Thursday, 29 April 2010

Korean water company submits highest offer for Angat power plant


A STATE-OWNED Korean water firm has submitted the highest offer for the 218-megawatt (MW) Angat hydroelectric plant, besting five other companies in a bidding staged yesterday by the Power Sector Assets and Liabilities Management Corporation (PSALM).

Korea Water Resources Corp. (K-Water) offered $441 million for the Angat plant, which PSALM Vice-President Conrad S. Tolentino said was "the highest bid and exceeded the reserve price."

The other bidders and their offers were First Gen Northern Energy Corp., $365 million; San Miguel Corp., $313 million; SN Aboitiz Power Pangasinan Inc., $256 million; Trans-Asia Oil and Energy Development Corp., $237 million; and DMCI Power Corp., $189 million.

"What we have is a very good price," Maria Luz L. Caminero, PSALM acting president, told reporters after the auction, referring to the Korean firm’s offer.

K-Water expects to fund the acquisition from internal funds and financing from the Korea Export Import Bank, said Byung Dal Kim, director at the company.

PSALM, in a statement, said it would "verify the accuracy, authenticity and completeness of the bid documents that K-Water submitted before the company can be formally declared the winning bidder."

"As soon as K-Water is officially declared the winning bidder, it will be obligated to operate and maintain the Angat Dam at no cost to the government," said PSALM.
PSALM assured that the privatization of the power plant will not negatively affect the disbursement of water from the Angat reservoir, which supplies over 90% of Metro Manila’s needs.

"The use of water by the winning bidder for the Angat HEPP (hydroelectric power plant) will be regulated by the National Water Resources Board," it said.

National Power Corp. (Napocor) spokesman Dennis S. Gana said hydropower plants are attractive to investors, since fuel is not a cost factor.

"The Angat dam is a hydro plant, so one does not need to spend on fuel anymore for it to run. And it also has no loans, no financial baggage," Mr. Gana said.

"It is already about 40 years [old] and is still good for about 25 years, although that could still be lengthened through additional investments."

Located in San Lorenzo, Norzagaray in Bulacan, the Angat power plant consists of four main units, each with a 50-MW capacity, that were commissioned between 1967 and 1968. To augment its operation, the plant uses five auxiliary units including two turbines capable of generating an additional 28 MW. The turbines, owned by the Metropolitan Waterworks and Sewerage System, were not part of the bidding.

With the sale of the Angat plant, PSALM’s privatization level has hit the 87.82% mark for generating assets in the Luzon and Visayas grids.

Privatizing 70% of the generating assets and contracted capacities of Napocor is one of the preconditions for open access and retail competition in the power industry under Republic Act 9136 or the 2001 Electric Power Industry Reform Act (EPIRA).
The 70% independent power producer administrator privatization target will be breached following a successful sale of the contract for the Malaya plant. The Malaya auction is scheduled to take place on June 16. -- with Reuters

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