By Lenie Lectura – October 7, 2019
from Business Mirror
THE Power Sector Assets and Liabilities Management Corp. (PSALM) will rebid the 650-megawatt (MW) Malaya thermal power plant in Pililla, Rizal next month.
“PSALM Privatization, Bids and Awards Committee invites interested parties to participate and bid for the privatization of the 650-MW Malaya thermal power plant and the land underlying the plant on an ‘as is, where is’ basis,” said the state firm in a published bid invite.
PSALM has set on November 22, the deadline for the submission of bid proposals. All bids must be submitted at 12 noon.
“A two-envelope bidding system will be adopted. Interested parties must post a bid security worth P310 million in the form of irrevocable letter of credit,” it said.
Interested bidders have until November 6 to submit their letters of interest to PSALM and pay a participation fee of P150,000. Only those that submit an LOI shall be allowed to participate in the privatization activities.
PSALM said due diligence starts October 7, until two days before the bid submission deadline. A prebid conference is scheduled on October 24 at 2 p.m. at the PSALM office.
Last September 18, PSALM declared the auction a failure because only one bidder participated. Under PSALM’s Bidding Procedures, there shall be a failure of bidding if only one bid is received.
AC Energy Inc. was the lone bidder.
“While it is unfortunate that the bidding failed, PSALM remains very much committed to privatize the Malaya Power Plant this year. Failure of the first round of bidding will not deter us from trying again, and again, until we are able to successfully dispose of this asset,” said PSALM President Irene Joy Garcia.
At the start of the bidding process in 2018, there were 11 companies that submitted to PSALM their letters of intent to participate in the bidding and purchased the bidding documents.
After the prequalification process, four bidders were declared as qualified to bid: AC Energy Inc., FGEN Reliable Energy Holdings Inc., DM Wenceslao and Associates Inc., and DMCI Power Corp.
Only AC Energy formally submitted a bid prior to the bid submission deadline at 12 noon.
In a letter of DM Wenceslao and Associates Inc., PSALM was informed of its decision to withdraw from the bidding supposedly “due to current market conditions and uncertainty of supply of fuel.”
FGEN Reliable Energy Holdings Inc. and DMCI Power Corp. did not indicate why they did not submit a bid.
Early this year, PSALM engaged a third-party consultant, PricewaterhouseCoopers Philippines, to conduct a valuation of the Malaya plant, structures and underlying land. The result of PwC’s valuation was among the factors considered by the PSALM Board in setting the reserve bid price.
The Malaya plant consists of a 300-MW unit with a once-through type boiler and a 350-MW unit fitted with a conventional boiler. It serves as a “must-run” unit which means it is designated to run when supply is tight in the Luzon grid.
PSALM was supposed to bid out the facility in March 2017, but it was put on hold after the Energy Department decided to include in the bidding the option to convert the plant into a facility running on liquefied natural gas. The plan did not push through.