Korea’s K-Water eyes Angat hydro plant takeover

MANILA, Philippines - Korean firm K-Water Resources Corp. is targeting to close the sale of the 218-megawatt Angat hydropower plant in Bulacan by the end of this month, a government official said yesterday.

Power Sector Assets and Liabilities Management Corp. (PSALM) president Emmanuel Ledesma said K-Water is now working on the approval from the Bangko Sentral ng Pilipinas (BSP) for an extension to be able to draw its loan.

“K-Water has signified its intention to close the sale by Oct. 31, covering all approvals needed including the BSP extension which they say will be issued mid October,” Ledesma said.

PSALM, the entity tasked to oversee the privatization of state-owned power assets including Angat, earlier targeted to close the sale of Angat by 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 last week 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 BSP, which manages the country’s external debts, has to approve all loans from foreign sources.

PSALM 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 plan 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 diversified conglomerate San Miguel Corp.