Bidders ‘baffled’ on terms of Malaya LNG conversion

By Myrna M. Velasco – March 27, 2017, 10:00 PM

from Manila Bulletin

Prospective bidders in the privatization of the 650-megawatt Malaya thermal power plant are still baffled as to the definitive terms of the Department of Energy’s (DOE) proposal for it to be converted into a liquefied natural gas-fired generating asset.

With many questions still unanswered, it was gathered that the bidding date will be moved anew to April 15 this year from the March 30 re-scheduling advised earlier. The original auction date was slated March 8.

According to Power Sector Assets and Liabilities and Management Corporation (PSALM) Officer-in-Charge Lourdes S. Alzona, “the final transaction document has yet to be presented to the PSALM Board,” for the required approval.

According to qualified bidders, they recently met with a DOE official to seek clarifications on Malaya’s conversion plan to LNG.

Among the contentious concerns raised had been on the LNG supply source and if there is already a definite entity that will put up the import terminal and when will this be coming on stream.

The bidders said they have not gotten categorical answers yet from the DOE, thus, they are at a loss as to how they would be packaging their offers at bid submission date.

In previous interview with the media, Energy Secretary Alfonso G. Cusi indicated that he would want PSALM to undertake a sensible study first on the planned gas fuel shift for the Malaya facility.

The Malaya plant is currently called upon as a “must-run-unit”, essentially taking the form of “security asset” that could help stabilize grid supply when available capacity runs tight either due to scheduled shutdowns or forced outages of power plants.

LNG is still being cast as a future for the country’s energy sector, with state-run Philippine National Oil Company (PNOC) envisioned to be taking the lead.

Plans have yet to take off from blueprint though and deep-pocketed investors are still awaited to firm up plans on portended billions of dollars of fresh capital outlay for the evolving Philippine gas market.

PNOC, on its own, may not have the technical expertise as well as the full financial muscle to put up the integrated LNG facilities – starting from the LNG import terminal to pipeline and distribution units and up to the anchor load power plants.