First Gen wins bid for Pantabangan-Masiway Hydropower Complex

08 Sep 2006

The Power Sector Assets and Liabilities Management Corporation (PSALM) today declared First Generation Hydropower Corporation as the winning bidder for the 112-megawatt (MW) Pantabangan - Masiway Hydroelectric Power Plant Complex.

With a bid of US$129,000,000, First Gen topped the bid of SN Aboitiz Power Inc. which offered US$ 112,000,000 for the Nueva Ecija-based complex. The public auction was held at the Audio-Visual Room of the Department of Energy in Fort Bonifacio, Taguig City.

Pantabangan-Masiway is the second major power asset to be bid out by PSALM this year. PSALM bid out the 600-MW Calaca coal plant in April, which resulted in a failure after the offers fell short of the reserve price set for the plant.

"We are very happy with the offers. Clearly, this is the result of good competition and continued interest in Philippine power assets," Energy Secretary Raphael P.M. Lotilla said.

PSALM President and CEO Nieves L. Osorio said the energy sector welcomes the success of this bid. "We will work to sustain this as we are set to move forward with the privatization of power assets. Next to be offered is the 360-MW Magat hydroelectric complex in Isabela and the 25-year concession of TransCo (National Transmission Corporation)," she added.

SN Aboitiz Power Inc. and First Generation Hydropower Corporation submitted their bids before the 12:00 PM deadline set by PSALM, the agency tasked by the government to privatize the assets of the National Power Corp.

The terms of the sale are contained in the Asset Purchase Agreement (APA) between the winning bidder and PSALM. First Gen will also sign a land lease agreement with PSALM, and the Operation and Maintenance agreement with the National Irrigation Administration for the non-power components.

The APA for the Pantabangan-Masiway facility requires the winning bidder to deliver at least 40% of the purchase price as upfront payment payable on or before the closing date. The balance of 60% may be paid in 14 equal semi-annual payments with an interest of 12% per annum compounded semi-annually.

The winning bidder is also required to post a performance bond of US$ 2.58 million, equivalent to 2% of the purchase price. The performance bond will be reduced every year equivalent to 2% of the aggregate amount of the deferred payments.

In addition, the winning bidder will be required to post a deferred payment security deposit equivalent to at least the next deferred payment in the form of cash, currently dated manager's check or an irrevocable standby letter of credit acceptable to PSALM.

Representatives of the Philippine Chamber of Commerce and Industry and Procurement Watch, a non-government organization, attended today's bidding as observers.

Strategic Communications and Partnership Division
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