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Wednesday, August 23, 2006
State firm sells assets worth P130.1M in Cebu
The National Transmission Corp. (Transco) yesterday signed three contracts providing for the divestment of its sub-transmission assets, with a total value of over P151.9 million, in Cebu Province and Cotabato.
Ownership of Transco’s sub-transmission assets—69 kilovolt (kv) sub-transmission lines—will be transferred to the consortium of the Visayan Electric Co. (Veco) and Cebu 1 Electric Cooperative Inc. (Cebeco 1), Cebeco 2 and the Cotabato Light and Power Co. (CLPC) upon payment of the assessed value of the facilities and approval of the Energy Regulatory Commission (ERC).
The divestment of the sub-transmission lines, with combined length of 175.51 circuit kilometers, is part of Transco’s privatization process, which is targeted for completion in December.
Transco president Dr. Allan Ortiz said prior to the three contracts, the government-owned and controlled corporation has clinched 29 purchase agreements with various distribution utilities in Luzon, Visayas and Mindanao. The three are the ninth, 10th and 11th sale contracts in the Visayas.
Cebu towns
Sub-transmission lines to be sold to the newly-formed consortium of Veco and Cebeco 1 are found in the towns of Naga, Sibonga, Dumanjug and Alcoy. The lines span 82.13 circuit kilometers and are valued at P68.8 million.
Cebeco 2 offered to purchase 74.2 circuit kilometers of 69 kv sub-transmission lines found in Compostela, Danao, Lugo and Medellin for P61.3 million.
The sub-transmission assets in Cebu that were covered by the two contracts have a total value of P130.1 million.
CLPC, a subsidiary of Aboitiz Equity Ventures, is buying the 18.56-circuit kilometer 69 kv sub-transmission line from Tacurong to Cotabato to Nuling for about P21.8 million.
Veco-Cebeco 1 and CLPC offered to pay the full amount of the sub-transmission assets within 10 days after ERC has approved their respective contracts of sale. Cebeco 2 offered to pay, within 10 days from ERC approval, 20 percent of the amount as down payment, and the balance to be spread over 17 years.
Ortiz, in a speech following the contract signing, said only 70 of 107 distribution utilities are legally qualified to buy Transco’s sub-transmission assets. Of the 70, only 60 are financially capable but only 32 have initiated contracts of sale with Transco.
‘On track’
Despite this, Ortiz assured that Transco’s pri-vatization is “on track.”
In an interview, he expressed confidence that the privatization of the operation and maintenance of Transco’s transmission assets (main transmission lines)–through a 25-year concession contract with a private entity—will be successful as it has already attracted 12 investors.
He said that while the first two attempts to invite private sector participation in the operations, maintenance and enhancement of transmission assets had failed, it will be successful this time because the ERC has raised the allowable return on investment.
“ERC has decided to grant very inviting, very reasonable return on investment rate,” he said.
He said if a winning bidder is declared by December, the private entity will have to wait for about 12 months for a franchise from Congress.
“Certainly, by the end of 2007, the turnover (of the assets for concession) will be effected,” he said. (LAP)
For Bisaya stories from Cebu. Click here. (August 23, 2006 issue)
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