Korean company declared highest bidder for Angat power plant

28 Apr 2010

Korea Water Resources Development Corp. (K-Water), a new player in the Philippine electric power sector, was declared by the Power Sector Assets and Liabilities Management (PSALM) Corporation as the highest bidder for the 218-megawatt Angat Hydroelectric Power Plant (HEPP) in a successful sale held today (28 April 2010).

K-Water offered USD440.88 million (USD440,880,000) for the Angat HEPP to edge out five other bidders whose enthusiasm to participate in the exercise negated the misconceptions thrown against the bidding process. The other bidders were DMCI Power Corp. (USD188.89 million), First Gen Northern Energy Corp. (USD365 million), San Miguel Corp. (USD312.50 million), SN-Aboitiz Power Pangasinan, Inc. (USD256 million), and Trans-Asia Oil & Energy Development Corp. (USD237 million).

K-Water's bid exceeded the reserve price set by the PSALM board for the Angat HEPP.

Founded on 16 November 1967, K-Water significantly contributes to the development of South Korea's heavy and chemical industries and the modernization of the national industrial structure in accordance with the Korean government's national development plan.

K-Water substantially contributed to the growth of the Korean economy and the improvement of the public welfare by implementing water resources development projects and managing these resources. The company completed the Soyanggang Dam Project and began the Seobingo and Gumi Industrial Complex Projects.

PSALM will verify the accuracy, authenticity, and completeness of the bid documents that K-Water had submitted before the company can be formally declared the winning bidder for the Angat HEPP.

As soon as K-Water is officially declared the winning bidder, it will be obligated to operate and maintain the Angat Dam at no cost to the government. Operation and maintenance obligations include keeping the dam compliant with international standards on safety, as well as addressing all structural weaknesses of the dam.

In successfully bidding out the Angat HEPP, which operates through the Angat Dam, PSALM stressed that only the power plant component of the dam was privatized. The Angat Dam, which supplies more than 90% of the water requirements of Metro Manila and neighboring provinces, remains the property of the Philippine government.

PSALM also pointed out that there is no correlation between the privatization of the power plant and the water supply from the Angat reservoir, saying that the use of water by the winning bidder for the Angat HEPP will be regulated by the National Water Resources Board.

"This addresses any misapprehension that the control over the use of the water from the dam will be left to the discretion of a private entity," PSALM stated.

The power privatization agency explained that the new owner of the Angat HEPP can only use the same water that is already allocated to the Metropolitan Waterworks and Sewerage System (MWSS) for domestic use and the National Irrigation Administration for irrigation purposes.

PSALM also cited the Water Code which stipulates that "in times of emergency the use of water for domestic and municipal purposes shall have a better right over all other uses."

Located in San Lorenzo, Norzagaray in Bulacan, the Angat HEPP consists of four main units, each with a 50-MW capacity. The units were commissioned between 1967 and 1968. To augment its operation, the plant uses five auxiliary units including two turbines capable of generating a total of 28 MW. These turbines are owned by the MWSS and were not part of the bidding.

With the successful privatization of the Angat HEPP, PSALM's privatization level has hit the 87.82% mark for all its generation assets in the Luzon and Visayas grids.

Corporate Communications Division
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