteros said.

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