PSALM attaches 400-MW supply deal to sale of Tiwi-Makban power complex

The Power Sector Assets and Liabilities Management Corp. (PSALM) has attached more than 400 megawatts in the power supply contract (PSC) for the sale of the 747-mw Tiwi-Makban geothermal power complex in June.

PSALM said the allocation of a substantial supply contract to the Tiwi-Makban bidding will boost the sale process of the power plant complex.

“We are confident of gaining the full support and participation of the prospective investor groups in the upcoming bidding exercise for Tiwi-Makban,” PSALM president Jose Ibazeta said.

The PSC, which is part of PSALM’s commitment to accelerate the power privatization program of the government, is expected to optimize the value of the Tiwi-Makban power plants.

PSALM made the announcement during the second pre-bid conference held two weeks ago to provide the bidders another opportunity to discuss the PSC allocation and issues on the geothermal resources sales contract (GRSC).

All of the nine investor groups interested in bidding for the Tiwi-Makban geothermal plant attended the second pre-bid conference.

PSALM presented to the bidders the privatization framework covering the transition period until the effectivity of the GRSC. 

The major provisions of the GRSC, such as the scope and pricing, were also discussed to provide the bidders more insights on the intricacies of the contract. 

Since the steam field assets and generating plants will be sold as one package, Chevron Geothermal Philippines Holdings Inc. (CGPHI), the entity which operates and maintains the Tiwi-Makban geothermal facilities, also made a presentation on the generation and steam production history and the current production and future opportunities on the Tiwi-Makban geothermal fields. 

PSALM also explained the underlying relationship between and among the major stakeholders that include PSALM, National Power Corp. (Napocor), CGPHI and the buyer under the existing transition agreement.

Due to the flurry of questions and concerns raised by the bidders, particularly on the restoration of Makban units 5 and 6 which is an important requirement under the asset purchase agreement and the GRSC, PSALM told the prospective bidders that it might hold another consultation to thresh out these critical issues.

With the sale of the Tiwi-Makban geothermal complex, PSALM expects to reach a significant output that will bring it closer to the 70 percent privatization target for the generating assets of Napocor in Luzon and the Visayas.

This will also fulfill one of the preconditions for implementing open access and retail competition in the Philippine electricity industry.