TransCo asset sale to raise P9.8B for government — DOE

The National Government expects to raise some P9.8 billion from the sale of the sub-transmission assets (STAs) of the National Transmission Corp. (TransCo), a Department of Energy (DOE) report showed.

The forecast proceeds from the sale of the STAS is significantly higher than TransCo’s previous estimate of P5 billion.

But TransCo officials explained the company would likely sell only P5 billion worth of assets despite the higher sales estimate of DOE.

"We made the (P5 billion) projection based on the assumption that there would likely be a lot of electric cooperatives (ECs) which are expected to buy the assets, but may not have the capability to buy these STAs due to financial problems," a TransCo official said.

The STAs involves a total of 7,500 circuit-kilometers of mostly 69-kv (kilovolt) transmission lines and 1,600 MVA (mega volt-amphere) of substation capacity, at cost.

Based on the DOE’s status report on the implementation of the Electric Power Industry Reform Act of 2001 (EPIRA), the sale of TransCo’s STAs involves around 120 sale packages that concern 115 interested distribution utilities (DUs), mostly electric cooperatives (ECs).

"Estimated cost of these assets is at P9.8 billion," the status report said.

Under the EPIRA, the DOE noted that the STAs will be operated and maintained by TransCo until their disposal to qualified DUs which are in position to take over the responsibility for operating, maintaining, upgrading, and expanding the assets.

As of end-December 2005, TransCo has already disposed of STAs worth P1.132 billion, equivalent to about 23 contracts signed with DUs and ECs since January 2004.

The EPIRA also states that all the sale contracts for STAs should be approved by the Energy Regulatory Commission (ERC). To date, the ERC has approved only three contracts.

TransCo is urging the ERC to approve the contracts saying proceeds from the sale of the STAs is considered "unfinished sales" because of the lack of approval.

Among the latest contracts signed by TransCo is the P86-million lease-purchase agreement with the Agusan del Norte Electric Cooperative (Aneco) and a cash purchase deal with the Dagupan Electric Corp. (Decorp).

Aneco will pay P58.85 million for 599 structures along the Butuan-Lumbocan, Butuan-Cabadbaran, and Cabadbaran-Santiago 69-kV lines spanning a total of 63 circuit kilometers. The 20-percent downpayment or P11.77 million would be due upon the contract’s approval by the ERC with the balance to be settled in 16 and a half years.

Decorp, on the other hand, will pay P27.34 million for 237 structures along the Labrador-Binmaley and Binmaley-Calasiao 69-kv lines spanning a total of 24 circuit kilometers. The private distribution utility will pay the amount in cash within ten calendar days after the ERC’s approval.

Both cooperatives will finance the purchase of TransCo’s STAs through loans from the Development Bank of the Phils. which offers lower interest rates.

The contract with Decorp is TransCo’s first sale contract with a distribution utility in Pangasinan and the seventh in Luzon.

With the wholesale electricity spot market (WESM) nearing commercial operations, TransCo president Alan T. Ortiz said electric coops and DUs have realized the importance of owning the sub-transmission lines.

Ortiz said that the key to lower power rates and the success of the WESM is the empowerment of the electric coops and DUs and crucial to this empowerment is the ownership of the sub-transmission lines so they can maximize their revenues.