06 Dec 2006
The Power Sector Assets and Liabilities Management Corporation (PSALM) released to bidders on Thursday, 30 November, the final version of the Asset Purchase Agreement (APA) and Land Lease Agreement (LLA) for the sale of the 360-megawatt (MW) Magat Hydroelectric Power Plant (MHEPP) that is set to be auctioned off on 14 December.
The other bid documents consisting of the Lease Contract and the Operation and Maintenance (O&M) Agreement with the National Irrigation Administration (NIA) will also be released as soon as negotiations are completed and finalized. These agreements will be binding among the winning bidder, PSALM and the NIA.
The APA for the Magat 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 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.
The winning bidder will likewise 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.
"During the deferred payment period, PSALM will turn over to the winning bidder the Magat facility on the condition that it will operate, maintain and rehabilitate the complex in the ordinary and usual course of business," said PSALM Vice President for Asset Management and Electricity Trading Froilan A. Tampinco.
The winning bidder will sign the APA and LLA with PSALM, and the Lease Contract and O&M Agreement with the NIA. The O&M Agreement details the terms and conditions set by PSALM and the NIA regarding the operation and maintenance of the dams and other non-power components needed for the operation of the Magat power complex, which has the largest generating capacity among the hydroelectric power facilities currently operating.
"NIA is amenable to lease its lands underlying a portion of the MHEPP subject to the execution of a lease contract under the O&M Agreement," said Mr. Tampinco. "The terms and conditions of the lease contract will be binding between NIA and the winning bidder."
The final transaction documents incorporate the comments raised by the bidders during the pre-bid conference held last 08 November. Seven prospective bidders attended the conference held at the Department of Energy. Of the seven investor groups, five submitted the documentary deliverables on the 14 November deadline. Four of these investors have complied with all the documentary deliverables for the Magat facility.
The Isabela-based power plant is the second hydroelectric power facility to be bid out by PSALM this year following the successful sale last September of the 112-MW Pantabangan-Masiway hydroelectric power complex in Nueva Ecija.
Strategic Communications and Partnership Division |