Tag Archives: privatization

Ayala mulls bid for O&M contract of Laguindingan airport

BusinessWorld Online
November 01, 2011

AYALA CORP. is looking to bid for the operation and maintenance (O&M) contract of an airport that will serve Cagayan de Oro, an area where the conglomerate is already building a mall and housing complex.
This comes on top of the firm’s interest in other infrastructure projects lined up by the government for privatization, marking a further foray out of its core businesses.

“We are looking at the new airport in Cagayan de Oro that will start operating I think in 2013,” Delfin C. Gonzalez, Jr., Ayala’s chief finance officer, told reporters last week, referring to the Laguindingan facility in Misamis Oriental, roughly 50 kilometers away from the existing Lumbia airport.

“It actually sits on a property that we donated to the government,” Mr. Gonzalez said.

“[Ayala] also owns about 500 more hectares around it,” he said. “We are also looking at participating in that so that it can also help to spur the development of [the area].”

The Aquino government has included the privatization of Laguindingan Airport’s operation and maintenance project among the 10 vital infrastructure projects to be opened for private investment under the Public-Private Partnership (PPP) program.

The 20-year operations concession is seen to reduce government expenditures and improve the quality of service at the airport.

According to PPP Center, the new airport on a 393-hectare property is seen to accommodate 1.2 million passengers per year based on its master plan.

The tender period had earlier been slated to end by next month but a government decision to review all projects up for bidding is expected to delay the contract’s awarding.

Ayala, through its subsidiaries, is already building a mall in the area via a joint venture. It is also developing a subdivision and is looking to construct a hotel as well, earlier reports show.

Ayala officials have said that the company is interested in other PPP projects offered by the government, particularly the Daang Hari-South Luzon Expressway road project.

“We need an operator partner [which is a] foreign [firm],” Mr. Gonzalez said, when asked about the firm’s progress in bidding for the road project.

The interest in infrastructure comes as Ayala is looking to venture into other industries including power.

The conglomerate announced in March its bid to build a portfolio of over 1,000 MW in generating assets. It has already formed joint ventures with partners for coal, wind and hydroelectric power projects.
Mr. Gonzalez reiterated the company would spend P100 million in the next five years for its power ventures.

“But there is no immediate fund raising that we are looking at right now,” he said
Ayala’s first-half net income climbed by 12% to P4.9 billion over year-ago levels, propelled by its property, banking, water distribution and telecom units.

Gov’t to keep Mindanao hydroelectric power plants

By Amy R. Remo
Philippine Daily Inquirer
First Posted 08/18/2010

THE DEPARTMENT of Energy will no longer privatize or offer to investors the 955-megawatt Agus and Pulangi hydropower plants in Mindanao as these are expected to help stabilize supply and electricity prices on the island.

“I’m not eager to sell [the hydro facilities] because I think part of the solution to the Mindanao situation is the appropriate use of those [plants] not just for supply but in the pricing equation,” said Energy Secretary Jose Rene Almendras.

The two facilities are critical power assets as these currently provide more than half of Mindanao’s electricity supply.

At the sidelines of the mid-year economic briefing Wednesday, Almendras said that he has informed the state-run Power Sector Assets and Liabilities Management Corp. (PSALM) that “we would like to recommend that we do not sell Agus and Pulangi.”

The energy chief acknowledged that the DOE had to seek a confirmation or a go-ahead from the Joint Congressional Power Commission (JCPC) to allow it to keep the facilities.

Under the Electric Power Industry Reform Act (Epira), the government is mandated to privatize all its power generation assets, including the Agus and Pulangi facilities.

“So hopefully, Congress will [allow] us. I will have to explain to Congress why we don’t want to [privatize the facilities],” Almendras said.

“[The Agus and Pulangi are] not yet for sale. We don’t want to sell it yet, or maybe how long that will be, it will depend on how soon we can achieve true pricing [in Mindanao] and make appropriate adjustments to encourage investments,” Almendras pointed out.

Since it relies heavily on hydropower, Mindanao was the hardest hit by the prolonged drought experienced earlier this year, during which the island suffered power outages lasting up to 12 hours daily.

It was only in July and August this year, with the onset of the rainy season, did the power supply situation in Mindanao began to stabilize.

Last May, former Energy Secretary Jose C. Ibazeta stressed the need to sell all government-owned power-generation assets despite the opposition raised by a number of civil and nongovernment groups.

PSALM was even planning to start preparations for the planned privatization of the hydroelectric facilities by the end of the year. A number of prospective investors had expressed interest in the Agus and Pulangi hydropower plants, including Norway-based Statkraft Norfund Power Invest AS (SN Power).

The Agus hydropower facilities have seven units that can generate a total of 700 MW. Agus 6, the first of the seven units, was constructed in 1953 while the newest of the power plants was Agus 1, which began operating in 1992.

The Pulangi hydropower plant in Bukidnon can generate 255 MW. It began operating commercially in 1985.