Napocor funds eng’g study on baseload power projects

State-owned National Power Corp. (Napocor) has allocated some P10 million for the conduct on an engineering study of baseload power projects that will be used as investment guide for prospective private investors interested in building new power plants.

Napocor president Rogelio M. Murga said Napocor is already looking for consultants for the engineering study.

The study will be conducted for four priority sites, namely, Isabela and Ilocos Norte in Luzon, Cebu in the Visayas, and South Cotabato in Mindanao. Specifically, the consultancy services will cover site selection; fuel supply; plant optimization; plant layout; plant design configuration; project cost estimates; and economic and financial evaluation.

Napocor has already conducted pre-engineering studies on the mentioned sites. "The consultancy services shall be used to validate our own findings. We have already gathered and compiled pertinent information and data that will help investors assess the viability of each project. In effect, we have already helped shorten the process. Usually, pre-engineering studies have to be undertaken as bases for feasibility studies. Now, all that is needed is validation," Murga said.

This move is consistent with the Department of Energy’s (DOE) directive that a new consortium would be established for the purpose of setting up new baseload power plants to be funded through internally generated funds.

These power plants are expected to add 250 MW to 400 MW of capacity in Luzon by January 2008. Energy Secretary Vincent S. Perez also announced last week that another consortium will construct a 200-MW baseload merchant power plant in the Visayas, and a 200-MW coal-fired power plant in Mindanao. Said projects will begin commercial operation by 2008 and 2006, respectively.

Republic Act 9136 has effectively prohibited NPC from undertaking new power generation projects to prevent it from incurring new obligations. As a result, the function of the Napocor has been realigned to conducting missionary electrification projects in the remotest areas of the country, to operating and maintaining unsold power generation plants. Napocor’s transmission function has been transferred to the National Transmission Corp. (Transco).

Tasked by the EPIRA to sell Napocor’s generation and transmission assets is the Power Sector Assets and Liabilities Corp. (PSALM), which has sold last month the 3.5-MW Talomo Hydropower Plant in Davao City to private power generator Hydro Electric Development Corp. (HEDCOR).

Thirty-four other power plants are lined up for privatization. For the meantime, the Napocor has been commissioning generator sets for areas that need immediate capacity addition, especially those under the Small Power Utilities Group (SPUG), such as Marinduque, Bantayan and Palawan in March; and Mindoro in April.

In February, Napocor has also started discussions with equipment suppliers of mothballed power plants, in preparation for possible activation in the near future. Through these talks, Napocor is exploring various schemes on how to minimize cost and finance the rehabilitation of these plants; for example, thru supplier credit.