19 Dec 2007
The highest bidder for the right to operate the National Transmission Corporation (TransCo) will not be able to run TransCo without a franchise from Congress. Thus, it is in its best interest to comply with all the requirements of Congress to be able to secure the franchise.
This was stressed by the Power Sector Assets and Liabilities Management Corporation (PSALM) which conducted the bidding for the TransCo concession last 12 December. The consortium of Monte Oro Grid Resources Corp., Calaca High Power Corp. and State Grid Corp. of China was declared the highest bidder for the 25-year concession of TransCo.
The Constitution requires the operator of a public utility, such as the nationwide transmission assets of TransCo, to first get a franchise from Congress before it can run the public utility. This means that under the TransCo bidding rules, the winning bidder must incorporate a concession corporation which will apply for a franchise from Congress to operate TransCo. The highest bidder has one year from its receipt of a notice from PSALM declaring it the winning bidder to obtain the congressional franchise.
PSALM had made it clear that the concession corporation must consist of the same members of the consortium that participated in the bid.
The winning bidder will be required to pay the 25% down payment of its bid price, called the Commencement Fee, only after it acquires the congressional franchise. In the same vein, however, the winning bidder will not benefit from TransCo operations until it gets the franchise. In the meantime, the government will continue to assume the cost of maintaining and earnings from operating TransCo.
Strategic Communications and Partnership Division |