16 November 2007, Page 1
By Paul Anthony A. Isla
GOVERNMENT-RUN Power Sector Assets and Liabilities Management Corp. (PSALM) has prequalified four of five interested bidder groups for the 25-year concession to operate the National Transmission Corp. (Transco).
PSALM said the four qualified bidders will participate in the final stage of the Transco bidding process, which is the submission of the technical proposal and financial bid scheduled on December 12.
It named the prequalified bidder groups as the consortium of Monte Oro Grid Resources Corp. (MOGRC) and State Grid Corp. of China (SGCC); consortium of Two Rivers Pacific Holdings Corp. and Terna-Rete Electtrica Nazionale SPA; San Miguel Energy Corp. and TPG Aurora BV; and the consortium of Citadel Holdings Inc. and Power Grid Corp. of India Ltd.
Monte Oro is represented by its chairman and president Walter W. Brown, while Two Rivers is represented by its president Jose Ma. K. Lim.
San Miguel Corp. chairman and president Ramon S. Ang represents San Miguel Energy, while Amelia S. de la Rosa represents Citadel.
The prequalification group composed of the technical teams of PSALM and Transco conducted and completed the evaluation of the prequalification proposals.
The results of the prequalification process were finalized after the reconsideration period, which is a standard procedure for bidding transactions as stipulated in the Government Procurement Reform Act.
The PSALM project management team and its Transco counterpart for the Transco privatization thoroughly evaluated the prequalification proposals of the interested bidders to ensure the accuracy, authenticity, completeness, veracity and validity of all documents and information submitted in compliance with the prequalification criteria.
The second stage of the Transco privatization process, the prequalification procedure, enables PSALM to assess the financial and technical capabilities of the investor groups interested in bidding for the Transco concession.
The procedure assures strict compliance with the provisions stipulated in the Electric Power Industry Reform Act (Epira).
The prequalification process is conducted to ensure that only serious bidders with proven domestic or international experience as a leading transmission-system operator will be qualified to participate in the final bidding.
Bidders for the Transco concession must have a member or affiliate with experience in operating and maintaining electricity-transmission systems comparable to that of the Philippines, consisting of not less than 6,000 circuit kilometers of transmission lines operating at 115 kilovolts (kV) or higher, including a system operating at not less than 230 kV and having a peak demand of at least 6,000 megawatts.
The member of the prospective bidder who meets the technical prequalification criteria must have a net asset value or market capitalization of $500 million.
Bidders should also have the capability to form a concession that will meet the 60-percent Filipino ownership restrictions for grantees of a public-utility franchise as stipulated in the Philippine Constitution.
The largest foreign and Filipino-members of the prospective bidder will need to pass a net-asset-value or market-capitalization criteria.
Based on the results of its regular dialogue with the prospective Transco bidders, PSALM is finalizing the transaction documents for the concession.
PSALM also conducted a series of management presentations from November 6 to 8 to discuss with the bidders relevant information about the transmission business. Meanwhile, a group of consumer advocates expressed opposition to the privatization of the Transco through a 25-year concession contract.
EMPOWER Consumers said bidding out the right to operate and maintain the $3-billion Transco, a utility imbued with public interest, poses a threat to the national security as well as the economy, with a private company taking hold of all the transmission facilities which provide a highway for electricity to run throughout the country.
“We can be held hostage by profit-driven private companies once Transco is under their control. The winning bidder of Transco would be holding the switchboard of the entire country and has the power to turn it off at will. Even Malacañang would be on its knees before Transco’s would-be owners begging for electricity once this happens,” the group warned.
“The private company that would operate and maintain Transco would only be accountable to the owners, and not to the public. It could do whatever it wants with the transmission lines, hold power at source or raise prices exorbitantly to recover costs,” said Milo N. Tanchuling, EMPOWER Consumers spokesperson.
Tanchuling also berated PSALM president Jose Ibazeta for his announcement that the bidding of Transco would be done behind closed doors as requested by the bidders to withhold their identity from the public.
“Transco should remain public to ensure a steady and reliable supply of electricity nationwide, and that all privatization efforts by the government on the power industry should be put to stop. Instead, a thorough assessment of the restructuring and privatization of the power industry has to be undertaken by the government,” said Tanchuling.