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Friday, August 25, 2006
Transco will not sell $2.6B assets: exec
THE government is not selling the assets of the National Transmission Corporation (TransCo) now valued at $2.6 billion.
In a press conference at the Waterfront Insular Hotel in Davao City, TransCo president and chief executive officer Dr. Allan Ortiz explained that the government has decided not to let go of the assets.
"It is unwise for government to sell the assets. What if it falls into the hands of unfriendly countries," he said.
He said what has been decided is to bid out to concessionaires only the operation and maintenance for 25 years and a bidder must post a bid bond of 25 percent pegged at $30 million.
The original schedule for the bidding on September 28 was moved to November 7 because the participants wanted more time to comply with the documentation, Ortiz said.
He said with $500 million as base amount it is expected that only the biggest and the best will participate and there are only a few of them in the world that could become qualified foreign partners.
Ortiz said that TransCo is now ready to privatize as they had been preparing for over three years making it profitable and with the best workforce.
With 12 interested investors that already obtain bid documents, Ortiz said, normally only six would go through the process and submit the necessary documents.
He said they have to make sure that things are handled carefully after the Masinloc brouhaha saying it would be the biggest privatization in the history of the country.
"We have to be very careful this time," he said.
There are other sectors that argued on TransCo going through privatization because it is earning but such move is needed because funds are also needed for the expansion program in anticipation of the power shortage in 2009, he said.
He said they need about $200 million each year for the expansion program of TransCo even as he said that there is a need to double the capacity that is already in place to meet the current demands as well as set up additional base load centers in Mindanao.
In response to perception that there will be power rate increase when the operations and maintenance of TransCo would be privatized.
Ortiz said there is a cap for that because it will be stipulated in the agreement that the maximum allowable revenue (MAR) should be within the weighted average point of 18.2 percent return of equity before tax or 15.7 percent after tax.
There is also substantial consumer protection as Ortiz said that if the concessionaire over earns during the next five years they will be asked to flow it back. He did not however elaborate.
Ortiz meanwhile said that after determining the winning concessionaire Congress has to award the franchise.
"It is likely that they will award the franchise. If not, they will be penalizing the people," he said.
For Bisaya stories from Davao. Click here. (August 25, 2006 issue)
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