PSALM to seek board approval on Mindanao coal supply privatization

by Myrna Velasco – February 10, 2016

from Manila Bulletin

State-run Power Sector Assets and Liabilities Management Corporation (PSALM) will be seeking the go-signal of its board for a firmed up privatization schedule for the supply contract of the 210-megawatt Mindanao coal fired power facility in Misamis Oriental.

“PSALM will seek the approval of its Board for the privatization of Mindanao coal in the second semester of 2016,” company officer-in-charge Lourdes S. Alzona told reporters.

She said this has been anchored on the fact that the Department of Energy (DOE) did not pose any objection to their proposed schedule.

Alzona qualified that the department’s concurrence had been based “on forecast that power supply situation in Mindanao will normalize by then.”

The offer of the facility’s power supply deal to an independent power producer administrator (IPPA) should have been consummated November last year, but timelines skidded due to several considerations on the asset’s privatization terms.

The privatization firm has set colatilla on non-adjustment of the facility’s rates over a certain period – a condition that it had apprised its interested bidders on.

PSALM previously indicated there have been six investor-groups that lodged their interest on the asset. It remains to be seen though if their appetite is sustained until final bidding date.

The Mindanao coal plant is currently under the operation and management of German firm Steag State Power, Inc. The facility was developed under a 25-year build-operate-transfer (BOT) scheme with state-run National Power Corporation.

Their power supply pact lasts for 25 years, effective at the plant’s declared commercial operation in November, 2006.

This is the one dangled for privatization to an interested IPPA, which will then manage the trading and selling of the plant’s capacity.

It was the first generating asset that paved the way for further fuel diversification of Mindanao grid – mainly for coal technology as source of its base load power requirement.