The Power Sector Assets and Liabilities Management Corporation (PSALM) in the Philippines is to auction off the 360MW Magat hydroelectric project - the largest hydro project in the country - on 14 December.
PSALM released the final version of the Asset Purchase Agreement (APA) and Land Lease Agreement (LLA) to bidders on 30 November, with four bidders expected to take part in the auction. The other bid documents consisting of the Lease Contract and the Operation and Maintenance (O&M) Agreement with the National Irrigation Administration (NIA) will also be released as soon as negotiations are completed and finalised. These agreements will be binding among the winning bidder, PSALM and the NIA.
The APA for the Magat facility requires the winning bidder to deliver at least 40% of the purchase price as upfront payment payable on or before the closing date. The balance of 60% may be paid in 14 equal semi-annual payments with an interest of 12% per annum compounded semi-annually.
The winning bidder is also required to post a performance bond equivalent to 2% of the purchase price. The performance bond will be reduced every year equivalent to 2% of the aggregate amount of the deferred payments.
The winning bidder will likewise be required to post a deferred payment security deposit equivalent to at least the next deferred payment in the form of cash, currently dated manager’s check or an irrevocable standby letter of credit acceptable to PSALM.
‘During the deferred payment period, PSALM will turn over to the winning bidder the Magat facility on the condition that it will operate, maintain and rehabilitate the complex in the ordinary and usual course of business,’ said PSALM Vice President for Asset Management and Electricity Trading Froilan A. Tampinco.
The Magat power plant is the second hydroelectric power facility to be bid out by PSALM this year following the successful sale last September of the 112MW Pantabangan-Masiway hydroelectric power complex in Nueva Ecija.
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