SC orders awarding of Naga Power Plant to Aboitiz’s Therma Power

MANILA, Philippines – The Supreme Court (SC) ordered the Power Sector Assets and Liabilities Management Corporation (PSALM) to immediately award the P1.1-billion deal to own and operate the 153.1-megawatt (MW) Naga Power Plant Complex to a subsidiary of Aboitiz Power Corporation.

The SC’s Special 3rd Division said in a 13-page resolution dated October 5 that it upheld the validity of PSALM’s public bidding of the Naga Power Plant in Cebu, which was then awarded to Aboitiz Power’s Therma Power Visayas Incorporated.

This court ruling stemmed from the petition filed by former senator Sergio Osmeña III, who argued that the “right-to-top” condition in the bidding should be declared illegal as it defeats the purpose of a fair and transparent bidding for a government asset. 

In 2015, the notice of award was cancelled because of the high court’s final ruling, invalidating the “right-to-top” condition imposed by PSALM in the bidding.

Therma Power then filed a petition before the SC, seeking the reinstatement of the cancelled April 30, 2014 notice of award issued to it.

The SC’s October 5 ruling said that what was declared as invalid was only the right of first refusal granted to SPC Power Corporation by PSALM under the 2009 Naga Land-Based Gas Turbine-Land Lease Agreement (LGBT-LLA). 

Previously, after two failed bids, Therma Power won the bidding for the Naga Power Plant, with a bid of P1.08 billion, higher than SPC’s bid of only P858 million. 

But SPC exercised its “right to top” the bid, offering PSALM 5% more at P1.143 billion.

The Court pointed out that the property subject of the right of first refusal is outside the leased premises covered by the LGBT-LLA.

“We hold that the grant of right to top to SPC under the LGBT-LLA is void as it is not founded on the same lessee’s legitimate interest over the leased premises,” the SC ruled. 

The high court stressed that the new ruling should not be considered a reversal of its September 28, 2015 decision.

“On the contrary it adheres to the plain wording of its fallo (judgment): that only SPC’s Right to Top and the NPPC-Land Lease Agreement (LLA) and NPPC-Assets Purchase Agreement (APA) in its favor were declared null and void,” the SC noted. – Rappler.com