Swiss challenge for Iligan plant held up

BusinessWorld Online
October 23, 2011

CAGAYAN DE ORO — The Iligan City council has deferred the Swiss challenge for the 103-megawatt Iligan diesel-fired plant complex as it awaits the Commission on Audit’s recommended updated ceiling price for the power asset.

Conal Holdings Corp., under the Alcantara Group, last year submitted an unsolicited offer of P300 million for the two-plant complex.

While the period for the Swiss challenge was originally scheduled to end on Oct. 13, the city council decided last week to hold off the exercise until the Commission on Audit (CoA) recommended a ceiling price, Councilor Moises G. Dalisay, Jr., chairman of the ad hoc committee on the power plants’ disposal, said in a telephone interview last weekend.

Norberto J. Oller, vice-president of the Lanao Power Consumers Federation, noted in a separate phone interview that previous appraisals placed the power complex’s value at P2.1 billion (CoA, in a 2007 report), P1.9 billion (National Power Corp.) and P1.8 billion (Lanao Consumers Federation).

The City of Iligan acquired the 7.9-hectare power plant complex under a compromise agreement with the Power Sector Assets and Liabilities Management Corp., following the latter’s failure to settle real estate tax liabilities for the asset.

The $110-million power plant complex was commissioned in 1993 as a joint build-operate-transfer (BOT) undertaking of the Alcantara Group and Tomen Corp. of Japan, called Northern Mindanao Power Corp. (NMPC).

Previously designated as NMPC-1 (60.9 megawatts) and NMPC-2 (42 megawatts), the plants were renamed as Iligan Diesel Power Plant 1 and 2 when ownership of the two units was turned over to the National Power Corp. on July 31, 2003 and on Feb. 9, 2006, respectively, after the BOT contract expired.

Three investor groups subsequently expressed interest to bid for the power plant complex and conducted due diligence on the units.

However, only Conal Holdings and Energy Developer Co. Ltd. of Seoul, South Korea — a company involved in renewable energy generation — were eventually deemed qualified by the city’s bids and awards committee to vie for ownership of the plant. — M. D. Baños

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