By Myrna M. Velasco – June 6, 2019, 10:00 PM
from Manila Bulletin
State-run Power Sector Assets and Liabilities Management Corporation (PSALM) has engaged the Philippine subsidiary of United Kingdom-headquartered PricewaterhouseCoopers (PwC) as its consultant on asset valuation which will then serve as the basis of pricing for the sale of the 650-megawatt Malaya thermal power facility this year.
The government-owned company said it decided on securing the consultancy services of PwC following two failed biddings and four negotiations that also fell through.
“PSALM has finally engaged a consultancy firm for the valuation of the Malaya thermal power plant and its underlying land,” the company has announced to the media.
The privatization design initially thought out for the Malaya thermal power plant is to have it sold on “as is, where is” basis and the package shall include the property where the facility is sited.
PSALM qualified that in the auction process undertaken on March 4 this year, PwC “scored the highest among three competing consultancy firms during the negotiated procurement,” a process that generally leaned on a quality-based evaluation procedure.
The prescribed criteria in the selection of a consultant roped in 40 percent for experience; 50 percent on qualifications; while the balance of 10 percent delves with approach and methodology in executing the “asset appraisal” task.
On its consultancy works, PwC is required to craft the financial models and analysis “to optimize value for the land and structures of the Malaya thermal power plant.”
The consulting firm will also be aided by a sub-consultant, Asian Appraisal Company, “for appraising the land underlying the Malaya thermal plant,” and its appointment shall also be bound “by the same terms and obligations that apply to the principal consultant.”
At the completion of required consultancy work, PwC is mandated to present the outcome of its valuation to the board of directors of PSALM – and that is targeted around August this year.
The engagement of a “valuation consultant” had been the major factor that delayed the privatization of the Malaya plant – as the sale timeline was actually targeted latter part of last year.
PSALM had done tons of successful asset privatizations in the past, and it was able to rely internally on valuation as well as on bringing forth the prescribed reserve price of facilities on divestment. But for the Malaya plant, it suddenly staggered without the help of a valuation consultant.
The Malaya plant is the first power plant asset lined up by PSALM under the Duterte administration; and it has more to go in the remaining three years of this current government leadership.