SMC,  FIRST  PACIFIC  EYE  ON  TRANSCO  PRIVATIZATION

MANILA, September 27, 2004 (STAR) By Donnabelle Gatdula - Conglomerates San Miguel Corp. (SMC) and First Pacific Corp. may likely participate in the privatization of the National Transmission Corp. (Transco), industry sources told The STAR over the weekend.

Sources said officials of SMC and First Pacific have reportedly signified interest in bidding for the 50-year lease of the countryís $2-billion high-voltage transmission highway.

It was learned that SMC president Ramon Ang had approached some Transco officials to inquire if it was possible for the food and beverage giant to invest in Transco.

Apparently, the entry of SMC and First Pacific had prompted the Power Sector Assets and Liabilities Management Corp. (PSALM) and the Department of Energy (DOE) to extend the deadline of the Transco privatization. The sale is expected to be completed by yearend.

According to sources, the two local groups are looking at pouring capital into the transmission company as part of their respective diversification programs.

Sources said both groups are willing to invest up to $500 million in the transmission firm.

SMC is the largest publicly listed food, beverage and packaging company in the Philippines. Founded in 1890 as a brewery, the company has over 100 facilities in the Philippines, Southeast Asia, China and Australia.

First Pacific, on the other hand, is a Hong Kong-based investment and management company with operations located in Southeast Asia. Its principal business interests relate to telecommunications and consumer food products.

Sources said First Pacific may have been considering to invest in Transco to complement its fiber optic business.

First Pacific has a stake in Philippine Long Distance Telephone Co. and Smart Communications, the leading telecommunications firm in the country. It also has an exposure in Metro Pacific Corp., which is engaged in large-scale urban development projects and holds investments in the shipping and consumer banking industries.

Interested foreign bidders eyeing to bid for Transco would have to tap a local group to comply with the 60-40 percent foreign ownership legal restriction.

Edgardo del Fonso, presidential adviser for Napocor privatization and a former PSALM president, had said only big conglomerates would have capability to invest in Transco.

Last year, it was reported that some big local conglomerates led by the Ayalas and Gokongweis may have been eyeing to participate in the Transco privatization.

Since the Ayala family, who controls BPI Capital, and the Gokongweis, who own JG Summit Holdings Inc., have the financial capacity to invest in this capital-intensive venture, they are likely seen to participate by forging partnership with foreign power firms.

It would be recalled that the Metrobank group, led by George Ty, has already diversified into power generation business by putting up a power facility in Iloilo.

In late 2002 when the supposed privatization of Napocorís transmission assets was announced, several foreign power firms expressed interest to bid.These power companies are based in Hong Kong, Thailand, Singapore and New Zealand.

The Konsortium Logistik Berhad (KLB), the biggest power company in Malaysia, was among those that indicated its interest to bid for both the transmission and generation assets of Napocor.

A close relative of former Malaysian prime minister Mahathir Mohamad, Mahathir Mirzan, executive chairman and president of KLB, had met with officials of PSALM and DOE in mid-2002 to discuss their intention to participate in the Napocor privatization.

Tenaga Nasional Berhad vice president for corporate affairs Datuk Sidek Bin Ahmad also went to Manila in 2002 to look at Napocorís assets.

Other groups that have expressed interest in the transmission and generation assets of Napocor include Red Electrica, Intergen, Mid American Energy Holdings Inc., Edison Mission Energy, Hydro Quebec and National Grid.

Five Japanese firms were reported to have indicated plans to participate in the bidding. Among them were Kansai Electric Corp., Kyushu Electric Corp., Electric Power Development of Japan and Tokyo Electric.

Of these groups, only Singapore Power Corp. submitted an offer to bid for Transco in July and again in August. This prompted the government to privatize Transco through a negotiated bid.

Aside from Singapore Power, it was reported that a few companies ó such as US-based AES Corp. Trans-Grid of Australia and a Finland-based power firm ó have apparently submitted indicative offers for Transco recently.


Reported by: Sol Jose Vanzi

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