UPDATE 1-Manila's PSALM rejects bids for power purchase deals

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MANILA, June 26 (Reuters) - Philippine state agency PSALM said on Friday it had rejected bids for contracts to exclusively buy the power output of two big coal-fired power plants on the main island of Luzon as these fell under the floor price.

"It did not meet the reserve price," Jose Ibazeta, president of the Power Sector Assets and Liabilities Management Corp (PSALM) told reporters regarding the submitted bids. He did not disclose the reserve price.

The agency may announce the schedule for a new round of bidding next week. The companies which participated in the auction on Friday are allowed to join the second round of bids. Prior to the bid rejections, a unit of San Miguel Corp (SMC.PS) submitted the highest bid of $1 billion for the Sual power plant contract and a unit of the Aboitiz group (AEV.PS) bid $648.9 million for the Pagbilao plant deal.

The Sual and Pagbilao plants, with a combined capacity of 1,700 MW, are both currently operated by private firm Team Energy Corp under a build-operate-transfer arrangement with the government.

Team Energy is owned by Tokyo Electric Power Co (9501.T) and Marubeni Corp (8002.T).

The combined capacity of the two facilities represent more than a third of the total power supply contracts currently held by state firm National Power Corp in the Luzon and Visayas regions, two of the country's three main island groups. (Reporting by Karen Lema; Editing by Michael Urquhart)