San Miguel, Aboitiz firm to manage IPP contracts

The energy investment arm of San Miguel Corp., Southeast Asia’s largest food and beverage conglomerate, won the bidding to manage the contracted energy from a coal-fired power plant. In a statement issued Friday, the Power Sector Assets and Liabilities Management (Psalm) Corp. said San Miguel Energy Corp. gave the highest bid to become the independent power producer administrator (IPPA) of the National Power Corp.’s contracted capacity in the coal-fired Sual power plant. This is the second energy investment venture of San Miguel Energy following the government’s acceptance of its $13.5-million offer for the 620-MW Limay combined-cycle power plant. Besides San Miguel Energy, Psalm also appointed the Aboitiz-led Therma Luzon Inc. to become the IPPA of Pagbilao, another coal-fired power plant. Appointed through public bidding, IPPAs are qualified private sector independent entities that will manage the contracted energy from the energy conversion agreements and power purchase agreements entered into by Napocor with the IPPs. Under the Republic Act 9136 or the Electric Power Industry Reform Act of 2001, among the conditions of retail competition in the power industry is the transfer of management of at least 70 percent of the IPP contracts to the private sector. “San Miguel Energy and Therma Luzon were declared the two highest bidders in the rebid of the selection of IPPAs, which has been described as the first of its kind in Asia and, probably, the world," said the government agency tasked to sell power assets. San Miguel Energy offered $1.072 billion to manage and control Napocor’s 1,000-megawatt (MW) contracted capacity of Sual. Meanwhile, Therma Luzon, an affiliate of the Aboitiz group, offered $691.01 million for the 700-MW contracted capacity of Pagbilao. “Both bids exceeded the reserve price set by the Psalm board," the government said. Psalm will formally declare the winning IPPAs through the issuance of a notice of award as soon as the bid documents have been verified. Both companies participated in the first bidding for the Sual and Pagbilao IPPAs held last June 26. While the technical bids of the two companies met the government’s requirements for both capacities, their financial offers came up short of the floor price. With the successful appointment of the Sual and Pagbilao IPPAs, Psalm will enter the second phase of its IPPA selection process, which will involve the IPP contracts of the hydropower plants. - GMANews.TV