TransCo bidding fails for fourth time
Tuesday, February 06, 2007
By MYRNA M. VELASCO
After fourth attempt to privatize the spinoff National Transmission Corporation (TransCo) by way of a 25-year concession deal, the end-result was still a declaration of failure of bidding by asset seller Power Sector Assets and Liabilities Management Corporation.
But the lone bidder — Citadel Holdings with its Italian partner Terna SpA — is strongly pushing for a negotiated deal since this is already the third time that a failed bidding occurred in the process of privatizing the country’s transmission assets.
Finance Secretary and PSALM board chairman Margarito Teves said they will have until the end of this week to come up with a decision whether to pursue a negotiated deal with the Italian group or undertake a re-bidding exercise.
Energy Secretary Raphael P.M. Lotilla first told media that "we will rebid, definitely no negotiations." But after a closed door meeting with the lone bidder, the PSALM board opted to re-study their options.
When asked if government pursues a "no negotiation policy," would this signal them to walk away, Citadel Holdings forthrightly responded "probably."
The other pre-qualified bidders - Triratna Holdings Corporation with foreign partners Tenaga Nasional Berhad and Newbridge Asia and the consortium of Monte Oro Grid Resources Corporation and State Grid Corporation of China were also at the bidding venue but did not submit their respective tenders.
For one, the Triratna group has raised several issues that it claimed served as major deterrent for it to advance interest at bidding stage - including the solidary provision in the transaction document which provides that all members of the consortium "shall be jointly and severally liable" for whatever adversarial circumstances that may arise out of the concession arrangement.
The two bidders are also complaining on PSALM’s failure to resolve and accommodate in the Transaction Documents the concerns they raised relating to recovery of invested capital for the transmission network’s upgrading and expansion; proposed assumption by government of tax liabilities and resolution of lingering right-of-way (ROW) problems.
While there have been issues raised before on securing a public utility franchise, the apprehension on this requirement has somehow been eased, according to some representatives of the bidders.
In a press briefing, PSALM president Nieves L. Osorio said the company’s management has briefed the board on the various issues raised by the bidders and the Board will evaluate the same before announcing the next steps to be taken."
Citadel Holdings representative Rogelio Singson told reporters "we will strongly push for a negotiation," further noting that they are even willing to elevate their appeal to President Arroyo who has reportedly given word that she wants TransCo privatization concluded the soonest possible time.
Singson added "it is not our fault if the other bidders were not ready" as of set scheduled bidding date; further relating that some of the issues raised by other bidders are not the same concerns that perturbed their interest to bid for the TransCo assets.
In a press statement, Triratna divulged that it opted to submit to PSALM an offer to purchase the transmission assets "subject to resolution of certain provisions in the transaction documents."
It added that it has tabled the bid bonds that could be drawn subject to resolution of certain provisions; but these are all hinged on the government’s decisiveness to sort out all remaining concerns within a short period of time.
posted by philpower @ 7:06 PM,
