Privatization team to seek legal opinion on disposal option
Monday, October 11, 2004
By MYRNA M. VELASCO
The privatization team for spinoff National Transmission Corporation (Transco) will be seeking a legal opinion on the mode of disposal being espoused for the asset which was proposed to be done on a 25-year concession arrangement.
This, as Energy Secretary Vincent S. Perez noted that the four consortia — comprising of both local and foreign companies — have advanced their bids on the asset when they submitted their price offers last October 6.
"We hope to meet with DoJ (Department of Justice) next week to discuss the request for opinion," he said.
As an initial step, the energy secretary disclosed that he has already met with Justice Secretary Raul Gonzales. "He understands the urgency of the issue and we intend to sit down with him next week and discuss the request for opinion on the Transco privatization," Perez added.
At the same time, the privatization has already sent a formal letter of request to the justice department; in bid to expedite the need to secure DoJ opinion of the model of asset disposal.
Meanwhile, Perez stressed that the price offers put forward by the interested parties "exceeded our expectations," noting further that these should be ranked based on various conditions provided for; and shall be coupled with the evaluation of their term sheets.
The groups of investors submitted the price offers in response to a request from the Power Sector Assets and Liabilities Management Corp. (PSALM) and as part of ongoing discussions with PSALM on a Transco concession agreement.
The price offers were disclosed to representatives of the interested parties early this week without necessarily revealing the identity of the parties making the specific price offers.
PSALM President Raphael P.M. Lotilla said the evaluation of term sheets and price offers will be the basis for determining who among the interested parties PSALM will negotiate with first.
If no agreement is reached with the highest ranked party, PSALM may negotiate with the next ranked party.
PSALM is the government agency tasked to privatize state-owned electricity generation and transmission assets.
Lotilla further emphasized that the holding of formal negotiations would depend on the issuance of and compliance with a favorable DoJ opinion that the award of a concession contract for Transco 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," he added.
Perez said that the privatization of Transco through concession agreement puts the government in a unique and potentially advantageous position.
"This arrangement allows government to retain ownership and control of strategic transmission assets pending award of franchise, and gain maximized revenues as investors are expected to bid a price as if they had permanent ownership of assets," he stressed.
PSALM has been conducting discussions on the Transco concession agreement with interested investors who submitted indicative term sheets last August 6
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