Sale closing of Angat plant to Korea’s K-Water set Oct 31

MANILA, Philippines - It’s all systems go for Korean firm K-Water Resources Corp. for the closing of the sale of the 218-megawatt Angat hydropower plant in Bulacan on Oct. 31, a government official said yesterday.

The closing of the sale has been delayed several times due to issues encountered since last year ,but Power Sector Assets and Liabilities Management Corp. (PSALM) president Emmanuel Ledesma said the closing is finally expected at the end of the month.

“There will be closing ceremonies on October 31st,” Ledesma told reporters on the sidelines of a hearing on the Department of Energy’s budget at the Senate yesterday.

PSALM, the entity tasked to sell state-owned power assets including Angat, earlier targeted to close the sale of Angat on Sept. 1 but this was affected by the Supreme Court’s decision on a case involving former employees of National Power Corp. (Napocor).

Napocor lost a class suit filed against it by its former drivers and mechanics and has been ordered by the Supreme Court’s Third Division to pay the retrenched employees P60.2 billion in back wages and wage adjustments.

The Supreme Court issued a notice of garnishment on Napocor’s assets, which included the fee of K-Water for the Angat sale. 

Former Napocor employees who were retrenched included members of the company’s Drivers and Mechanics Association (DAMA). They contested the retrenchment and filed a case before the court.

In 2006, the High Court ruled in favor of the more than 8,000 employees and upheld their claim of damages totaling to P34.7 billion.

 “This amount swelled to P60.2 billion in 2014 as computed by the ex-officio Sheriff of the Regional Trial Court of Quezon City. In addition to the claim is the P1.8 billion sheriff’s fee,” according to Napocor. 

However, the High Court lifted the garnishment but Napocor, through PSALM, would still have to settle the damages through other means. ?

The period for K-Water to draw a loan to pay for its fee to PSALM has also expired, adding to the delay in the closing of the sale.

The Bangko Sentral ng Pilipinas (BSP), which manages the country’s external debts, had to approve the loan of K-Water.

K-Water applied for a $500 million bridge loan from the Korean Exim Bank for the takeover.

The government corporation issued the certificate of effectivity (COE) to K-Water in September last year and had targeted to close the sale within 270 days from the issuance of the COE. It conducted a bidding for the $440.88 million facility in 2010.

K-Water topped the bidding but was unable to take over the plant due to thorny issues including court hurdles raised by non-government organizations (NGO) on the foreign takeover of a power asset. 

The Supreme Court last year upheld the privatization of the power plant but K-Water had negotiated with the government for a lower price tab on the facility, saying that it wanted the same level of benefits expected in its 2010 bid. 

The privatization of Angat, once completed, would be the first successful power asset sale under the Aquino administration, as mandated under the Electric Power Industry Reform Act of 2001. 

K-Water is optimistic that its investment in Angat is only the beginning of future projects in hydropower. 

The Korean firm’s local partner is San Miguel Corp.