August 12, 2024 | 12:00am
MANILA, Philippines — Pangilinan-led Meralco PowerGen Corp. (MGen) is bowing out of the bidding war for the massive Laguna hydropower complex estimated to yield up to P100 billion in government revenue.
In a recent interview, MGen president and CEO Emmanuel Rubio said they would no longer join the bidding for the privatization of the 797-megawatt (MW) Caliraya-Botocan-Kalayaan (CBK) hydroelectric power plant complex.
“When I joined MGen, we decided that we (would) limit the limited resources that we have. There’s still a limited portfolio that we have in order to at least provide the value for CBK that would be competitive,” Rubio said.
CBK is the major privatization project of the state-run Power Sector Assets and Liabilities Management Corp. (PSALM) this year.
The complex is currently governed by a 25-year build-rehabilitate-operate-transfer contract and power purchase agreement set to expire in February 2026.
Given MGen’s slimmer arsenal, Rubio said they have opted to step aside and leave the battlefield to other industry heavyweights.
“We decided not to proceed with that and let others with bigger portfolios. I think that’s how they’re going to justify the participation of ACEN, First Gen and Aboitiz,” he said.
Last month, PSALM conducted a pre-proposal conference for the CBK complex that attracted significant interest from five industry players.
These include Japan’s Marubeni Corp., Semirara Mining and Power Corp. of tycoon Isidro Consunji, Lopez-led First Gen Prime Energy Corp., ACEN Corp.’s Giga Ace 11 Inc. and Thunder Consortium consisting of Aboitiz Renewables Inc., Electric Power Development Corp. and Sumitomo Corp.
According to Rubio, MGen’s decision to stay out of the CBK bidding was also influenced by the upcoming green energy auction program (GEAP) this year.
The Department of Energy will offer impounding hydro, pumped-storage hydro, run-of-river hydro and geothermal contracts with a combined capacity of 4,399 MW for GEA-3.
“So, if there’s a GEAP for pumped storage, it would be difficult to value CBK if you’re competing for pumped storage and a GEAP,” the MGen official noted.
PSALM is expected to start the bidding process for the CBK complex this year and award the asset to the winning bidder in 2025.
Finance Secretary Ralph Recto, who chairs the PSALM board, earlier said they could generate “anywhere from P50 billion to P100 billion” from the CBK privatization to help plug the deficit of the cash-strapped state firm.
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