$3.6-B bid tops 3 others for 25-yr transmission lease
Friday, October 08, 2004
A bid of $3.6 billion topped three other offers for the 25-year lease of the Philippines’ high-voltage electricity transmission grid, now operated by the state-run National Transmission Corp. (Transco), industry sources said.
The highest offer is more than 80 percent higher than the reported $1.9 billion floor price the Power Sector Assets and Liabilities Management Corp. (PSALM) had set.
The second highest bid came in at $2.8 billion, while the other offers were $2.5 billion and $1.9 billion, the sources said.
In a statement, the Department of Energy confirmed that four firm bids were submitted. However, it did not reveal the bidders or their offers.
It said the offers were disclosed to representatives of the interested parties yesterday.
"The price offers submitted indicate that there is sustained and serious interest in Transco from the four investor groups," Energy Secretary Vincent Perez said.
He added: "These are raw offers which we have to evaluate alongside the term sheets they earlier submitted, to compare the proposals in terms of net expected value for government."
Should the government fail to reach an agreement with the top bidder, the PSALM will negotiate with the next ranked party, the energy department said.
PSALM is the government agency handling the privatization of state-owned electricity generation and transmission assets.
PSALM president Raphael Lotilla said formal negotiations will begin as soon as the Department of Justice releases a legal opinion that the award of the Transco concession contract can be negotiated.
"Should PSALM pursue formal negotiations, the term sheets and price offers submitted shall not bind PSALM as it may negotiate for better terms and conditions," Lotilla said.
Perez said Transco’s privatization through a concession contract will be beneficial to the government as it will allow government to retain ownership and control of strategic transmission assets and gain maximized revenues since investors are likely to bid "as if they had permanent ownership of assets."
Under the government’s privatization plan, Transco’s concession agreement will be for 25 years and may be renewed by another 25 years.
The government will require a downpayment of 25 percent of the total bid, while the balance may be paid over a 25-year period.
PSALM first put up the transmission assets for tender in July 2003, but declared the process a failure after only Singapore Power submitted a prequalification proposal. (XFN Asia)
posted by philpower @ 9:25 AM,
