Investors in power sector remain bullish on RP

Investors, both local and foreign, are looking past the uncertain political situation and are still keen on the government’s privatization program for the energy sector, the country’s top energy official said.

"We are confident that despite the perceived political tension in the country, local and foreign investors have long-term prospects for investment in mind, specifically in the power sector," said Energy Secretary Raphael M. Lotilla.

Lotilla cited among others, the recent disclosure of Aboitiz Equity Ventures Inc. (AEV) to tie up with Norwegian company SN Power Invest AS in bidding for hydroelectric power projects in the Philippines.

AEV’s subsidiary, Hedcor, now owns the 3.5-megawatt (MW) Talomo plant in Davao, the first power plant to be privatized by the government. The partnership will also allow the companies to share resources and bid for more than one of the assets being privatized by the Power Sector Assets and Liabilities Management Corp. (PSALM).

In July last year, PSALM bid out the 600-MW Calaca coal-fired plant. The auction failed, however, as investors were reluctant to participate without a transition supply contract (TSC) that ensures a ready market for its electricity.

But recently, PSALM officials reported that after the cancelled bid, investors, including foreign companies, have expressed renewed interest in bidding for Calaca despite the absence of a TSC.

"These developments, coming in the wake of current political turbulence, only show that investors can see beyond what is temporary, and are taking a long-term view of the country’s economic prospects," said Lotilla.

The government began privatizing state-owned power plants in March 2004 as part of the restructuring of the power sector.

PSALM has since successfully bid out six power plants, five of which are hydropower. These are Talomo in Davao, the 1.6-MW Agusan plant in Bukidnon, the 1.8-MW Barit plant in Camarines Sur, the 0.4-MW Cawayan plant in Sorsogon, and the 1.2-MW Loboc plant in Bohol. Proceeds from the sale of these hydropower plants amounted to $5.2 million.

PSALM also bid out the 600-MW coal-fired Masinloc plant in Zambales with the winning bid amounting to $561.7 million. Total proceeds from the successful sale of the six plants amounted to $566.9 million, or about P31.75 billion, which will be used to settle a portion of the debts of the National Power Corp.

PSALM is set to privatize seven more hydropower plants. These are the 12-MW Masiway plant, the 100-MW Pantabangan plant, the 360-MW Magat plant, the 75-MW Ambuklao plant, the 100-MW Binga plant, the 246-MW Angat plant, and the 0.8-MW Amlan plant.