08 Dec 2007
The Power Sector Assets and Liabilities Management Corporation (PSALM) and AES- Masinloc Power Partners Co. Ltd. (AES-MPPCL), winning bidder for the 600-megawatt Masinloc Coal-Fired Thermal Power Plant, are set to close the sale of the facility by the first quarter of 2008, ahead of the May 2008 deadline provided under the purchase agreement for the power plant.
With the closing of the transaction, PSALM will be able to collect from MPPCL its upfront payment of at least US$372 million, or 40% of MPPCL's bid of US$930 million. The amount will go to the liquidation of the National Power Corporation's (NPC) debts, as specified under the Electric Power Industry Reform Act (EPIRA), thus lowering the government's debt burden.
The Asset Purchase Agreement for the Masinloc power plant provides that the transaction should close no later than 270 days after the effective date of 28 August 2007, or until 24 May 2008.
To close the transaction, PSALM must, among other responsibilities, obtain a certificate of compliance with the Energy Regulatory Commission and address land and other power plant issues. AES-MPPCL, on the other hand, must ensure the availability of the upfront payment and obtain a legal opinion that it is capacitated to perform its obligations under the transaction documents, among other requirements.
"The parties worked doubly hard to complete all the requirements to close this transaction. This only demonstrates PSALM's and AES-MPPCL's commitment to ensure the success of the government's power privatization program," PSALM Vice President for Contracts Management Helena C. Tolentino said. "We have been informed that AES-MPPCL is now working on the documentation for its entry into the Wholesale Electricity Spot Market (WESM). With this, we shall be moving towards the fulfillment of our goal for open competition", Tolentino added.
In a bidding last 26 July 2007, MPPCL was declared the winning bidder after posting the highest offer of US$930 million for the Zambales-based power facility. All bidders exceeded the US$650-million floor price set by the government for the power plant.
The Masinloc plant was bid out with a transition supply contract covering around 265 megawatts (MW).
As early as 2006, PSALM had obtained from the NPC's major creditors, namely, the Asian Development Bank, the World Bank, and the Japan Bank for International Cooperation, their specific consents to the transfer of the Masinloc plant.
Strategic Communications and Partnership Division |