TransCo auction fails; gov't eyes re-bidding

(Update) The auction for the National Transmission Corp. (TransCo), the centerpiece of the government's privatization program, was declared a failure on Monday after only one party submitted a bid. The country's top energy official quickly said there would be a re-bidding. The Power Sector Assets and Liabilities Management Corp. (Psalm), the agency tasked to privatize the government's power assets, said only the group of Citadel Holdings Inc. took part in the auction for the 25-year concession of TransCo, the agency in charge of the power transmission network whose assets are worth about $3 billion. "Only the consortium of Citadel has submitted a bid, Psalm hereby declares a failure of bidding," Psalm president Nieves Osorio said. "We will rebid, no negotiations," Energy Secretary Raphael Perpetuo Lotilla said. But Finance Secretary Margarito Teves was less sure of what track the government would take after the failed bidding. "The (Psalm) board will decide in the next few days, hopefully before Friday, on whether we will have another bidding or go into a negotiation," Teves said. For her part, President Gloria Macapagal Arroyo called attention to the bidding process. "I think we have to be more professional in the way we do the bidding," Mrs Arroyo said. Re-bidding process Under the procurement law, the government can enter into negotiations with a bidder after two failed auctions. This the fourth time the government has failed to bid out the power grid assets since the Electric Power Industry Reform Act took effect in 2001. Citadel Holdings, for its part, said it would be pushing for negotiations with the government to settle the issue. "We've done our appeal (to the Psalm board) already and we are willing to elevate this to President Gloria Macapagal-Arroyo," Citadel Holdings representative Rogelio Singson said. Singson said that should the government decide on a re-bidding, the group will no longer participate. Psalm had finally pushed through with the bidding at the Development Bank of the Philippines building in Makati on Monday, after the date was pushed twice. The bidding was originally scheduled on Dec. 20, 2006, but was moved to January 22 this year and again postponed to Monday. Citadel Holdings of former Bases Conversion Development Authority chair Rogelio Singson, submitted its bid together with Terna SPA, a power firm which has assets in Italy and Brazil. Bidder concerns Among the companies earlier reported to be interested in TransCo but which did not submit a bid was a venture between Triratna Holdings Corp., Malaysia's Tenaga Nasional Berhad and Newbridge Asia IV, LP, which is represented by retail tycoon Henry Sy Jr, San Miguel Corp. president Ramon Ang and pharmaceutical giant Joselito Campos of Unilab. Ang said the group was concerned over a "joint and several liabilities clause" in the transaction documents. The provision states that each member of a participating consortium will be liable for the whole group. He said that if the government addresses this clause his group will be willing to join a rebidding. When asked about the bidder's concern, Osorio said Psalm would try to revisit the issues raised by the prospective bidders, including the joint liabilities clause. 'We will look at the provisions and see where it may still be clarified," the Psalm president said. Another prospective bidder that did not take part in the action was a venture between Monte Oro Grid Resources Corp. and State Grid Corp. of China, which is represented by Philex Mining Corp. chair Walter Brown. Brown declined to comment on why the group did not submit a bid. -GMANews.TV