PSALM changing privatization track for Mindanao coal plant

by Myrna Velasco – July 31, 2016

from Manila Bulletin

State-run Power Sector Assets and Liabilities Management Corp. (PSALM) is changing the privatization course for the 210-megawatt Mindanao coal-fired power plant that is currently under the operatorship of German-led Steag State Power, Inc.

“The privatization track for Mindanao coal plant will change,” PSALM Officer-in-Charge Lourdes S. Alzona said, noting that they are more inclined at pursuing buyout of the facility’s contracted capacity then divest the plant on “straight asset sale” subsequently.


Alzona said the plan to engage independent power producer  administrator (IPPA) may already be scrapped, and that is the option that they have initially presented to their principals at the Departments of Energy and Finance.

“We are currently undertaking a study on Mindanao coal plant’s privatization…we no longer want to do it as IPPA deal,” Alzona stressed.

The proposed direction, she said, “is to study the buy-out option, and then we will sell the asset as a full privatization exercise.”

She qualified that they would want to re-assess if the ‘buyout-then-straight-asset-sale option’ may fetch higher value in terms of cash proceeds.

That will then be their basis and justification on their propounded divestment plan – which is also indispensable in seeking the approval of the PSALM Board.

The plant’s contracted capacity would have been offered for IPPA deal with interested parties by second half of this year – from a skidded timeline in 2015.

In the original plan, there is specific condition dangled to prospective investors that the facility’s tariff would not be adjusted over specified period of time. However, that dampened the appetite of some bidders.

The Mindanao coal plant is under a 25-year build-operate-transfer (BOT) contract with private sponsors – reckoned from its effective commercial operation date in November 2006.

Because of its contracted capacity, the privatization scheme framed through the Electric Power Industry Reform Act (EPIRA) is of the IPPA appointment mode. But with the buyout plan, direct divestment of the facility could be consummated later on.