PSALM to bid out IPP contracts in early 2008

State-run asset manager Power Sector Assets and Liabilities Management Corp. (PSALM) will bid out the independent power producer (IPP) contracts to IPP administrators in the first quarter of 2008, a top company official said.

PSALM vice president for asset management and electricity trading Froilan Tampinco said they are currently finalizing the terms of reference (TOR) for the bidding.

“We hope to complete the TOR within the year and hold the bidding early next year,” he said.

This early, he said PSALM has also been receiving positive feedback from new entrants in the energy industry to participate in the bidding for the IPPA contracts.

There has been clamor among industry players for the IPPA contracts, now being administered by PSALM, to be transferred to private hands to promote more competition in the industry.

First Gen Corp., the power generation arm of the Lopezes, for instance, has called on the speedy implementation of the plan to bid out the IPP contracts.

“The privatization of the Napocor-IPP contracts has not progressed. We need to move on this quickly,” First Gen president and CEO Federico Lopez said in an earlier interview.

Under the Electric Power Reform Act of 2001, Lopez noted that PSALM has the power to take title to and possession of the Napocor-IPP contracts and to appoint, after public bidding, qualified independent entities who shall act as IPP administrators.

The law further states that retail competition and open access can only be implemented, “subject to the transfer of the management and control of at least 70 percent of the total energy output of power plants under contract with Napocor to the IPP administrators.”

The transfer of the management and control of at least 70 percent of the total energy output of the Napocor-IPP contracts to the IPPAs is expected to translate to more affordable electricity prices for Filipino consumers.

Among the facilities covered by IPP contracts are the major power plants in Luzon with a total installed generating capacity of 6,242 megawatts (MW), the biggest of which is the 1,200-MW Sual coal-fired facility and the 1,200-MW Kepco Ilijan natural gas facility.

The other power plants are the Limay combined cycle (655 MW), Pagbilao coal facility (735 MW), Subic Power Corp. (116 MW), Hedcor Bacun (29 MW), Luzon Hydro Corp. (75 MW), CBK Botocan (21 MW), CBK Kalayaan (739 MW), Casecnan (150 MW), San Roque (411 MW), Malaya (650 MW) and Bauang Private Power Corp. (226M W).

PSALM has hired a number of consultants – Robert Dykstra, Peter Bedson, John Breslin and David Baker of the Lacima Group; Michael Wagner of IPA Energy + Water Consulting; and Richard John Hemmings of Stonelegh Consulting- to oversee the privatization process.

PSALM has earlier obtained a technical assistance grant from the World Bank to assist in developing an IPPA structure and approach for the appointment of IPPAs consistent with the EPIRA and the Napocor Privatization Plan.

The IPPAs will be tapped through a competitive bidding and those targeted are international power industry players and traders to be engaged as IPP administrators.