Philippine Star
A consortium of Filipino and Chinese firms led by local infrastructure holding firm Monte Oro Grid Resources Corp. bagged yesterday the concession contract for power grid operator National Transmission Corp. (TransCo) with a bid of $3.95 billion.
Monte Oro had teamed up with Calaca High Power Corp. and State Grid of China for the bidding, the country's biggest privatization effort.
Controversy has shrouded Monte Oro in the wake of allegations by Sen. Jamby Madrigal of the group's discreet ties to President Arroyo's brother, Diosdado "Buboy" Macapagal Jr. and the Aboitiz group.
She also said it is Enrique Razon Jr., chair of International Container Services Inc. (ICTSI) and treasurer of the administration Team Unity in the May senatorial elections, who leads the Monte Oro group.
The consortium narrowly beat the $3.905-billion bid of the group of San Miguel Energy Corp. and partners Dutch firm TPG Aurora BV and Malaysia's TNB Prai Sdn Bhd.
The Monte Oro group must still get a franchise to operate the grid from Congress, where opponents of Mrs. Arroyo in the Senate are likely to give them a rough ride amid allegations the winning consortium has close links to her.
"They (Monte Oro) have enough political clout to get it through the lower house but will likely run into a long-running tele-novella in the Senate," said Alex Magno, director of the Development Bank of the Philippines.
The consortium has a year to get the franchise or ownership will revert to the government, which will continue to run the grid for the time being.
But Monte Oro's president expressed confidence, saying their offer would be funded through a combination of equity and borrowing.
"We have agreements with underwriters and we will begin to implement them," Walter Brown, who is also chairman of mining group Philex, said.
The government will get 25 percent of the purchase price once the franchise is awarded, with the remaining funds to be paid over 20 years.
"This is a move in the right direction," said Jose Ibazeta, head of the agency tasked with selling state-run energy assets.
The winning price tag is more than double the previous privatization record of $1.6 billion paid for Fort Bonifacio in 1995 and crowns a turnaround in what had previously been a notoriously stop-start energy privatization program.
The government has been trying since 2003 to privatize the management of TransCo to boost state finances and modernize its creaking power sector. Yesterday's auction was the fifth attempt and the second this year.
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