Wednesday, 15 July 2009

Philippines' SMC eyes partners for $1-B dam

Firm may invite Japanese to form joint venture

By Doris Dumlao
Philippine Daily Inquirer
http://business.inquirer.net/money/topstories/view/20090714-215484/SMC-eyes-partners-for-1-B-dam

MANILA, Philippines—Food and beverage giant San Miguel Corp. plans to tap two Japanese partners for its $1-billion unsolicited proposal to the government to build the Laiban dam as an alternative source of bulk water for Metro Manila.

At the sidelines of San Miguel Brewery Inc.’s first annual stockholders meeting Tuesday, San Miguel president Ramon Ang also told reporters that the Laiban proposal had always been transparent and above-board as he challenged critics and other interested parties to make their own studies and submit their own offer to the government.

Ang said one foreign partner would provide technical expertise while another would provide financial muscle, estimating that the project would cost at least $1 billion.

Fending off criticisms that the project was shrouded in secrecy, Ang said that San Miguel had long disclosed its intention to submit an unsolicited proposal.

“Others who are interested need only to submit a letter of intent to prove that they are financially and technically capable to undertake it,” Ang said, adding that the Metropolitan Waterworks and Sewerage System could check the background of the participating entities.

“Now if you ask if San Miguel is willing to share the results of our studies, of course not! It’s the problem of other competitors to do their own research,” he said. “Our offer is very transparent. But of course, to the speculator who wanted to have a copy of our technical studies and financial studies, we won’t give them.”

San Miguel had been studying the project for the last two years, Ang said, notwithstanding skepticism from others that this was not viable.

“The only (major) source of bulk water for Metro Manila is Angat Dam. But if there’s an earthquake and the dam is damaged, where do we get the water?” Ang said. “That’s why we proposed this as an alternative, to ensure security of water supply. Also, with the fast-growing population in Metro Manila, there could be a water shortage very soon. So our offer is very timely.”

He said San Miguel would not be offended if another group were to bag the project, as long as the dam would be completed.

According to government regulations, unsolicited proposals under the build-operate-transfer system and its variants will be subject to a “Swiss challenge,” in which other interested investors will be invited to submit their own proposals, while the original proponent will have the right to match the best proposal from the challengers.

San Miguel has yet to hear from the MWSS on its proposal after the deadline to challenge it lapsed last July 8, Ang said.

As for a possible “take or pay” provision that could require MWSS or the two private water concessionaires to pay for a fixed volume of raw water from the San Miguel-led joint venture, whether the supply was actually used or not, Ang said the matter was still being discussed.

The dam will be built at the Kaliwa River basin in Tanay, Rizal. A watershed of about 28,000 hectares on the slope of the Sierra Madre mountain range will be drained. The dam aims to provide an average 1.83 billion liters of water a day for about 5.5 million people in southern Metro Manila. The project also has a hydropower component that will produce about 25 megawatts of electricity.

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