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Press Release

C. 31-13 th

El Salvador, December 4 , 2013.

CS issued opinion to promote competition in 300MW public tender The Board of Directors (BD) of the Competition Superintendence (CS) issued and opinion regarding the public tender for the supply of 300MW of firm power and associated energy. The Superintendence pointed out that the tender documents contain several measures that might limit the number of possible bidders in this public procurement procedure. “Requirements and time frames must be amended so that the proposed projects have identical rivalry opportunities in the public procurement process”, informed Francisco Diaz Rodriguez, Competition Superintendent.

Pursuant to a request from the Electricity and Telecommunications General Superintendence (SIGET), the BD of the CS issued an opinion with respect to the tender documents of the public procurement process CAESS-CLP-003-2013, for the supply of 300MW of firm power and associated energy, divided in three blocks st st of 250 and 20MW, to be supplied starting on May 1 , 2014 and August 1 , 2014. Said procedure is carried out by the company Compañía de Alumbrado Eléctrico de San Salvador, S.A. de C.V. (CAESS), for its supply of 300MW, as well as for other electricity distributors. After the respective analysis, the Superintendence stated that the tender documents contain several measures that might limit the participation of some agents who already participate in this market and give an advantage to new projects with a considerable planning advance.

Furthermore, some of the requirements and time frames must be amended so that the proposed projects have identical rivalry opportunities in the above cited public procurement process. The following figure amongst the restrictive conditions of competition identified by the Superintendence: a. The tender documents establish that the back-up generation units must have an initial firm capacity (IFC) equal or greater than the contracted power, but said IFC “must not be compromised in other supply contracts”. Said conditions will limit access to the electricity generators who currently participate in the market, since the compromised IFC will keep them from bidding. b. The CS also warned of a possible restriction with respect to new generation units. The bidder must guarantee that the aforementioned units will be operating, at least, by the beginning of the supply st st (May 1 and August 1 , 2014). Considering the significant investment required, it is not likely that the project is finalized and ready to operate by the proposed dates for the beginning of the supply; unless the projects are already in the process of initiating operations. Said situation would give an advantage to developed projects or in advanced stages of the process, in comparison with those that will be planned and implemented due to the knowledge of the beginning of the public procurement process. c. Taking into account that the tender documents do not incentivize the participation of generators already operating in the market and that these documents facilitate the participation of new projects, the possible bidders with units outside El Salvador have an additional problem: they can only bid 10MW in the first


block and 10 MW and the second and third. The above cited situation maximizes the restrictive effects of the requirements under study in this paragraph. The limit of the offered power acts as a quantitative restriction, and, thus, as a barrier to the participation of possible bidders. Pursuant to the analysis carried out, the Competition Superintendence recommended the SIGET to require the following the distributors: 1. In order to avoid a reduction in the participation of possible bidders, asses the convenience to amend section 7 of the tender documents. For instance: to back-up the bid, the economic agent should not be required a generation unit with no limit to its compromised initial firm capacity. The IFC the bidder has should be the capacity needed to provide the supply 2. To open participation under similar conditions to different types of generators, the CS recommended assigning blocks according to more uniform categories. For example, different time frames for agents already existing in the market and for new ones, hence, allowing access to the more interested and distributors to diversify their risks. 3. Take into account prior opinions and recommendations issued to the Competition Superintendence regarding tender documents in previous public procurement processes for the supply of electricity, including the changes which are considered appropriate. The aforementioned opinion may be consulted in the CS´ web site: http://www.sc.gob.sv/pages.php?Id=1406 Legal framework With respect to matters related with procurement procedures for the acquisition of energy, Provision 86-A paragraph 4 of the Regulations of the Electricity General Law mandates that said processes must be approved by the SIGET, previous opinion rendered by the CS. In these procedures, the tender documents proposed by the distributors must also be approved by the SIGET, prior consult with the CS, pursuant to Provision 86-E of the above cited regulations. Regarding the opinions issued by the CS, Provision 14 of the Competition Law prescribes: m) Issue, at the request of a third party or ex-officio, opinions on public procurement procedures, which might significantly limit, restrict, or impede competition.


12 4 diciembre 2013 cs issued opinion to promote competition in 300 mw public tender  

cs issued opinion to promote competition in 300 mw public tender

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