A PSALM official, who requested anonymity, said that while the Department of Justice (DOJ) had already issued an opinion favoring the re-assignment of the San Pascual PPA, the process should still involve a public bidding.
"Based on PSALM board’s decision, we cannot go on a negotiated sale approach, we still have to bid it (San Pascual PPA) out," he said.
This decision will be an unwelcome development for Korean Electric and Power Corp. (KEPCO) that had earlier indicated plans to expand its capacity by 330 MW on condition that PSALM would allow them to contract the San Pascual’s 300 MW PPA.
The PSALM official said aside from KEPCO, there were also some proposals that would allow San Pascual’s PPA to be attached to a combined cycle power plant.
"We have received numerous alternative proposals for the use of San Pascual’s PPA. Aside from Kepco, there are also proposals to attach it to Limay combined cycle plant for the latter to be converted into a natural gas facility," he said.
There were also earlier proposals to attach such supply contract to Sucat power plant to make it more attractive to investors.
Kepco Philippines Inc. (Kephilco), the Philippine arm of Kepco, said it is willing to spend some $400 million to expand its Ilijan natural gas-fired power plant by 330 megawatt (MW) from the existing 1,200 MW if they can acquire the PPA from San Pascual.
The San Pascual project was supposed to take up the remaining 300 MW from the 3,000-MW Malampaya Deep Water Gas to Power project. The 2,700 MW were distributed to 1,200-MW Ilijan Power Plant; Lopez-owned 1,000-MW Sta. Rita and 500-MW San Lorenzo .
The construction of San Pascual plant did not materialize due to the existing excess capacity in the power system during that time. But the proponents of San Pascual have already signed a PPA with Napocor. Thus, it is already part of the renegotiations of IPP’s PPA contracts with Napocor.
Based on the plan, PSALM will buy out the 25-year PPA contract of the Napocor with San Pascual and assign the contract to Sucat power plant which is envisioned to be converted into a gas-fired power facility.
The government had been working out the pre-termination of the contract of San Pascual with US-based Edison Mission Energy since September 2002.