PSALM sells P20.8-billion government power assets

by Lenie Lectura, January 27, 2015
from BusinessMirror

PRIVATIZATION proceeds from last year’s sale of state-owned power assets reached P20.8 billion, said an official of the Power Sector Assets and Liabilities Management Corp. (PSALM) on Tuesday.

PSALM is the agency mandated by Republic Act 9136, or the Electric Power Industry Reform Act (Epira) of 2001, to handle the sale of the remaining state power assets and financial obligations of the National Power Corp. (Napocor).

Emmanuel Ledesma Jr., PSALM president, said in a text message that the 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.

Korea Water Resources Corp. (K-Water) paid the government P19.66 billion for the HEPP.  So far, this is the biggest power facility sold by PSALM.

Located in San Lorenzo, Norzagaray in Bulacan, the Angat HEPP consists of four main units, each with a 50-MW capacity.  The units, were commissioned between 1967 and 1968.  To augment its operation, the plant uses five auxiliary units, with a total capacity of 46 MW.

The 18-MW Auxiliary Units 1, 2 and 3 are part of the sale, while the 28-MW Auxiliary Units 4 and 5, which are owned by the Metropolitan Waterworks and Sewerage System, were not part of the bidding.

“The sale merely involves the power-plant component of the Angat Dam,” Ledesma said.  “The privatization of the Angat HEPP will not affect the water supply from the Angat reservoir, as the Angat Dam remains the property of the Philippine government.”

Meanwhile, the Naga Power Plant’s new owner is SPC Power Corp. (SPC).

SPC initially submitted a bid of P589 million, lower than Therma Power Visayas Inc.’s P1.09 billion. However, the condition of the sale provides that SPC has the “right to top” the price of the winning bidder for the Naga plant by 5 percent, as provided under the Land Lease Agreement executed between PSALM and SPC for the Naga Land-based Gas Turbine in 2009.

Thus, SPC paid PSALM P1.14 billion, which is 5 percent higher than Therma Power’s bid.

“Actual cash received for Naga [totaling] P1.14 billion includes rental of P62 million, plus option price of P60 million,” Ledesma said.

The Naga Power Plant consists of the 52.5-MW Cebu 1 and the 56.8-MW Cebu 2 coal-fired thermal power plants, and the 43.8-MW Cebu diesel power plant 1 composed of six 7.3-MW bunker C-fed power units. Specifically situated in Colon, Naga City, Cebu, these power plants use a combination of coal, bunker C oil and diesel as fuel.

Only about 20 percent of government-owned power assets have yet to be privatized since PSALM took over Napocor, the PSALM official said.

Among the power facilities up for bidding are the 32-MW Power Barge (PB) 104 in Davao City; the 727-MW Caliraya-Botocan-Kalayaan (CBK) hydropower facility; the Agus hydropower plant; and the 140-MW Casecnan multipurpose hydroelectric power plant. These are all lined up for privatization up to 2017.

The agency will also rebid the 850-MW Sucat thermal power plant.

“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 that the government expects to raise about $3.2 billion from the sale of the remaining assets.

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