Buyout of IPP contracts eyed

by Alena Mae S. Flores – December 06, 2016 at 09:00 pm

from Manila Standard Today

Power Sector Assets and Liabilities Management Corp. has proposed buying out the independent power producer contracts of three plants in order to proceed with the eventual sale of the assets.

PSALM officer-in-charge Lourdes Alzona told reporters during an investment forum that the agency in charge of privatizing state power assets was studying the option to take over the IPP contracts of the 728-megawatt Caliraya-Botocan-Kalayaan hydro power plants, the 140-MW Casecnan multi purpose project and the 210-MW Mindanao coal station.

“Our action plan study on the buyout and whatever the result will go back to the board,” Alzona said.

“It’s only an option by government. Note that this is still under study,” Alzona said earlier.

She said a legal review would be conducted on the proposed government buyout of the IPP contracts. Alzona cited a buyout provision in the IPP contract “but there’s a specific date.”

“But as per discussion with DoF (Finance Department) and Malacañang, we have to study the legal side if it can be allowed because under EPIRA (Electric Power Industry Reform Act of 2001, we have to privatize,” she said.

“If we buy out the IPP plants that are with us, then… we can privatize. But we have to check the legality,” she said, adding the results of the study would determine the mode of privatization scheduled in 2017.

The CBK hydro facility consist of the 22.6-megawatt Caliraya in Lumban, 20.8-MW Botocan in Majayjay and the 684.6-MW Kalayaan I and II in Kalayaan, Laguna. J-Power and Sumitomo Corp. of Japan operate the CBK power plants.

The 150-MW Casecnan project, meanwhile, was built following the signing of a build-operate-transfer contract between the National Irrigation Administration and California Energy Casecnan Water and Energy Company Inc. in 1994.

CE Casecnan’s contract with the government will lapse on April 5, 2022 while that of J-POWER will end on February 7, 2026.

Steag State Power Inc. of Germany, meanwhile operates the Misamis Oriental coal plant under a build-operate-transfer agreement with the government.

Steag owns a 51-percent stake in the coal plant, Aboitiz with 34 percent and La Filipina Uygongco with 15 percent.

The Mindanao coal plant was constructed in 2006 under a 25-year build-operate-transfer-power purchase agreement scheme, which ends in 2031.