SPC Power: PSALM must rebid Naga power plant if SC denies SPC motion

by Lenie Lectura – January 14, 2016

from Business Mirror

SPC Power Corp. (SPC) on Thursday said the government must conduct another auction for the Naga Power Plant Complex (NPPC) should the Supreme Court (SC) deny the power firm’s motion for reconsideration.

“The proper way forward in case the right to top is omitted is to rebid the plant so that all bidders start from the same assumption and so that the government may have an opportunity to recover the topped up price that SPC paid,” Senior Vice President Alfredo Ballesteros said.

SPC had exercised its “right to top” the P1,088-billion bid of Therma Power Visayas Inc. (TPVI) for the NPPC. SPC offered the Power Sector Assets and Liabilities Management Corp. (PSALM) a bid higher by 5 percent at P1.143 billion and 33 percent more than its original bid.

Consequently, PSALM awarded the contract to SPC.

However, the SC declared null and void the right of first refusal or the right to top granted to SPC under the 2009 Naga LBGT-LLA (land-based gas turbine-land leased agreement).

Consequently, the SC annulled the NPPC asset purchase agreement and land lease agreement (NPPC-LLA) executed by PSALM and SPC.

“We are asking for the Supreme Court’s reconsideration of its decision,” Ballesteros said.

“Even the petitioner in the case, Sen. Sergio Osmeña, is asking for a reconsideration, so this case still has a number of issues to be clarified,” he said.

Ballesteros reacted to statements made by Aboitiz Power Corp., the parent firm of TPVI. AboitizPower CEO Erramon I. Aboitiz personally believes that the government should no longer conduct another bidding because TPVI had won the auction.

“But we won the bid,” Aboitiz said when asked if another auction should even be an option.

“The lawyers have a different way of looking at things,” he added.

But Ballesteros said merely awarding the plant to TPVI would be disadvantageous to the government.

“As you can see in the Naga bidding, if there was no right to top, the government would have settled for the lower bid, instead of getting SPC’s topped-up bid, which is more than P54 million than the bid of the other bidder,” said Ballesteros. “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.”

He added: “There’s even a question on what assets are included in the bid, but it is clear with all bidders that what is involved is the area of the Naga plant. In fact the leased premises for the Naga land-based gas turbines and the Naga plant are located in just one complex. Anyway, the bidding rules are specific in that regard.”

PSALM also filed a motion for reconsideration.

We filed already filed our appeal. We will abide by whatever the court will decide,” said PSALM President Lourdes Alzona when sought for comment.

SPC, added its official, would likewise abide by the final SC ruling.

“Of course, we will comply with the final decision of the High 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,” said Ballesteros.

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