PSALM stresses it acted with DOJ opinion in SPC transaction

By Juzel L. Danganan

MANILA, Nov 9 (PNA) – The Power Sector Assets and Liabilities Management (PSALM) Corp. stressed it has acted after consulting the Department of Justice (DOJ) for an opinion on Salcon Power Corp’s (SPC’s) right to top for the Naga Power Plant Complex (NPPC).

”The DOJ affirmed the legality of the “right to top” the adjoining properties within the NPPC accorded to the owner of the Naga Land-based Gas Turbine (LBGT) Power Plant in connection with the privatization of NPPC. The DOJ’s confirmation was made prior to the commencement of the NPPC sale process,” the government-owned and controlled corporation (GOCC) said in a statement.

PSALM added it has not received a copy of the Supreme Court’s (SC’s) decision voiding the win of SPC for the complex.

SPC Power Corp., which owns the Naga LBGT power plant, was given the right to top the highest bid on the sale or lease of the properties in the area of the plant. PSALM was in charge of bidding process and awarding.

PSALM noted the transaction gives the winning bidder the opportunity to expand.

The GOCC also said the right-to-top was provided in the land lease agreement (LLA), which was signed by PSALM, National Power Corp., and SPC in 2009.

Therma Power Visayas, Inc. (TPVI) initially won the bid through its Php 1.08 billion proposal, with SPC coming in second with Php 859 million.

PSALM stressed the LLA was made according to the asset purchase agreement (APA) for the Naga power plant.

Abotiz Power Corp., which owns TPVI, said in a statement Monday that it welcomes the SC’s order which declared the notice of award to SPC as null.

The company noted it believes that TPVI won the bid.

The SC declared the transaction as void as “it is not founded on the said lessee’s legitimate interest over the leased premises.”

Despite SPC’s argument that their higher offer of 5 percent resulted in a competitive rate, the high court stressed that the right to top option of SPC “had discouraged more potential buyers from submitting their bids, knowing that even their most reasonable bid can be defeated.”

The SC said the right-to-top resulted in SPC and TPVI only continuing in the bidding process.

The petition was filed by Senator Sergio Osmena III versus PSALM, former PSALM president and chief executive officer (CEO) Emmanuel Ledesma, SPC and TPVI.

SPC is a joint-venture corporation Salcon Power Corp. and Korea Electric Power Corp. (KEPCO), which owns the 153.10-MW power complex. (PNA)