Psalm, Napocor ink new asset-sale deal

by Lenie Lectura, 13 March 2015
from BusinessMirror

STATE firms Power Sector Assets and Liabilities Management Corp. (Psalm) and the National Power Corp. (Napocor) renewed an agreement for the latter to operate and manage the unsold assets of the former.

Under the Operation and Maintenance Agreement (OMA), Napocor will remain the service provider for much of Psalm’s remaining power and related assets. These include Power Barges 101, 102, 103 and 104, as well as the Agus and Pulangui hydroelectric power plants.

“Under the guidance of the Board of Directors of PSALM and [Napocor], we are happy to report that we have completed negotiations on the OMA with [Napocor]. The agreement is in accordance with Section 47[j] of the Electric Power Industry Reform Act (Epira), which states that [Napocor] may generate and sell electricity only from the generating assets and IPP (independent power producer) contracts of Psalm,” Psalm President Emmanuel R. Ledesma Jr. said on Friday.

Under the new OMA, Napocor will operate, maintain and manage Psalm’s remaining power plants and “appurtenant [or accompanying] assets, other assets and other facilities.] The Napocor is tasked to maximize plant availability and performance, minimize outages and operations and maintenance costs, minimize long-term deterioration of equipment and prepare the assets for sale and transfer.

In addition, Napocor shall provide personnel for supervision and preservation of  PSALM’s decommissioned plants and other facilities to prevent the deterioration of serviceable equipment and systems prior to disposal or privatization.

Psalm’s remaining decommissioned or retired power facilities include the Sucat Thermal Power Plant in Muntinlupa City and the Bataan Thermal Power Plant in Limay, Bataan.

Likewise, Napocor shall also provide personnel for the excluded assets from sold plants identified by Psalm. Napocor would also continue to discharge its duties and obligations under existing IPP contracts, prosecute and defend cases related to assets covered by the OMA and undertake titling for Psalm’s real-estate assets.

The Psalm is the agency mandated by the Epira, or Republic Act 9136, to handle the sale of the remaining state power assets and financial obligations of Napocor. 

Privatization proceeds from last year’s sale of state-owned power assets reached P20.8 billion.

Ledesma had said that bulk of the proceeds came from the sale of the 218-megawatt (MW) Angat Hydroelectric Power Plant (HEPP) in Bulacan, and the remaining from the 153.1-MW Naga Power Plant in Cebu.

Only about 20 percent of government-owned power assets have yet to be privatized since Psalm took over Napocor, the Psalm official added. “There’s still roughly around 1,600 MW remaining. So assuming the rule of thumb is applied, then that’s going to be multiplied by $2 million per MW,” Ledesma said.

This would mean the Philippine government expects to raise about $3.2 billion from the sale of the remaining assets. 

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