PCC clears privatization of Casecnan Hydroelectric Power Plant

The Philippines' competition watchdog on Tuesday said it has given the clearance for a subsidiary of Lopez-led First Gen Corp. to take over and privatize the Casecnan Hydroelectric Power Plant (CHEPP) for $526 million, or about P29.58 billion.

The Philippine Competition Commission (PCC) en banc cleared Fresh River Lakes Corp. to take over CHEPP on Jan. 25, after the commission's Mergers and Acquisitions Office (MAO) opened a Phase 1 review into the deal in December 2023.

The PCC said "the transaction would not result in substantial lessening of competition in the relevant markets," as it noted that the 165-megawatt volume generated by the plant is "unlikely to impact the relevant markets."

This comes as Fresh River Lakes Corp. came up with the highest bid of $526 million to take over CHEPP, located near Pantabangan and Muñoz in Nueva Ecija, which diverts water from the Casecnan and Taan Rivers through a 25-kilometer tunnel.

The transaction will effectively privatize CHEPP from state-owned Power Sector Assets and Liabilities Management Corp. (PSALM) and the National Irrigation Administration (NIA), in line with the Electric Power Industry Reform Act (EPIRA) introduced in 2021.

Under EPIRA, bulk of the responsibilities, assets, and liabilities of state-owned National Power Corporation (Napocor) were transitioned to PSALM, in a bid to boost competition in the power industry.

The law also mandated PSALM to privatize all assets and liquidate all of Napocor's financial obligations.

The PCC, for its part, is mandated to review mergers and acquisitions to ensure that transactions would not have a major impact on competition in their relevant markets, and harm consumer welfare.

The agency in 2023 adjusted the merger notification thresholds—at least P7 billion for the size of the party, and P2.9 billion for the size of the transaction. — VDV, GMA Integrated News