New round of bidding set for Malaya power plant

A THIRD round of public bidding has been set for the 650-megawatt (MW) Malaya thermal power plant in Rizal, the state agency tasked to privatize government energy assets said on Friday, after previous rounds resulted in failed bids.

In a statement, Power Sector Assets and Liabilities Management Corp. (PSALM) said it had started on Friday the publication of its “invitation to bid” to encourage interested parties to participate in its bidding activities starting on Feb. 3 until March 12, 2020.

“PSALM is determined to privatize the asset, which is sold on an ‘as-is-where-is’ basis, by taking the necessary steps to adjust the minimum bid price. It has also conducted valuation studies on MTPP (Malaya thermal power plant) and its underlying land in determining the reserve bid price,” it said.

Only parties that submitted letters of interest and have been issued PSALM’s bidding package will be allowed to participate in the privatization of the assets, the agency said. The bidding procedures can be downloaded from its website.

It has scheduled a pre-bid conference on Feb. 13, 2020 at 2:00 p.m. to solicit comments and concerns that interested bidders may have on the bidding requirements and asset sale provisions. The bid opening is set on April 15, 2020.

In November last year, the second attempt to auction the plant failed as most of the pre-qualified bidders retreated, and a lone bidder submitted an offer below the floor price, the agency said.

PSALM said back then that it would take the “necessary steps” to lower the minimum bid price. It had said the four entities that were prequalified to bid for the power plant and the underlying land in in Brgy. Malaya, Pililla, Rizal all backed out even after passing the initial bidding stage.

Fort Pilar Energy, Inc., Panasia Energy, Inc., and AC Energy Philippines, Inc. sent letters saying they could not meet the minimum bid price (MBP) of P4,481,796,017. One other bidder, D.M. Wenceslao and Associates, Inc., submitted a sealed bid.

PSALM declared a failure of the second round of bidding because there was only one bid. As called for by 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,” it had said.

The Malaya plant remains operational and is being dispatched as a “must-run” unit, or a power plant that is compelled to run and provide the needed power to ensure reliability of supply in the Luzon grid, especially during times of supply shortfall or when required for system security and voltage support.

Based on a directive from the Department of Energy, once the plant is privatized, it would no longer be required to be a must-run unit. — Victor V. Saulon