THE Department of Finance (DOF) is pressing ahead with a privatization drive, eyeing roughly P30 billion from the sale of state-owned assets later this year after it raised P1 billion from the disposal of government-owned office units at The Atrium in Makati.
Finance Undersecretary Michael Peter Alejandro said the Mile Long commercial complex in Makati and Food Terminal Inc. in Taguig, along with the government’s 20-percent stake in the operator of the South Luzon Expressway (SLEx), were among the assets lined up for disposal by the Privatization and Management Office.
“[I]n the pipeline, we’re still planning on Mile Long, Food Terminal Incorporated. Those are the flagship assets that we plan to privatize until the end of the year,” Alejandro told reporters on Thursday.
He said the Mile Long property had been valued at around P10 billion while the FTI property could fetch about P20 billion.
The estimates, however, remain preliminary as both assets have yet to undergo final appraisal and secure Privatization Council approval, which will determine the minimum bid prices before both are offered to investors.
“[T]hose aren’t set yet because they haven’t gone through the Privatization Council. We’re still getting appraisals for the properties so the pricing will be fair,” Alejandro said.
He said officials were eyeing Privatization Council approval for the Mile Long property by the end of the third quarter, while the larger FTI property and SLEx are targeted for the fourth quarter.
Alejandro acknowledged that the final timetable would depend on several factors, including the completion of property valuations, council approvals and prevailing market conditions.
“We also have to balance the market now on what people are willing to purchase the property for,” he added.
On Wednesday, the DOF and Sanpiro Realty and Development Corp. completed the P1-billion sale of government-owned units at the Atrium of Makati.
Alejandro said the government initially received offers of around P400 million but ultimately secured roughly double that amount.
“[W]e thought we got a very good price for it,” he said.
The transaction, completed around late May or early June, involved approximately 3,500 square meters of office space on the building’s fifth floor that had previously been occupied by the Bureau of Internal Revenue. It covered 24 condominium units and 21 parking slots.
Alejandro said the units were unused partly because the building required retrofitting.
“This sale demonstrates our commitment to turn idle government assets into revenues that strengthen our capacity to fund priority programs and support long-term national development,” Finance Secretary and Privatization Council Chairman Frederick Go said.
Alejandro said the planned sales would help in hitting a P101-billion target this year.
Asked whether he remained confident that the privatization goal could still be achieved even though proceeds were only around P1.0-billion, he answered in the affirmative.
“[T]hat’s our target. We’re endeavoring to hit that P101 billion,” he said, noting that the planned sales also included the SLEx stake.
Valuation work for the expressway stake is still ongoing because the tollway operator’s shares are not publicly traded.
“Unlike listed shares that have market prices, this one isn’t publicly traded, so we need to have it valued before we can sell it,” Alejandro said.
He added that recent changes to the government’s privatization guidelines had encouraged stronger participation from the private sector by allowing investors to initiate unsolicited offers.
Under the revised rules, interested parties may submit proposals together with independent appraisals, after which the assets will undergo a competitive challenge process before any sale is finalized.
“We’ve actually been getting a lot of unsolicited offers from the private sector, which is good. There is interest,” Alejandro said.
While many of the unsolicited proposals involve smaller assets located across different parts of the country, he said the transactions collectively could make a meaningful contribution to the government’s privatization program.
“All these smaller transactions, they do add up,” Alejandro said.
He stressed that the government would be conducting its own property valuations and that Privatization Council approval would ensure the assets were not sold below fair market value.
“We have to make sure that the offers aren’t too low,” he said.