The failed auction of the National Transmission Corp. is only a "temporary snag" that will not affect the investment outlook of the Philippines, Malacañang said in a press statement yesterday.

Presidential Spokesperson Ignacio Bunye said the public need not fear the failed bidding could dampen investor enthusiasm on the privatization of the TransCo.

TransCo, considered as the country's biggest privatization effort with an estimated value of $3 billion, has been on the auction block since 2003.

The latest bidding, the fourth attempt to privatize the 25-year concession, drew only one consortium, the Filipino-owned investment firm Citadel Holdings, Inc. and Italian power grid operator Terna SPA.

Malacañang said in the statement that, to ensure success of the next auction, President Gloria Macapagal-Arroyo directed Energy Secretary Raphael Lotilla and other concerned Cabinet officials to improve the bidding process.

Bunye said President Arroyo is confident the energy team will carry the privatization effort forward.

Trade Secretary Peter Favila, a member of the Power Sector Assets and Liabilities Management board, echoed Bunye's statement, saying the failed Transco auction is not a major setback in the government's privatization effort.

The most important lesson in the failure is that the government protected the investor's integrity in the bidding process, Favila said in the statement.*

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