PSALM, SPCC near accord on power deal

The Power Sector Assets and Liabilities Management Corp. (PSALM) is finalizing the termination of the power purchase agreement (PPA) with San Pascual Cogeneration Co. (Philippines) Ltd. (SPCC).

In a faxed message addressed to PSALM president Edgardo Del Fonso dated April 4, a copy of which was obtained by reporters, SPCC’s partner San Pascual Cogeneration Co. International B.V. (SPCCI) officials Patrick R. Hale and Byron G. Wong have indicated willingness to terminate the PPA pending resolution of some terms and considerations.

The deal with SPCC is one of the PPAs being renegotiated by PSALM in an effort to narrow down the stranded cost of the National Power Corp. (Napocor) which will eventually be passed on to electricity end-users.

PSALM, under Republic Act 9136 (Electric Power Industry Reform Act), handles the sale of Napocor’s assets and liabilities, including its contracts with independent power producers (IPPs). Under the law, PSALM will have to absorb about P180 billion worth of stranded contracts with IPPs.

The SPCC is a joint venture between US-based power giants Edison Mission Energy and Chevron-Texaco.

In 1997, SPCC signed a 25-year power purchase contract with Napocor in the hope that it could get the 300-megawatt (MW) excess capacity from the Malampaya Deep Water to Gas Power project.

The Malampaya project could fire up to 3,000 MW power. Of this capacity, some 1,200 MW will go to Ilijan project; 1,500 MW to Sta. Rita and 500 MW to San Lorenzo.

The remaining 300 MW should have been contracted by SPCC were it not for some unresolved issues encountered by the power plant’s investors and Napocor on when the plant should start to operate.

Earlier, the Department of Energy (DOE) confirmed that the SPCC project has been cancelled. This might have prompted the PSALM to work on the termination of the PPA between Napocor and SPCC.

Another PPA being eyed for termination is that of Enron Power Corp., a local subsidiary of Enron Corp., a US-based power giant which declared bankruptcy.

PSALM is willing to buy out Napocor’s contract with Enron Power if the latter would give more than 12-percent discount.

The Enron deal will involve two BOT power plants amounting to a total of $250 million, namely, the 105-megawatt (MW) Pinamucan-Enron oil-based power plant in Batangas and the 108-MW Subic-Enron 2 Unit 1-8 in Olongapo, Zambales.