December 04, 2008

PGCIL eying 10% stake in the assets of Philippines Transco

It is reported that Power Grid Corporation of India Limited is in the race to acquire a 10% interest in Philippines National Transmission Corporation of Philippines.

Acting in concert with Citadel Holdings of the Philippines, it plans to acquire the special purpose vehicle being floated to take over and manage the assets of Philippines National Transmission Corporation for 25 years. While Citadel, one of the largest private holding companies in that country with interests in aviation services, freight management and logistics and telecommunications, will hold 90% while Power Grid will hold the remaining 10% in the SPV. The Power Grid board has already approved the acquisition of the 10% equity stake in the SPV.

The Philippines government is privatizing Transco with a valuation estimated at USD 3.5 billion to USD 4.6 billion as part of the market reforms led by Mr Gloria Arroyo president to decrease the government’s debt burden. According to the global bidding a norm set by the Philippine government, a local partner with a stake of 60% or above is necessary to qualify for the bidding round. The bidding round is expected to begin in December 2007. Apart from the Citadel Power Grid combine, Terna of Italy, State Grid of China, Tenega of Malaysia and SNC Lavlin of Canada are also in the fray, along with local partners.

Top level officials of Power Grid said that “We have the best chance to bag Transco because of our expertise in managing such assets and Citadel’s ability to bring funds for the huge project. The Philippines government is expected to announce the qualified bidders in a day or 2.”