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PIA Press Release

Gagasan Steel pays in full for Manila Thermal plant

Manila (24 February) -- Gagasan Steel Incorporated has officially assumed ownership of the decommissioned 225-megawatt (MW) Manila Thermal Power Plant (MTPP).

This was confirmed by the Power Sector Assets and Liabilities Management Corporation (PSALM) which, last week, received from Gagasan Steel the full payment of USD2.5 million for the retired power facility located in Isla de Provisor, Paco, Manila. The MTPP was sold through a negotiated sale transaction that PSALM conducted on 25 April 2008. The purchase price covers the plant equipment, components, auxiliaries, and accessories of the MTPP, but excludes the underlying land.

Gagasan Steel, an affiliate of Malaysia-based Gagasan Steel Sdn Berhad, is an import-export handler, dealer, and trader of scrap metals that has been in operation since 2002. Its local clients include National Power Corporation and the Manila Electric Co.

PSALM's Contract Management Group will monitor compliance with the Asset Purchase Agreement provisions of the sale before the facility is turned over to Gagasan Steel to ensure that all required deliverables are met. Gagasan Steel will then be given six months, subject to extension, to dismantle the plant building and equipment and clean up the site.

Part of Gagasan Steel's responsibility is to secure the necessary permits, licenses and accreditation from pertinent government agencies such as the Department of Environment and Natural Resources in dismantling the structures and equipment as well as in cleaning up the site in accordance with existing environmental laws and regulations.

PSALM disclosed that the proceeds from the sale of the MTPP would be used to settle the financial obligations of National Power. As of 05 February, the total privatization proceeds generated from the successfully bid out generating and decommissioned plants as well as the National Transmission Corporation concession have amounted to USD6.33 billion. Of this amount, PSALM has collected a total of USD2.91 billion.

From these collections, PSALM has utilized USD1.30 billion for prepayments; USD350 million for debt service; USD290 million for independent power producers obligations; and USD200 million for other power-related debts.

Gagasan Steel is also eyeing the decommissioned 225-MW Bataan Thermal Power Plant that PSALM bid out last Friday, 20 February 2009. The third round of bidding, however, failed as two bidders, Krisahs Trading and Rubenori, Inc., were unable to meet the technical requirements set by PSALM, while Gagasan Steel did not meet the reserve price.

PSALM will immediately enter into negotiations with Gagasan Steel pursuant to the privatization company's procedures. (PIA-MMIO) [top]

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