PSALM strikes lease deal with genset supplier

by Myrna Velasco, February 8, 2015
from Manila Bulletin

While it was already a junked option under Section 71 of the Electric Power Industry Reform Act (EPIRA), the Power Sector Assets and Liabilities Management Corporation (PSALM) is still exploring the possibility of entertaining a prospective generating set supplier.

This was manifested in a recent Office Order issued by PSALM president Emmanuel R. Ledesma Jr., in which he is seeking the creation of a technical working group (TWG) to formulate terms for a lease of land near its power facility in Rizal for Aaltafil Inc.

“In preparation for the approval by the Joint House Resolution on EPIRA Section 71, PSALM intends to enter into a memorandum of agreement with Aaltafil Incorporated for the lease of the land underlying the Malaya gas turbine,” Ledesma has stipulated in his order.

He added that the MOA shall be subject to the approval of the PSALM Board, hence, Ledesma noted that the TWG shall be created “for the formulation of the MOA, and other related documents, and resolution of all legal, technical, financial, contractual and other outstanding issues.”

The PSALM chief executive has named a seven-man team to comprise the technical working group for the propounded land lease deal. It is to be chaired by Ricardo M. Empleo Jr.

“Other departments concerned are likewise directed to extend assistance to the PSALM-TWG as necessary… this Office Order takes effect immediately,” he stressed. The directive was dated February 6, 2015 and logged as Office Order No. 2015-036.

Ledesma’s order was vaguely worded, but Aaltafil was previously named by PSALM among the prospective genset suppliers that approached them when this option was still considered as solution to summer’s forecasted power supply shortages.

The reference to Section 71 in the Order also cued in what the “land lease arrangement” would be for.

It was also gathered from PSALM sources that the “land lease pact” could provide Aaltafil a prospective site for its plan to bring gensets to augment the country’s electricity supply if they fall short on the anticipated critical months of summer.

To the lawmakers who thumbed down the genset lease or procurement proposal, such suppliers may still provide capacity but it was clearly laid down that no subsidy or no pass-on in the universal charge of PSALM shall be made.

The Congress Joint Resolution on Section 71 already mustered approval at the Upper Chamber last week, and it still leans on the interruptible load program (ILP) as the “core supply gap measure” during the tight reserve months of March to July this year.