PSALM seeks legal opinion on ‘buy-out proposal’ for Casecnan, CBK hydro plants

by Myrna Velasco – January 26, 2016

from Manila Bulletin

State-owned asset seller Power Sector Assets and Liabilities Management Corporation (PSALM) will be seeking a legal opinion on whether or not it can offer the remaining big hydro plants under its charge to a “buy-out arrangement” with interested private sector takers.

PSALM President Lourdes S. Alzona has noted that both the 150-megawatt Casecnan and 720MW Caliraya-Botocan-Kalayaan hydropower facilities are being dangled for a “buy-out option” to independent power producers.

“For CBK and Casecnan, the plan is to have another study, aside from the privatization… we have to get an opinion whether the other option of buy-out is permissible or not,” she stressed.

She added that if the buy-out plan is legally feasible, then it will be the track of asset disposal that PSALM will likely take.

Alzona has opined that under the build-operate-transfer (BOT) contract for the assets, the initial assessment is for a buy-out to be an acceptable option – but within a specified timeframe.

Nevertheless, she stressed that the directive of both the Department of Finance (DOF) and Malacañang would be for PSALM to study such propounded scheme first.

“Per discussion with DOF and Malacañang, we have to study the legal side if that is allowed, because under EPIRA (Electric Power Industry Reform Act), the mandate is we have to privatize,” she said.

Alzona explained that if the buy-out option will be pursued, the ownership of the plants will remain with PSALM for some time – then the actual privatization of the assets will come later.

“We are still checking the legality (of a buy-out) that’s why our decision is still hanging as to how we intend to privatize them (hydro assets), she expounded.

The divestment of the plants, she indicated, may already slip to year 2017. Nevertheless, if a buy-out recourse is feasible, this might still be undertaken within the year.