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14 January 2010

Philippines to call Ilijan power contract bids in April

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Philippines state-owned Power Sector Assets and Liabilities Management Corp. is seeking investors who will manage the independent power producer administrator contract for the 1,200-megawatt Ilijan natural gas-fired power plant in Batangas, the Philippine Daily Inquirer reported.

According to bid documents, PSALM has scheduled the bidding for the contract on April 16. Only prospective investors who submitted letters of interest by Jan. 29 will be allowed to participate in the bidding process for the Ilijan facility management.

As a prerequisite to the receipt of the bidding package, interested parties must execute a confidentiality agreement and an undertaking, as well as pay a non-refundable participation fee of $10,000. These should be accomplished by Feb. 5, PSALM added.

Bidding packages will be issued from Jan. 18 to Feb. 8. Prospective investors can conduct due diligence from Jan. 18 until two business days prior to the bid submission deadline. A pre-bid conference will also be held on Feb. 11.

A two-envelope bidding system will be adopted. Interested parties will be required to post a bid security worth $15 million in the form of an irrevocable letter of credit. However, it was not certain if PSALM would bid out the Ilijan IPPA as a single contract or if it would break it in several smaller capacities.

“The committee reserves the right to divide the Ilijan capacity into two or more portions. The details of the appointment as administrator for the Ilijan capacity IPPA are contained in the bidding package,” PSALM explained.

PSALM president Jose Ibazeta earlier said they were considering to break up the management of the contracted capacity for the Ilijan facility into several smaller contracts and offer these to a number of prospective firms.

Ibazeta explained that this was meant to prevent market dominance by a single power firm. It was also intended to make the facility financially viable since the contract for the Ilijan plant, with its huge capacity, would have been too expensive for a single company to acquire.

However, Korea Electric Power Corp. (Kepco), which plans to bid for the Ilijan IPPA contract, expressed reservations about the plan to break up the contract, stressing that this would pose potential problems over the long run.

Completed in 2002, the Ilijan power plant is operated by Kepco through a build-operate-transfer contract that will expire in 2022. It draws natural gas from Shell Exploration BV’s Malampaya deepwater gas-to-power project.


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