Malaya plant sale fails anew

By Myrn M. Velasco – Updated November 25, 2019, 10:50 AM
from Manila Bulletin

The roughly two years saga of privatizing the 650-megawatt Malaya thermal power facility still ended in a failure because the offer price of the lone bidder was way below the government’s ₱4.481- billion minimum bid price.

Asset seller Power Sector Assets and Liabilities Management Corporation (PSALM) it only received a single offer from D.M. Wenceslao and Associates on the second bidding on Friday, November 22.

The second failed bid should have paved the way for PSALM to enter into a negotiated deal with the lone bidder had it not for its “below the minimum bid price” offer.

That then warranted the government-owned company to similarly declare “a failure of negotiated sale process.” The minimum bid price is decided upon by the PSALM Board before the company goes into asset divestment exercises.

In Malaya plant’s second round of bidding, four companies had been pre-qualified to join the targeted last stretch of the facility’s divestment process. These are: Panasia Energy, Inc., AC Energy Philippines, Inc., Fort Pilar Energy, Inc. and then D.M. Wenceslao and Associates.

AC Energy of the Ayala group had been most forthright on its decision not to join the bidding, with it sending formal correspondence to PSALM stating that the company “cannot meet the minimum bid price of ₱4,481,796,017.”

Following this phase of unsuccessful sale, PSALM said it will report the outcome to its board to ascertain the next necessary steps – and that may entail another bid activity for the plant. “The next round of bidding for the Malaya plant will commence at the soonest possible time,” the company said.

Despite its age, the Malaya plant is still at operational state – and is being called upon by system operator National Grid Corporation of the Philippines (NGCP) as a must-run unit (MRU) when there is tight supply condition in the Luzon grid.

The government’s target is to privatize the asset on “as is, where is” basis.
However, most of the bidders see the value of the plant to be “at almost depreciated state” – and it is just the site of the facility that could really have relevance to them.

Some of the interested parties set sight on the asset for prospective real estate development; while some targets it as probable site for other power plant projects, including solar farm installation.