25 Apr 2008
The Power Sector Assets and Liabilities Management Corporation (PSALM) last Friday (25 April 2008) completed negotiations with Gagasan Steel Inc. for the sale of the decommissioned Manila Thermal Power Plant (MTPP) to successfully close the transaction for one of the retired power assets of the National Power Corporation.
The government power privatization firm, which is also tasked to sell the decomissioned or retired plants of National Power as stipulated in the Electric Power Industry Reform Act, announced that Gagasan Steel agreed to pay the aggregate amount of USD2.5 million (USD2,506,000.00) for the plant equipment, components, auxiliaries, and accessories of the MTPP.
The technical working group reviewed the negotiating documents submitted by Gagasan Steel and found them fully compliant with all requirements prescribed by PSALM, subject to verification of the authenticity and veracity of the submissions.
Gagasan Steel, an affiliate of Malaysia-based Gagasan Steel Sdn Berhad, is an import-export handler, dealer and trader of scrap metals and has been in operation since 2002. Its local clients include National Power and the Manila Electric Co.
Under the terms for the sale, Gagasan Steel will be responsible for the dismantling of the plant equipment and environmental cleanup.
PSALM decided to conduct negotiations with Gagasan Steel after the third bid exercise held last 06 February 2008 was declared a failure. Gagasan Steel was the only bidder to pass the technical qualifications, but the firm fell short of the reserve price. The first two biddings for the MTPP - held in the first quarter of 2005 and the first quarter of 2007 - likewise failed primarily due to lack of investor interest.
The MTPP, which is located at Isla de Provisor, Paco, Manila, was sold on an "as is where is" basis but did not include the underlying land.
Strategic Communications and Partnership Division