Auction for Mindanao Coal output likely in H2, PSALM’s Alzona says

by Lenie Lectura – February 10, 2016

from Business Mirror

The auction for the selection and appointment of the Independent Power Producer Administrator (Ippa) for the bulk energy of the 200-megawatt (MW) Mindanao Coal-Fired Thermal Power Plant (Mindanao Coal) is finally pushing through this year.

According to Power Sector Assets and Liabilities Management Corp. (PSALM) Officer in Charge Lourdes Alzona, the Department of Energy (DOE) has given its green light to proceed with the planned auction.

The PSALM board will determine the schedule for the auction soon. Tentatively, the schedule is set sometime in the second half of the year.

“PSALM will seek the approval of its board for the privatization of Mindanao Coal in the second semester of 2016, considering the DOE’s non-objection to said schedule based on its forecast that power-supply situation in Mindanao will normalize by then,” Alzona said.

The PSALM official added that the “item will be for agenda in June 2016 onward,” and “the bidding is targeted in second semester.”

PSALM earlier suspended the auction after the DOE appealed to defer the bidding amid the tight power supply being experienced in Mindanao.

“Mindanao Coal’s [auction] has been deferred taking into consideration the power-supply outlook because of El Niño and the target schedule for commissioning of new capacities in 2016,” Alzona said earlier.

Alzona added that PSALM fully supports the position of the DOE to reschedule the bidding on a later date, when power-supply outlook is already at a comfortable level.

The power plant supplies about a fifth of Mindanao’s power requirements. An early auction, at a time when supply is tight, could cause price shocks. DOE officials explained that the Ippa’s winning bidder might dictate electricity rates, which, in turn, could translate to higher electricity rates for consumers.

Located in Misamis Oriental, the Mindanao Coal plant was constructed in 2006 for a 25-year power purchase agreement under a build-operate-transfer scheme that ends in 2031 with Steag SPI.

The power plant is 51-percent owned by Steag; 34 percent, Aboitiz Power; and 15 percent, La Filipina.

PSALM earlier met with the 12 prospective bidders for the Mindanao Coal, namely, Conal Holdings Corp., FDC Davao del Norte Power Corp., FirstGen Northern Power Corp., GDF Suez Energy Philippines Inc., Masinloc Power Partners Co. Ltd., Meralco Powergen Corp., Nexif Pte. Ltd., SMC Global Power Holdings Corp., SPC Power Corp., Team (Philippines) Energy Corp., Therma Southern Mindanao Inc. and Vivant Energy Corp.

The agency was supposed to bid the IPPA contract last November 25 and award it to the winning bidder in February this year.