Calaca bidders fail to meet reserve price

28 Apr 2006

First, one of the bidders delivered the bid documents to the wrong venue. Second, the price proposals of both bidders were below the reserve price.

Thus, the Power Sector Assets and Liabilities Management Corporation (PSALM) yesterday twice declared the bidding for the 600-megawatt Calaca coal-fired power plant a failure.

Bid rules state that bids submitted after the 12 noon deadline, April 27, 2006 will be rejected and returned to the bidders unopened. PSALM earlier informed the bidders that the venue for the submission and opening of the bids was the Executive Lounge, 5th floor of Building 5 of PNOC-EDC, Department of Energy Complex in Fort Bonifacio, Taguig City.

First Generation Luzon Power Corp. submitted its bid before 12 noon at the venue while the other bidder, DMCI Holdings Inc., delivered its documents before the deadline to the PSALM head office at SGV II Building Ayala Ave Makati City.

After declaring the bidding a failure, PSALM and representatives of the two bidders met. After a marathon meeting to ensure that all parties agreed with the procedures, the Privatization Bids and Awards Committee (PBAC) proceeded with the open negotiations where both DMCI and First Gen were given three chances to present their price proposals.

The first price proposals of the bidders were opened at 8:13 p.m., with First Gen and DMCI submitting bids that were both below the reserve price.

The two bidders were given 30 minutes to submit their second price proposals. By 8:36 p.m., the envelopes were in, with both bidders maintaining their original price bids.

After reading the second set of price bids, PSALM president Nieves L. Osorio opened the sealed envelope containing the government's reserve price of $288 million. First Gen and DMCI were then given another 30 minutes to submit their third and last price proposal.

At 9:07 p.m., the envelopes were handed over, with one of the bidders increasing its bid price. Both price proposals, however, remained below the reserve price.

Consequently, PSALM declared the bidding a failure.

"As much as we are disappointed with the outcome of the bidding, we have to pursue what will, in the end, bring optimal benefit to the government and the Filipino people," said Ms. Osorio.

"Our mandate is not simply bidding out and privatizing the generation assets, but ensuring that the interest of the Philippine government and its people is protected and upheld," she added. "We thank the bidders and appreciate their sustained interest and participation in this bidding."

The Batangas-based Calaca power plant is the first major generation asset on the government's bidding lineup this year. It was first opened for bidding in June last year, but the bidding was canceled when two of the three pre-qualified bidders backed out shortly before the deadline for the submission of bids.

Strategic Communications and Partnership Division
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