The Philippines’ privatization agency said December 14 that a consortium of Philippine power producer Aboitiz Equity Venture Inc. and Statkraft Norfund Power Invest of Norway (SN Power) is the high bidder for privatization of the 360-MW Magat hydropower plant.
Power Sector Assets and Liabilities Management Corp. (PSALM) said it would declare a winning bidder upon completion of post-bid requirements and issuance of a notice of award.
With an offer of US$530 million, the joint venture outbid First Generation Northern Energy Corp., which offered US$420.9 million. The auction is part of the privatization of dozens of power plants of National Power Corp. (Napocor). (HNN 12/6/06)
A government source close to the bidding officials, said the bids were higher than the government’s reserve price. Manila hailed the successful auction as a sign of investor confidence in the energy sector.
Magat, which was built on the Magat River at a cost of US$83.7 million, started commercial operations in 1983 in Isabela province in the northern Philippines. The largest operating hydro project in the Philippines, it has four 90-MW units commissioned in 1983-1984 at Ramon, Isabella, Luzon.
Commercial terms and conditions of the sale are contained in an asset purchase agreement that is to bind PSALM and the winning bidder. The winning bidder also is to sign a land lease agreement with PSALM and an operation and maintenance agreement with the National Irrigation Administration.
The winning bidder is required to deliver at least 40 percent of the purchase price as an initial payment by the closing date. The balance may be paid in 14 semi-annual installments at 12 percent interest. The winner also is required to post a performance bond of 2 percent of the purchase price, reduced each year based on the amount of deferred payments.
The winning bidder is required to operate, maintain, and rehabilitate the project in the ordinary course of business.
PSALM said the project can accommodate two additional generating units for expansion. The multi-purpose earth-and-rockfill dam is used for irrigation, flood control, and power generation.
Aboitiz and SN Power — which is owned by Norway’s utility Statkraft and investment fund Norfund — submitted a bid in September for the 100-MW Pantabangan and 12-MW Masiway hydro projects in the northern Philippines. That auction was won by First Generation Hydropower Corp., a unit of Philippines independent power producer First Gen Corp.