- Veteran bands Motorhead, Black Sabbath top Metal Hammer Golden Gods
- Kanye West wins over critics with 'daring' new album 'Yeezus'
- 'Standing man' inspires silent protests in Turkey |
- Golfing in Iceland's midnight sun - lava beds, angry birds, winds
- Brazil protests pose challenge for World Cup organisers
UPDATE 4-China State Grid group wins Philippine power auction
(Adds senator's comment)
By Karen Lema
MANILA Dec 12 (Reuters) - A consortium including China's State Grid Corp won the right to operate the Philippine power grid with a $3.95 billion bid on Wednesday, in what would be the biggest privatisation in the country's history.
The winning offer from the group led by the Philippines' Monte Ore Grid Resources narrowly beat the sole rival bid from a consortium led by San Miguel Energy, a unit of Southeast Asian food and drinks giant San Miguel Corp SMCB.PS.
The Monte Oro group must still get a franchise to operate the grid from Congress, where opponents of President Gloria Macapagal Arroyo in the Senate are likely to give them a rough ride amid allegations the consortium has close links to her.
"Certainly, we will scrutinise every angle," Senator Aquilino Pimentel, leader of the opposition in the upper house, told Reuters.
The consortium has a year to get the franchise or ownership will revert to the government, which will continue to run the grid for the time being.
"They (Monte Oro) have enough political clout to get it through the lower house but will likely run into a long-running tele-novella in the Senate," said Alex Magno, director of the Development Bank of the Philippines, which advised the government on its recent $1.35 billion sale of a majority stake in geothermal group PNOC-Energy Development Corp. (EDC.PS).
Monte Oro struck a confident tone saying its offer would be funded through a combination of equity and borrowing.
"We have agreements with underwriters and we will begin to implement them," Monte Oro President Walter Brown, who is also chairman of mining group Philex (PX.PS), told Reuters.
The state will get 25 percent of the price once the franchise is awarded, with the remainder to be paid over 20 years.
"This is a move in the right direction," said Jose Ibazeta, head of the agency tasked with selling the state's energy assets.
The winning price tag is more than double the previous privatisation record of $1.6 billion paid for a former army base on prime Manila real estate in 1995 and crowns a turnaround in what had previously been a notoriously stop-start energy privatisation programme.
Manila has been trying since 2003 to privatise the management of the National Transmission Corp (Transco) to boost state finances and modernise its creaking power sector. Wednesday's auction was the fifth attempt and the second this year.
Political uncertainty and doubts about the predictability of profits tripped up previous sale efforts but a new tariff system for Transco, in operation since last year, is supposed to make the 25-year licence more lucrative for investors.
The grid, which needs about $725 million till 2010 for upgrades and expansion, was valued at 138 billion pesos ($3.3 billion) in 2006. Wednesday's reserve price was not revealed.
State Grid Corp is China's largest electricity provider and is ranked 29th in the Fortune Global 500 list of the world's largest companies by revenue this year.
WORLD BANK SUPPORT
The private investment arm of the World Bank has said it will give financial help of up to $250 million to the winning bidder.
Manila had given four groups a green light to participate in the auction and 21 investors originally expressed interest.
A third group, led by Philippine holding firm Metro Pacific Corp (MPI.PS), did not bid after their technical partner and investor, Italy's Terna-Rete Electtrica Nazionale (TRN.MI), withdrew from the consortium at the last minute.
Proceeds from the sale will be used to pare some of the $6-$7 billion debt at the state-run National Power Corp (Napocor), once the single biggest drain on state finances.
Napocor has already benefited from a string of recent power plant sales and Ibazeta said with the auction for Transco, the crown jewel of Philippine energy assets, the government had sold $6.6 billion worth of power assets since 2004. (Reporting by Karen Lema; Editing by Carmel Crimmins & Lincoln Feast)
- Tweet this
- Share this
- Digg this