When will the Thermal Power Plant be sold?

The Philippine government failed for a third time to sell a decommissioned thermal power plant in Manila, according to the state-run agency tasked to manage the process.

JC Ethanol and Metal Trading, based in South Korea, offered a price lower than what the government was willing to accept, the Power Sector Assets and Liabilities Management said, without saying how much it wants for the facility.

The Philippines has been trying since 2004 to sell power assets to help boost revenue and encourage private investments in power generation to create a competitive electricity market and eventually lower power costs.

“The government must sell a minimum of 70 percent of its power assets within the next six months to get the wholesale electricity market operating effectively,” Peter Wallace, president of AYC Consultants, an adviser to investors in the Philippines, said by phone in Manila.

A unit of Malaysia's Gagasan Steel, which also offered to buy the Manila plant, didn't meet the technical requirements, which resulted to its disqualification from the bidding, Power Sector said on its Web site.

The government has so far sold generating assets with combined capacity of 1,850 megawatts of the 4,335.7 megawatts capacity owned by state-run National Power.

The 200-megawatt Manila generator, which was commissioned in 1965, “is an old power plant, and there's not a great interest in it,” Wallace said. “Maybe the government should be adjusting the minimum bid number to a lower rate.”

The government aims to sell at least 70 percent of the National Power's generating capacity by the end of this year, to encourage competition in the wholesale electricity spot market and pave the way for lower electricity rates.

The Philippines had the third highest power costs in Asia, Sergio Ortiz-Luis, president of the Philippine Exporters Confederation, said.

Higher electricity costs squeezed margins for Philippine exporters, forcing 9 percent of them to close shop in 2007, Ortiz said.

In light of this setback, will the Philippines lower its asking price for the plant?