Delays still expected in TransCo privatization
Monday, November 27, 2006
By MYRNA M. VELASCO
The much-anticipated privatization of the National Transmission Corporation (TransCo) is expected to encounter another round of delay given some unresolved issues raised by prospective bidders, primarily securing a franchise which could be enmeshed with the forthcoming elections in May next year.
Power Sector Assets and Liabilities Management Corporation (PSALM) president Nieves L. Osorio told a recent hearing of the Joint Congressional Power Commission that from the scheduled December 20 bidding, they are open to extending it "in consideration of the comfort of bidders."
She said the targeted bidding date will only push through "if we are able to resolve the issues raised by investors" during the prebid conference last November 20.
Three consortia have been listed to advance to the formal auction process namely Triratna Holdings Corporation as local partner with Malaysian firm Tenaga Nasional Berhad and Newbridge Asia IV L.P. as technical foreign counterparts; the Citadel Holdings Inc. with Italian firm Terna SpA; and the Monte Oro Grid Resources with State Grid Corporation of China.
The prospective concessionaires raised that securing a franchise may be a problem if award is made before the May 2007 elections because that could mean dealing with two separate Congresses.
Osorio explained that under the terms of reference, the award of contract will be done 30 days after the announcement of the winning concessionaire.
The bidders have also voiced out concerns on guarantee that they will be able to recover with reasonable rate of return the capital they will sink in for expansion of the country’s transmission system.
The Electric Power Industry Reform Act (EPIRA) specified that the TransCo concessionaire undertakes expansion and rehabilitation of the transmission network; and that has been the rationale for the stringent technical and financial qualifications set for the bidders.
The required operational experience of the technical partner shall match that of a transmission system with at least 6,000 circuit kilometers and 6,000 megawatts peak demand; and a voltage level of 115 to 230 kilovolts.
The net asset value or market capitalization of the prospective bidders shall also reach US$ 500 million.
The Filipino partner is required to have a market capitalization of at least $ 300 million or must be able to present a bank opinion that it can fund equity investment of that magnitude. The foreign counterpart, on the other hand, shall have net asset value of at least $ 175 million.
PSALM vowed it will only entertain serious bidders with proven domestic or international experience and expertise as a leading transmission system operator. (MMV)
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