PSALM starts soliciting bid invites for Malaya power plant privatization

By Lenie Lectura -February 3, 2020
from Business Mirror

THE Power Sector Assets and Liabilities Management (PSALM) Corp. has started soliciting bid invites for the privatization of the 650-megawatt (MW) Malaya Thermal Power Plant (MTPP).

“PSALM is ready to commence its third round of public bidding for the 650-megawatt Malaya Thermal Power Plant and its underlying land located at Brgy. Malaya, Pililla, Rizal,” the state firm said.

PSALM started today the publication of its “invitation to bid” encouraging interested parties to participate in its bidding activities February 3 until March 12 this year. Only parties who submitted Letters of Interest and who have been issued PSALM’s Bidding Package will be allowed to participate in the privatization of the assets.

A pre-bid conference is scheduled on February 13 at 2 p.m. to solicit any comments and concerns that interested bidders may have relative to the bidding requirements and asset sale provisions.

The bid opening is set on April 15, 2020.

Interested bidders must address their bids to the PSALM Bids and Awards Committee (PBAC) chairman and send these to PSALM’s office in Quezon City.

PSALM is determined to privatize the asset, which is sold on an “as-is-where-is” basis, by taking steps to adjust the minimum bid price. It has also conducted valuation studies on MTPP and its underlying land in determining the reserve bid price.

Meantime, PSALM awaits a “positive response” from the Commission on Audit (COA) in relation to its request to lower the P4.48-billion minimum bid price (MBP) of the MTPP.

“We are awaiting COA’s response to PSALM’s request for approval of a discounting mechanism that will allow PSALM to lower the MBP of the MTPP. To make this public bidding attractive to bidders, we need to find an acceptable way of reducing the MBP by at least 20 percent,” said PSALM President Irene Besido-Garcia in a text message.

Garcia said the cost to operate the plant, which is already way past its commercial life, is P400 million to P500 million. The amount includes fuel, real property taxes, among others. “Hopefully, we would be allowed to subtract that amount from the MBP. We can never really tell how much amount the market is willing to pay so we need to keep on trying,” the PSALM official said.

PSALM declared a failure of the second round of public bidding because there was only one bid. Following bidding rules, PSALM then went through the process of negotiated sale with the lone bidder, DM Wenceslao.

However, DM Wenceslao’s bid offer was below the MBP. Thus, PSALM was constrained to also declare a failure of the negotiated sale.