MANILA - Philippine conglomerate DMCI Holdings Inc. submitted the highest bid of $361.7 million at a state auction for the 600-megawatt Calaca coal-fired plant, the government said on Wednesday.

DMCI's offer exceeded the government's floor price, a spokesman at the power privatization agency Power Sector Assets and Liabilities Management Corp. (PSALM) told Reuters.

It also bested the only other bidder, Banpu Power Ltd. of Thailand, which submitted a $280-million bid.

DMCI Holdings and Banpu were the only two bidders that attended the auction out of 4 qualified bidders including San Miguel Energy Corp. and Therma Power Visayas.

Old, deteriorated

This is the fourth auction of the coal-fired power plant after two failed biddings in 2005 and 2006. A unit of French utility firm Suez then bagged the deal in October 2007, but backed out early this year after noting that its $786.5-million winning bid was not enough since the condition of the plant has already deteriorated.

DMCI Holdings President Nestor Dadivas said the company's priority will be the repairs of the quarter-century old plant.

"We already have some idea of the condition of the plant as well as the environmental concerns, and we will be working on a program to optimize the rehabilitation and use of the plant," he said.

Dadivas points out that the Calaca I plant is already 25 years old, while the Calaca II plant is 15 years old.

"They have already passed their economic life, so to speak, and a lot of engineering will be needed."

DMCI Holdings will be using internally-generated funds to pay the 40 percent downpayment required by PSALM. The company will be studying options on how to finance the entire bid price.

Open access

PSALM president Jose Ibazeta said the sale effectively fulfills the agency's 70 percent privatization level as mandated by the Electric Power Industry Reform Act (EPIRA), a pre-requisite to usher in open access and retail competition.

With the sale of Calaca, we have gone over the hurdle to sell 70 percent of the generation assets. We know have the burden to sell 70 percent of the IPP contracts. With the completion of both, we will go into what we call open access," Ibazeta said.

"There's also an EO that says that if we sell 50 percent of generation assets, and it required that Calaca be sold, prior to the implementation of what we call 'interim open access', this means that generation plants can do direct selling of bilaterals with customers of 1-MW or over. We have now hurdled that." -- With Reuters