Calaca power plant bidding fails
Friday, April 28, 2006
MYRNA M. VELASCO
A failure of bidding has been declared by the Power Sector Assets and Liabilities Management Corporation (PSALM) for the 600-megawatt coal fired power facility despite the fact that two local companies submitted tenders - namely First Gen Corporation and DMCI Holdings, Inc.
PSALM announced that the ‘hilarious turn of events’ triggered the declaration of failed auction because one of the bidders, DMCI Holdings, submitted its bid documents in a wrong venue. DMCI is currently a coal supplier to the Calaca facility.
"It is a failure of bidding although two bidders gave proposals because one brought documents to a wrong venue," PSALM noted in its advisory to media.
As of 3:00 pm yesterday, PSALM said its pre-qualification, bids and awards committee (PBAC) and the bidders were in discussion on what next moves shall be undertaken next.
Talks in the energy circles, however, intuit that the real reason for the failed bidding was that the bidders have not met the reserve price set by PSALM for the asset.
It was gathered that First Gen’s price offer was way lower than the floor price of $ 300 million set for the facility because it factored in costs for much needed rehabilitation so it could meet emission standards prescribed under the Clean Air Act. DMCI, on the other hand, is hurled with questions on its technical capacity to operate the power plant.
The asset liquidation firm earlier informed the Joint Congressional Power Commission that it would set stricter criteria to asset bidders; including technical qualification.
After securing transition supply contract for at least 83 MW, out of the 600-MW installed capacity of the coal plant, PSALM has been expecting investors to swarm in as it announced to interested parties the submission of financial bids for April 27 deadline.
The company originally expected that at least four investor groups would join the auction; expecting that the supply contracts it cornered, no matter how insignificant, could provide some form of inducements.
PSALM vice president for asset management and electricity trading group Froilan Tampinco said the final transaction documents, which contain the land lease and asset purchase agreement for the Calaca power plant, are required as part of the legal component that bidders have to submit together with their financial bids.
Invitation of bid submissions for Calaca was first made August last year; but due to lack of interests, PSALM advised interested parties that the scheduled auction shall be deferred.
The second time it attempted to undertake auction was October but the same circumstances, including the lack of market for the plant’s output, derailed the plan.
With the supply contracts attached to the package, Tampinco noted that "the new owner will only have to look for additional markets and negotiate for its own bilateral contracts with either distributors or big electricity consumers."
Aside from selling to distribution utilities or large customers, the other potential market being offered to asset takers is the commercial operation of the Wholesale Electricity Spot Market.
The Calaca facility is being operated by NPC as a baseload plant and its output is being delivered to the Luzon grid for dispatch and delivery to consumers in Metro Manila and outlying areas.
The state-owned power firm claims that Calaca is one of the cheapest in terms of generation cost among all of the government-owned power plants; with its average generation cost reaching only P1.62 per kilowatt hour (kWh) in 2004.
The plant was designed to run on local Semirara coal, thus, seen contributing a great deal in bids to utilize indigenous fuel sources.
posted by philpower @ 6:18 PM,
