Bidding for Palinpinon, Panay power plants faces delay

The Power Sector Assets and Liabilities Management Corp. (PSALM) said it may not be able to meet its privatization target this year due to the possibility of delaying the bidding for the 192.5-megawatt (mw) Palinpinon 146.5-mw Panay power plants.

PSALM vice president Froilan Tampinco admitted that the issue on the geothermal resources supply contract (GRSC) to be attached to the sale of Palinpinon has not been discussed yet at the meeting with the Joint Congressional Power Commission (JCPC).

“We are assessing our options.  We should have something decided by Monday next week (Dec.17),” he said.

The sale of the power plant package, originally scheduled on Dec.5 but was moved to Dec. 19 was supposed to complete the 50-percent target privatization level of the government this year.

At present, PSALM has privatized 42.8 percent of the National Power Corp.’s generation assets in Luzon and the Visayas.

Should PSALM fails to meet the 50 percent target this year, there is also the possibility of not meeting the 70 percent privatization target set for 2008. The 70 percent level is a precondition for open access and retail competition in the power industry.

Tampinco said the Palinpinon/Panay sale will not be possible without the GRSC that would need  JCPC approval.

PSALM and Napocor earlier announced that they would be attaching a 225-mw supply contract to the sale of Palinpinon. But sources said these are all preliminary discussions and PSALM will finalize the supply contract level once it decides on the date of the Palinpinon bidding.

Earlier, PSALM has hinted that they may move the scheduled bidding of Palinpinon package due to some unresolved issues.

It said the revised agreement will assure the winning bidder of steady fuel to run the Palinpinon power plant and is expected to enhance the transaction, translating into higher proceeds.

The Palinpinon and Panay power plants are located in the Visayas region, with the Palinpinon facility strategically situated between the islands of Panay and Cebu. Palinpinon supplies 60 mw to Panay to augment the power supply in the island.

Commissioned in 1983, the Palinpinon geothermal power plant consists of two power stations: Palinpinon I and II. The plant uses geothermal steam supplied by the Philippine National Oil Co.-Energy Development Corp. whose 60 percent government stake was recently turned over to First Gen Power Corp.

The Palinpinon power plant supplies 18 percent to 20 percent of the electricity demand in the Cebu-Negros-Panay-Bohol-Leyte-Samar Grid.

The Panay diesel power plant, on the other hand, consists of the Panay 1 and 3 plants, which are the only land-based facilities of Napocor in the island.

These are peaking plants that provide ancillary services such as backup power, load following, system frequency, and voltage regulation.