PSALM to tack in San Pascual supply contract for NPC power asset sale
Tuesday, September 26, 2006
By MYRNA M. VELASCO
To ensure fairly appealing price offer for power plants being privatized, the Power Sector Assets and Liabilities Management Corporation (PSALM) is firming up plans to attach the 300-megawatt supply contract originally intended for the San Pascual power facility to one of the assets due for bidding soon.
An official of the company, however, would not say which of the power facilities would be the beneficiary of the supply deal that was bought out from the original proponents of the project.
But he made clear that the award of the contract shall be undertaken on a competitive bidding; noting that "based on PSALM board’s decision, we cannot go on a negotiated sale approach, so we still have to bid out."
After securing a legal opinion from the Department of Justice (DOJ) stipulating that the supply contract is assignable to other power facilities, PSALM noted one of the more viable options is to attach it to one the facilities to be divested.
Shareholders in San Pascual Cogeneration Company (SPCC) which include US firms ChevronTexaco, Inc., Edison Mission Energy and SPCC International B.V. Netherlands, demanded $ 20 million as cancellation fee for the contract, but after series of negotiations with the government, the amount was significantly pared down to $ 6.0 million.
On top of that, SPCC also sought for the reimbursement of the $ 9.0 million performance bond deposit posted when it bagged the project’s contract.
The return of the surety bond and reimbursement of accrued costs for the proposed facility’s implementation were among the issues stringently tackled by the project sponsors and PSALM at the course of negotiations for the termination agreement.
With a power purchase contract in place, it was noted that risks confronting prospective investors in a merchant market environment would be partly eased, thus, the asset being sold turns out more attractive and the government would also gain from higher privatization proceeds.
It would be noted that among the power facilities eyed for auction include the 600-megawatt Masinloc and 600-MW Calaca coal-fired plants.
Proposals were also set forth to assign it to the 850-MW Sucat or the 600-MW Limay facilities which are being planned to shift fuel use to natural gas as part of their privatization blueprint.
posted by philpower @ 3:20 PM,
