Philippines: SPC Power to PSALM - Ask SC to reconsider award to build power plant to another firm

Philippines: SPC Power to PSALM - Ask SC to reconsider award to build power
plant to another firm

PUBLICLY listed SPC Power Corp. on Wednesday urged the Power Sector Assets
and Liabilities Management Corp. (PSALM) to seek a motion for
reconsideration before the Supreme Court (SC), after the court reinstated
the notice of award of a power plant to another power firm.

'We urge PSALM, chaired by the finance department, to file its own motion
for reconsideration, as clearly, the decision is disadvantageous to the
government at a time when the government needs much-needed funds for
employment and other basic services,' SPC said on Wednesday.

This, even as SPC is preparing its motion for reconsideration to the High
Tribunal, reiterating its earlier position that the recent decision
'destabilizes the investment climate in the Philippines and retroactively
changes the rules on competitive bidding.'

'With the Supreme Court's ruling to reinstate the notice of award to Therma
Power Visayas Inc. [TPVI], the government not only stands to lose P54
million, but is deprived of a rebid of the Naga Power plant, which would
likely result in an even higher price for the government,' SPC said.

TVI is a unit of Aboitiz Power Corp. Both power firms, SPC and Aboitiz, are
based in Cebu.

On October 5 the SC upheld the validity of the public bidding held by PSALM
of the Naga Power Plant, but invalidated the condition in the bidding
granting SPC the right to top the bid.

It ordered the reinstatement of the Notice of Award issued by PSALM dated
April 30, 2014, awarding the 153.1-megawatt (MW) Naga Power Plant Complex
(NPPC) in Cebu to TPVI. The SC also annulled and set aside the Asset
Purchase Agreement (NPPC-APA) and the Land Lease Agreement executed
(NPPC-LLA) between SPC and PSALM, and directed PSALM to execute the NPPC-APA
and the NPPC-LLA in favor of TPVI.

PSALM declared TPVI the highest bidder for the NPPC, with a bid of P1.088
billion, higher than SPC's bid of only P858,999,888.88.

SPC said the October 2016 ruling of the SC was 'grossly disadvantageous to
the government.'

The move followed the previous ruling of the SC, which declared as null and
void SPC's right to top the bid of TPVI by 5 percent.

SPC Power said the High Court's decision to reinstate the award of the Naga
facility to TVPI is contrary to its earlier position that 'public bidding is
the better means to secure the best bid for the government.'

In its decision dated September 28, 2015, the SC stated 'attracting as many
bidders to participate in bidding for public assets is still the better
means to secure the best bid for the government and achieve the objective
under Epira [Electric Power Industry Reform Act] to privatize NPC [National
Power Corp.] assets in the most optimal manner.'

TPVI offered a bid of P1.088 billion during the bidding of the PSALM in
March 2014, when the right to top was known to the bidders.

SPC exercised its right to top and matched TPVI's bid and paid an additional
P54 million, or a total of P1.143 billion, to PSALM. Eventually, the Naga
facility was awarded and turned over to SPC in September 2014. In June 2014
Sergio Osmeña III filed a case against SPC and TVPI with the SC, questioning
the validity of the right to top, arguing it is noncompetitive.

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Ref:
http://www.energycentral.com/news/spc-power-psalm-ask-sc-reconsider-award-bu
ild-power-plant-another-firm?did=39205064&utm_source=2016_10_20&utm_medium=e
NL&utm_content=71965&utm_campaign=DAILY_NEWS

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com