PSALM starts sale of Napocor's IPP contracts

The Power Sector Assets and Liabilities Management Corp. (PSALM) has started the process of selling the independent power producer (IPP) contracts of the National Power Corp. (Napocor).

PSALM said it would start accepting letters of interest by Nov. 21, 2008 for the 700-megawatt (MW) Pagbilao and the 1,000-MW Sual coal-fired power plants.

Interested parties will be given the time to undertake their due diligence activities from Nov. 11 to 24.

The bidding proper has been set on Feb. 20, 2009.

Under the bidding rules, a bidder must submit a bid for both the Pagbilao and Sual contracts as an IPP adminstrator (IPPA).

The bids, however, are separate and distinct from other, hence, one bid each must be submitted for the Pagbilao and the Sual IPPA. There shall be separate awards for the Pagbilao IPPA and Sual IPPA.

A bidder can only be declared the winning bidder for either the Pagbilao IPPA or Sual IPPA.

IPPAs are qualified independent entities that will administer and manage the energy output contracted by the Napocor with IPPs operating in Luzon and the Visayas.

The invitation to bid (ITB) for the IPPA selection was originally scheduled on Oct. 22 to 24, and was moved to the first week of November 2008. This was further moved back to February 2009.

With the issuance of the ITB, PSALM will open its data room to prospective bidders who will have access to pertinent information on the IPPA bidding process.

The investors, however, will have to comply with PSALM’s bidding procedures indicated in the ITB, including submitting a letter of interest, signing a confidentiality agreement and paying a participation fee.

PSALM was trying to accelerate the privatization of the energy contracts of Napocor with IPPs through the selection of IPP administrators because this is one of the preconditions to open access and retail competition.

It is believed that the implementation of open access and retail competition will eventually translate to more reasonable electricity prices for Filipino consumers.

PSALM will use the ownership scheme as a model to the IPP contract sale. — Donnabelle Gatdula