PSALM resumes sale of Naga Complex; Right to top okay

23 Apr 2013

With clearance from its board of directors, the Power Sector Assets and Liabilities Management (PSALM) Corporation will resume the sale of the 145.8-megawatt (MW) Naga Power Plant Complex (NPPC) in the second semester.

The approval came after the Department of Justice (DoJ) confirmed in an opinion dated 09 January 2013 that the "right-to-top" provision included in PSALM's bidding documents was not in violation of the rules on competitive bidding.

"The opinion rendered by the DoJ confirmed PSALM's previous assertions regarding the sale of the NPPC, and therefore we can now prepare for its bidding," PSALM President and Chief Executive Officer Emmanuel R. Ledesma, Jr. said.

In 2011, PSALM deferred the bidding for the NPPC upon the request of the Joint Congressional Power Commission over an allegedly unfair and illegal condition known as a "right to top" the highest bid previously granted to SPC Power Corporation (SPC) in the Land Lease Agreement (LLA) executed among PSALM, National Power Corporation and SPC in 2009.

The LLA was executed pursuant to the Asset Purchase Agreement for the Naga Land-based Gas Turbine (LBGT) acquired by SPC through public bidding. In the Agreement, SPC was granted the right to top the highest bid on the sale or lease of the properties within the vicinity of the LBGT to give the winning bidder the opportunity to expand, subject to the payment of a premium of 5% over the highest bid on said adjacent properties. The NPPC is located in the vicinity of the LBGT.

Ledesma added that the NPPC will be privatized without any assigned power supply contract - a merchant plant. The sale will also exclude the land underlying the NPPC.

The NPPC consists of three (3) thermal power plants that use a combination of diesel, bunker C oil, and coal as fuel. These are the coal-fired 50-MW Cebu Thermal Power Plant 1 and 56.8-MW Cebu Thermal Power Plant 2; and the 39-MW Cebu Diesel Power Plant 1, which consists of six (6) diesel-fed power units with a capacity of 6.5 MW each.

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