SC rules in favor of Aboitiz on Naga plant

by Alena Mae S. Flores – October 13, 2016 at 11:50 pm

from Manila Standard Today

The Supreme Court upheld a decision that nullified the awarding of the 153.1-megawatt Naga power plant complex in Cebu to SPC Power Corp. and effectively recognized a unit of Aboitiz Power Corp. as the right winner for submitting the highest bid in 2014.

Aboitiz Power said in a disclosure to the stock exchange wholly-owned subsidiary Therma Power Visayas Inc. received on Thursday the notice of judgement dated Oct. 5 from the Supreme Court in case number G.R. No. 212686 entitled “Sergio R. Osmena III vs. PSALM, Emmanuel R. Ledesma Jr., SPC Power Corp. and Therma Power.”

Aboitiz said while the high tribunal upheld the viability of public bidding held by Power Sector Assets and Liabilities Management Corp. in 2014, it invalidated the “right to top” provision.

PSALM earlier awarded the power plant complex to SPC Power Corp., because of the “right to top” provision in the agreement.  The complex consists of the 52.5-megawatt 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.

Therma Power Visayas emerged as the highest bidder with an offer of P1.09 billion in 2014, beating the P859-million offer of SPC Power, which was the existing operator then. PSALM allowed SPC to exercise its right  to top the offer of Aboitiz Power.

Senator Sergio Osmeña III filed a case with the SC 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.

The Supreme Court voided the PSALM-SPC lease agreement in January 2016 and upheld the decision this month.

“In its notice of judgement, the Supreme Court upheld the validity of the public bidding held by the PSALM Corp. of the Naga power plant but invalidated the condition in the bidding granting SPC the right to top the bid,” Aboitiz Power said.

“The Supreme Court annulled and set aside the asset purchase agreement  and the land lease agreement executed  between SPC and PSALM and directed PSALM to execute the NPPC-APA and the NPPC-LLA in favor of TPVI,” it said.

PSALM officer-in-charge Lourdes Alzona confirmed the agency received a copy of the Supreme Court decision. “We are reviewing it and will refer to DOE,” Alzona said.

Energy Department undersecretary Felix William Fuentebella said PSALM “will implement said decision accordingly.”

“We asked them to furnish Secretary [Alfonso] Cusi a detailed presentation on the background of the case and how to proceed,” Fuentebella said.

SPC senior vice-president for finance and administration Alfredo Ballesteros earlier said a “no rebid” scenario for the Naga complex would be disadvantageous to the government.

“Merely awarding the plant to what is now the lower bidder would be disadvantageous to government. This is changing the rules of the game. All the interested parties to the bid were aware of the right to top, as a condition on the Naga sale. By participating in the bid, they recognized  SPC’s right to top and cannot assert their right to win,” Ballesteros said.

“Of course we will comply with the final decision of the court. But a no rebid  scenario for the government would change the rules of the game. I’m sure all bidders for Naga considered the right to top in their bids, because  the right was the primary condition in the bidding. It cannot simply be deleted,” Ballesteros said.