Saturday, 17 April 2010

San Miguel bags Ilijan power contract on $870M bid

Amy R. Remo
Philippine Daily Inquirer
http://business.inquirer.net/money/topstories/view/20100416-264663/San-Miguel-bags-Ilijan-power-contract-on-870M-bid

SAN MIGUEL POWER CORP. Friday submitted the highest bid of $870 million for the contract to manage the 1,200-megawatt (MW) Ilijan natural gas power facility in Batangas, according to the state-owned Power Sector Assets and Liabilities Management Corp.

In a bidding held Friday, PSALM vice chair Jose C. Ibazeta announced that San Miguel Power bested the offers of Aboitiz-owned Therma Power Visayas Inc., Trans-Asia Oil and Energy Development Corp. and the Lopez-led First Gen Luzon Power Corp.

Trans-Asia Oil offered the second highest bid of $804 million, while Therma Power’s bid price was $100 million. First Gen Luzon submitted a bid of $534 million.

Ibazeta, who is also acting Energy Secretary, said the highest bid met the government’s reserve price for the management of the Ilijan independent power producer administrator (IPPA) contract.

He added that the sale of the IPPA has brought the privatization level to 68 percent—a mere two percentage points away from the 70-percent privatization level that PSALM has to achieve to allow the government to finally implement open access and retail competition.

As soon as it has verified the accuracy, authenticity and completeness of the bid documents, PSALM said it would issue a notice of award to San Miguel Power, formally declaring it as the winning IPP administrator for the contracted capacities of the natural gas facility.

The Ilijan management deal will be the third to be bagged by the San Miguel group after winning the bidding for the contracts to manage the 1,200-MW Sual coal-fired plant and the 345-MW San Roque multipurpose hydroelectric facility (through subsidiary Strategic Power Development Corp.). Both San Roque and Sual power plants are in Pangasinan.

There were originally five companies that expressed interest in the IPPA contract for Ilijan, but only four showed up during the bidding yesterday.

Completed in 2002, the Ilijan power plant is operated by Kepco through a build-operate-transfer contract that will expire in 2022. It draws natural gas from Shell Exploration BV’s Malampaya deep water gas-to-power project.

The Ilijan facility also has a take-or-pay contract with its gas suppliers.

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