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February 11, 2009

Philippines plans new tack on power plant sale

The Philippines plans to negotiate the sale of a 600-megawatt coal-fired power plant after a unit of French utility Suez (LYOE.PA) backed out of a deal to buy the facility, a top privatisation official was quoted by Reuters as saying Tuesday.

Suez unit Emerald Energy Corp made a winning bid of $786.5 million for the Calaca plant south of Manila through a state auction in 2007. But it said last month it could not complete the deal after the condition of the plant deteriorated.

"Under the rules, we are free to enter into a negotiated bid with interested buyers," Jose Ibazeta, president of the Power Sector Assets and Liabilities Management Corp (PSALM), told reporters.

PSALM is the state agency tasked with privatising the assets of National Power Corp, the country's biggest electricity producer.

The agency can launch talks for the sale of an asset after at least two failed auctions, Ibazeta said. Bidders who qualified in previous auctions would be asked to make an offer higher than the government's valuation of the asset, he said.

Ibazeta said it was unlikely the agency would receive an offer as high as Emerald Energy's, which had considered doubling the Calaca plant's capacity.

Emerald Energy forfeits to PSALM its $15 million bond paid at the time of the auction.

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