News: Teves says TransCo sale could top $3B -
01 Dec 2007
Finance Secretary Margarito Teves said he is optimistic the government could raise more than $3 billion from the bidding for the 25-year concession contract of the National Transmission Corp. (TransCo).
“If you go by the trend, I’m hopeful that this will be the consistent pattern that will take place,” he told reporters.
Teves noted that based on previous biddings the government, through the Power Sector Assets and Liabilities Management (PSALM), was able to realize higher proceeds than the set reserve prices for the power plants that were sold so far.
“If we go by what we have seen before, although there could be some possibilities of change now — this is the trend in many of the PSALM assets that we have sold — I’m saying many of the asset we have sold, including Masinloc, have fetched higher prices than what we were expecting,” Teves said. Teves also expressed optimism the TransCo sale will proceed on Dec. 12 without a hitch. “It’s on scheduled, except that there are some operations taking place, as far as we’re concerned Dec. 12 will still be the bidding date,” he said.
The Finance chief also reiterated that the government is merely bidding out the concession contract on the operation and maintenance of the country’s transmission highway and not the ownership of the facilities. “(The case of) TransCo will have to be repeatedly explained because we are not selling the rights of TransCo, but it is just a concession agreement. So a lot of our policymakers are concerned, that maybe we need to communicate it very clearly to them that we are not selling the rights of TransCo, but it is just a concession agreement and that we still retain legal ownership. So after 25 years, this will go back to the government or the government may decide to extend it further before allowing another concessionaire to make use of the facilities. That is important because a lot of our colleagues in government are not clear about this yet,” he explained. According to Teves, they have also yet to firm up the reserve price for the concession agreement.
“What I recall, the last time we worked on TransCo was around $3 billion — but we still don’t know because we still have to work on the reserve price. We normally discuss the reserve price on the day of the bidding,” he said.
He said so far, there is also no initiative to come up with a new valuation for the TransCo assets. “I’m not aware of any re-evaluation, because what we’ve been focusing on, so far, are the bidding documents, procedures and steps have been addressed,” he said.
PSALM has prequalified four bidder groups for TransCo. These are: Monte Oro Grid Resources Corp. (MOGRC) and State Grid Corp. of China (SGCC); Two Rivers Pacific Holdings Corp. and Terna-Rete Electtrica Nazionale S.P.A.; San Miguel Energy Corp. and TPG Aurora BV; and consortium of Citadel Holdings Inc. and Power Grid Corp. of India Ltd.
Monte Oro is represented by its chairman and president Walter W. Brown. Two Rivers by its president Jose Ma. K. Lim; San Miguel Corp. chairman and president Ramon S. Ang represents San Miguel Energy while Amelia S. Dela Rosa represents Citadel.
The results of the prequalification process were finalized after the reconsideration period, which is a standard procedure for bidding transactions as stipulated in the Government Procurement Reform Act.