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July 26, 2007

Manila revives power sales with $930mln deal
The Philippine government sold a 600-megawatt coal-fired power plant for US$930 million to a group led by AES Transpower on July 26, successfully reviving its energy privatisation programme, Reuters reported.

The winning bid was nearly two thirds higher than the US$562 million price tag paid for the plant, in Masinloc, Zambales northwest of Manila, in a 2004 sale that was later nullified.

All six bidders in the auction on July 26 met the undisclosed reserve price for the facility, with the lowest bid at US$588 million, said Froilan Tampinco, vice president of the state agency which managed the auction.

The government earlier said it would raise the reserve price for Masinloc from the previous US$388 million after it guaranteed the buyer a supply deal comprising 48% of the facility's average daily load to ensure its profitability.

It was Manila's second attempt to sell the Masinloc plant after the previous sale was nullified last year when the winning bidder, a consortium led by Malaysia's Ranhill Berhad, failed to make the required down payment.

Ranhill led the group, which included A. Brown Co, which put in the lowest bid for Masinloc at the auction, Tampinco said.  Aside from Ranhill, Singapore-based AES, a unit of AES Corp. of the United States, beat other bidders such as the Philippines' First Gen Corp, Suez-Tractebel S.A. (LYOE.PA: Quote, Profile , Research), Britain's International Power, and China's Shenhua Group Corp. First Gen put in the second highest bid of US$710 million, Tampinco said.

Masinloc is only the 9th out of 31 plants the Philippines has earmarked for sale in a long-running programme to raise up to $5 billion to boost its coffers and revitalise a sector starved of cash.

Manila will also try, for a fifth time, to sell in December a 25-year licence to run the national grid, valued at up to $3 billion, but in urgent need of modernisation.

Concerns about profitability and political instability have tripped up previous privatisation attempts but the Philippines is confident a new tariff system and political calm will enable it to sell off 50 percent of the National Power Corp's generating assets, with a total capacity of 4,337 MW, this year. Reuters

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