Gov’t mulls transfer of San Pascual power plant contract to Sucat

The government is contemplating the transfer of the San Pascual co-generation power plant’s contract to the Sucat power plant, industry sources said.

The plan, they said, is part of the contract renegotiation with the San Pascual proponents, the US-based power firms Chevron-Texaco and Edison Mission Energy.

The San Pascual contract was supposed to be terminated but the Power Sector Assets and Liabilities Management Corp. (PSALM) was apparently apprehensive to pay the termination fees which may amount to millions of dollars.

PSALM was created under Republic Act 9136 or Electric Power Industry Reform Act EPIRA) to absorb all the assets and liabilities of Napocor. It is also in charge of the privatization and sale of the IPP contracts of the state-run power firm.

San Pascual was made to pay a performance bond, which is equivalent to a portion of the contract price, when it signed the power purchase agreement (PPA) contract with Napocor.

On Sept. 2002, Edison Mission Energy pre-terminate its PPA with Napocor for the San Pascual co-Generation plant.

The San Pascual project was supposed to take up the remaining 300 megawatts (MW) from the 3,000 MW Malampaya deep water gas-to-power project. The 2,700 MW were distributed among the 1,200-MW Ilijan power plant of Napocor and Korea Electric Co (Kepco); and the 1,000-MW Sta. Rita and 500-MW San Lorenzo power plants of the Benpres group.

The San Pascual project, however, did not materialize given the existing excess capacity in the power system.

The diesel-fired Sucat plant, which was decommissioned a few years ago, is now being eyed to be converted into a gas facility and will serve as an anchor load to justify the construction of a gas pipeline as part of the natural gas downstream development program of the government.

Sources said it would be easy for the government to just assign the contract from San Pascual to Sucat since it already has 25-year agreement with Napocor. This plan would enable the government not to pay the penalties for not meeting the PPA contract with San Pascual.

Sources said it could be the easiest and fastest way to get an investor to run and convert the Sucat power plant and avert a possible power shortage in Luzon in 2008. It takes about four to five years to put up a new power plant.