TRANSCO  BIDDING  FAILS  ANEW;  GMA  ORDERS  IMPROVED  AUCTION  PROCESS

MANILA, FEBRUARY 6, 2007
(STAR) By Donnabelle L. Gatdula - The government failed in its fourth attempt to privatize the 25-year concession of the National Transmission Corp. (TransCo), the country’s sole power transmission company, after only one group submitted an offer yesterday. Considered as the country’s biggest privatization effort with an estimated value of $3 billion, TransCo has been on the auction block since 2003. By 12 noon yesterday, the deadline set by the Power Sector Assets and Liabilities Management Corp. (PSALM), only the consortium of Filipino-owned investment firm Citadel Holdings Inc. and Italian power grid operator Terna SPA had tabled a bid. Rogelio Singson, a former Bases Conversion Development Authority president, who represented the Citadel/Terna group in the bidding, said they were "very disappointed" with the turnout of the TransCo bidding process.

As this developed, President Arroyo ordered yesterday concerned officials to improve the bidding process following the failed auction.

In a pooled interview following a televised roundtable discussion in Malacañang with her economic managers and some lawmakers, Mrs. Arroyo was visibly disappointed over the failed bidding. When asked what the government can do to make TransCo more attractive to investors, she said: "I think we have to be more professional in the way we do the bidding." Albay Rep. Joey Salceda, chairman of the House Committee on Appropriations, said the matter of the failed bidding could be easily resolved through some "improvements in the paperwork."

"This is not a systemic thing. Transco was just a big-ticket victim of abnormal relations between the Palace and the Senate," Salceda, who was one of the guests in the roundtable discussion, said. Despite the unsuccessful bidding, the PSALM board, chaired by Finance Secretary Margarito Teves, has declared that they have yet to decide whether they will enter into a negotiated deal with the lone bidder or will re-bid the concession. Under the procurement law, after two failed biddings, the government could enter into negotiations with the sole bidder of the asset. However, Teves’ pronouncement somewhat irked the Italian-led consortium. "Terna is a publicly-listed company and it has been very interested in this privatization. We are disappointed, being the only pre-qualified bidder that submitted complete documents and offered a bid. We know for a fact that President Arroyo wants to complete this privatization as soon as possible," Singson said.

"We will appeal to President Arroyo. We are ready and willing to negotiate with government having completed all the documents. As you can see, we submitted all of the transaction documents signed and executed by us. We are ready to negotiate with government as soon as possible, we are ready to meet because the Italian principals are here with us and we hope when we meet with them downstairs we’ll convey this clearly to them and we expect the government to negotiate with our consortium having completed every requirement they have asked so far. Keep in mind that Citadel has joined from the first bidding and this is already the third and this cannot go on forever. We hope to be able to serve the country by operating the transmission network. We will probably walk away from the Transco bidding should the government re-bids it again," Singson said.

Singson cautioned the government that this habitual rejection of investors’ enthusiasm on TransCo will eventually impact negatively on investments. When asked whether they would consider walking out of the deal should the government fails to enter into a negotiated bid with the group, Singson said: "Probably." But Teves pointed out that the two options are still being studied by the PSALM board. "We hope to be able to reach a decision within this week whether to negotiate or undertake a rebidding," Teves told a press conference.

For his part, Energy Secretary Raphael P.M. Lotilla said they would also try to look at the concerns and issues raised by the two other pre-qualified bidders which prompted them not to participate in the TransCo bidding. Lotilla, however, declined to give a new schedule for the next bidding process for TransCo. "The PSALM board will have to decide on that." The two other pre-qualified groups which did not submit their bids are the consortium of Filipino firm Triratna Holdings, US-based Newbridge Asia IV L.P. and Malaysian power firm Tenaga Nasional Bhd., and the consortium of Monte Oro Grid Resources Corp. and State Grid Corporation of China.

Triratna Holdings’ Ramon Ang, the president of food and beverage giant San Miguel Corp., said in an interview that there are still major issues that remain unresolved, thus they decided to hold back their bid. "We decided not to bid because there are some issues in the bid documents that need to be clarified. Among these issues are the personal guarantee of the bidders and several liabilities," Ang said. He said they would be willing to bid again if given a chance. "But we were here to show our bid bond. We are going to try again but the issues have to be resolved," he said. If the government fails to privatize TransCo, it will continue to shoulder the cost of expansion and maintenance of the country’s power transmission system. This is estimated to cost $850 million over the next 10 years. Given the government’s current fiscal condition, this means that it will continue to borrow money to fund these endeavors as well as pay old debts and interest charges. This is a vicious cycle that the country’s legislators wanted to eliminate when they enacted the Electric Power Industry Reform Act of 2001. The government hopes to raise as much as $3 billion revenues from the lease contract for TransCo.

For his part, Trade and Investment Secretary Peter Favila, a member of the PSALM board, said they do not see this failure in TransCo bidding a major setback in government’s privatization efforts. "What is important is that the investors see integrity in the process. I don’t think it will raise major concern on investors," he said. — With Paolo Romero

Another failed bidding TAKIN’ CARE OF BUSINESS By Babe Romualdez The Philippine Star 02/06/2007

After press statements claiming there would be no more snags in the Feb. 5 bidding arranged by the Power Sector Assets and Liabilities Management Corp. (PSALM) for the privatization of the National Transmission Co. (TransCo), the bidding was again a dismal failure with only the Italian transmission company Terna SpA in partnership with the Citadel group showing up yesterday. The two other bidders were a no-show. This failure is getting to be the norm rather than the exception, with two botched bidding attempts in 2001 and 2004.

As we have pointed out before, this privatization project which could raise $2 to $3 billion for government is already long overdue by six years. Government should just go ahead and negotiate with the Italian group. If I remember correctly, the law allows the government to negotiate in cases of repeated bidding failures — which is certainly what has been happening with this Transco privatization. Besides, the Terna-Citadel Group seems to be the only serious bidder at this point, and is also technically the most qualified among the three because it is a private entity, unlike the two other Chinese and Malaysian bidders which are both state-owned. Once again, this failure places the administration in a most embarrassing situation. If government does not act decisively this time, this whole thing might just collapse and jeopardize future efforts to attract foreign investments into the country.

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Going overboard with tourists There’s been an upsurge in hotel bookings from tourists, largely credited to Tourism Secretary Joseph "Ace" Durano for his aggressive marketing campaign, packaging the country as more than the usual tourist destination. Last year, the DOT even launched a shopping spree campaign for tourists, showcasing premier malls in Metro Manila as excellent shopping havens. But as usual, Filipinos have a tendency to go overboard when it comes to hospitality towards foreign visitors.

A couple of days ago, five motorcycle riding policemen — better known as hagad in local parlance — stopped traffic in a busy shopping area in Makati to allow unimpeded access to a bus full of passengers. A young business tycoon followed the bus around out of curiosity to find out who the very important passengers were. It turned out they were mere Korean tourists billeted at the Shangri-La Makati with arrangements made by the Island Resort Club.

There’s no question tourists are welcome in this country, but Filipinos should not go overboard just to make these visitors feel spoiled and pampered. Bringing them from one shopping mall to another with a police escort is simply disgusting. It’s doubtful Koreans will bend over backwards in the same manner just to give Filipino tourists a great time shopping in Seoul. Certainly, there are no VIP tourists in countries like the United States, Singapore or Japan.

Traffic in Metro Manila is already horrendous, and it’s bad enough we have to put up with so many clowns arrogantly going around with unauthorized bodyguards, escorted by police cars every time they ply Metro Manila’s busy streets. Let’s not add to this by having tourists going around escorted by traffic-stopping motorcycle cops just so they could shop till they drop.

* * *

Photo op gone wrong Sources from the Palace disclosed that GMA was so pissed at a front page photo that appeared in The Philippine STAR last week showing her flanked by new Palestinian Ambassador Abdelrahman Abuqutaish and honorary consul Jose Antonio "Tony" Leviste. Apparently, GMA was not aware that honorary consul Leviste would be in attendance during the presentation of credentials by the new Palestinian envoy until the last minute. The former Batangas governor is facing murder charges for killing his long-time aide Rafael delas Alas early last month.

Someone must have received a severe tongue lashing from the very annoyed GMA due to the faux pas. Whoever thought the photo op would help the former governor with his case must be very ignorant of GMA’s character. She is the type who will keep her hands off and distance herself from people in trouble whom she thinks will only place her in an awkward situation. So now there are speculations that the offensive photo op must have been the reason why the Department of Justice (DOJ) quickly came out with a recommendation to upgrade to murder the charge of homicide previously filed by the Makati City prosecutor’s office against Leviste. The DOJ is standing pat on its recommendation, claiming that a re-investigation of the crime scene showed tampering of evidence. A classic case of a photo op gone wrong.


Chief News Editor: Sol Jose Vanzi

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