PSALM lists ‘hurdles’ in privatization of power assets

by Lenie LecturaMay 10, 2016

from Business Mirror

THE Power Sector Assets and Liabilities Management Corp. (PSALM) has yet to line up the inventory of power assets up for sale this year, pending further discussions with concerned agencies.

Under Republic Act 9136, or the Electric Power Industry Reform Act of 2001, PSALM is mandated to manage the privatization and maintenance of National Power Corp.’s (Napocor) power-generation assets, liabilities and contracted capacities.

Among the power assets that are yet to be privatized are the 850-megawatt (MW) Sucat Thermal Power Plant; the 200-MW Mindanao Coal-Fired Thermal Power; the 982-MW Agus-Pulangi hydropower complex; the 40-MW “security capacity” of the Unified Leyte Geothermal Power Plant (ULGPP) and the bulk capacity of the ULGPP itself.

“There is no definite bid schedule yet for Unified Leyte bulk and security energy this year because we need further consultation with [the] DOE [Department of Energy] on policy directions,” PSALM Officer in Charge Lourdes Alzona said in an interview.

The ULGPP is  in the Visayas. The PSALM Board still needs to determine if the 40-MW security capacity would be bundled to the remaining 160 MW of ULGPP’s bulk capacity that has yet to be privatized.

PSALM is also looking at a negotiated sale of the bulk capacity of ULGPP after only one bidder—Unified Leyte Geothermal Energy Inc., a subsidiary of Lopez-led Energy Development Corp.—participated in the bidding activity.

In the case of Mindanao coal, PSALM said it is awaiting the go ahead of the DOE. “We are continuously consulting the DOE with regard to power demand-supply outlook in Mindanao before further presentation to the PSALM Board will be made this year,” Alzona said in the same interview.

Mindanao coal privatization has been deferred taking into consideration the power supply outlook because of the El Niño, and the target schedule for commissioning of new capacities in 2016.

Alzona said PSALM fully supports the position of the DOE to reschedule the bidding on a later date when the 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 said, adding that the winning bidder might dictate electricity rates, which, in turn, could translate to higher electricity rates for the 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.

For the 982-MW Agus-Pulangi hydropower complex, which provides more than half of Mindano’s current electricity capacity, Alzona said  the facility is unlikely to be privatized this year.

“Agus-Pulangi [has not been lined up for privatization], as there is still need for consultation with Congress and stakeholders. PSALM, meanwhile, is studying sale structure options for these power assets,” Alzona added.

The hydro facility is tentatively scheduled for privatization in 2017. However, the sale is being opposed by some Mindanao lawmakers and consumer groups, fearing it could result in power-rate hikes.

The Mindanao Development Authority strongly opposed the privatization of Agus-Pulangi power complex, and said this should be operated by the proposed Mindanao Power Corp.

It also urged Congress to pass a law that will allow Mindanao to manage and operate the crucial power facility in the region before the end of the Aquino administration.

The PSALM Privatization Bids and Awards Committee, meanwhile, has yet to convene to discuss the next steps for the sale of the decommissioned 850-MW Sucat Thermal Power Plant.

PSALM earlier declared the second round bidding for the structures, plant equipment, auxiliaries and accessories of the Sucat plant, as a failed bidding after the three qualified bidders did not meet the reserve price set by the PSALM Board.

Initially, four bidders submitted their offers for the Sucat sale. However, one bidder was disqualified after it was found noncompliant with the legal requirements of the bidding process.

The three bidders who were qualified in the bidding were Riverbend Consolidated Mining Corp., VPD Trading and Sta. Clara International.