PSALM to reduce floor price for Malaya thermal plant after failed tender

By November 25, 2019Property News

ANOTHER ATTEMPT of state-led Power Sector Assets and Liabilities Management Corp. (PSALM) to sell the 650-megawatt (MW) Malaya thermal power plant failed anew as most of the pre-qualified bidders backed off and a lone bidder submitted an offer below the floor price, the agency said.
“PSALM will report to its Board of Directors the outcome of today’s bidding so that it can take the necessary steps to lower the MBP (minimum bid price),” it said in a statement on Friday after going through the auction process. “The next round of bidding for the Malaya plant will commence at the soonest possible time.”
PSALM, the company formed by law to privatize state-owned energy assets, said the four entities that were prequalified to bid for the power plant and the underlying land in Pililla, Rizal all backed out even after passing the initial stage of the bidding.
“However, right before the deadline for submission of the financial bid at 12 noon today (Friday), Fort Pilar Energy, Inc., Panasia Energy, Inc., and AC Energy Philippines, Inc. sent letters to PSALM saying essentially that they cannot meet the minimum bid price (MBP) of P4,481,796,017,” PSALM said.
The agency said one other bidder, D.M. Wenceslao and Associates, Inc., submitted a sealed bid.
“PSALM declared a failure of the second round of public bidding because there was only one bid,” it said.
It added that pursuant to the bidding rules, the agency then proceeded to go through the process of a negotiated sale with D.M. Wenceslao.
“Nonetheless, when PSALM opened the lone bid from D.M. Wenceslao, it was below the MBP. Thus, PSALM was constrained to also declare a failure of the negotiated sale process.”
The plant remains operational and being dispatched as a “must-run” unit. A must-run plant is compelled to run and provide the needed power supply as deemed necessary to ensure reliability of power supply in the Luzon grid, especially in times of supply shortfall, system security and voltage support.
Based on the directive from the Department of Energy, once the plant is privatized on an “as is where is basis,” it would no longer be required to be a must-run unit. — Victor V. Saulon
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