SPC Power wants SC to restore validity of contract to own power plant in Cebu

by Lenie Lectura – February 10, 2016

from Business Mirror

SPC Power Corp. is seeking a reversal of a Supreme Court (SC) ruling that nullified its contract to own and operate the 153.1-megawatt (MW) Naga Power Plant Complex (NPPC) in Cebu.

“On February 2, 2016, SPC Power Corp. filed an urgent motion for second reconsideration and/or referral to the en banc, after the Supreme Court Third Division denied its earlier motion for reconsideration which prayed for the reversal of its decision,” said the power firm in a disclosure to the stock exchange on Wednesday.

SPC said the government must conduct another auction for NPPC should the SC deny again the power firm’s appeal.

“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.

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 land-based gas turbine-land leased agreement. (LLA)

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

In the same disclosure, SPC said it “is still operating the Naga Power Plant.”

An official of Aboitiz Power Corp., the parent firm of TPVI, personally believes that the government should no longer conduct another bidding because TPVI had won the auction.

“But we won the bid,” Aboitiz Power CEO Erramon I. Aboitiz said when asked if another auction should even be an option.“The lawyers have a different way of looking at things.”

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,” Ballesteros said. “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.”