PSALM prepares to sell Agus, Pulangi hydropower plants

MANILA, Philippines - The Power Sector Assets and Liabilities Management Corp. (PSALM) will prepare for the sale of Agus and Pulangi hydropower plants by the second half of 2009, a top PSALM official said.

PSALM president and CEO Jose Ibazeta, in an interview by Oxford Business Group, said they would make necessary preparations for the privatization of these two big hydro assets this year.

“Preparations for the sale of the Agus and Pulangi hydropower complexes will commence by the second half of 2009, with the actual asset sale to be conducted in 2011,” Ibazeta said.

Under the EPIRA of 2001, the government can sell these two huge hydro assets 10 years after the passage of the power law.

Napocor’s Mindanao Generation currently operates Agus Hydroelectric Power Complex.

The Agus has seven facilities with total capacity of over 700 megawatts.

The first Agus plant, Agus 6, was created in 1953. The newest of the Agus power plant is Agus 1 which went online in 1992.

Pulangi which is located in Bukidnon and has 255 MW capacity, commenced operations in 1985.

Ibazeta said they are also planing to bid out all the National Power Corp. -independent power producers (Napocor-IPPs) contracts, which are expected to expire within the next two years.

Under the Electric Power Industry Reform Act (EPIRA), PSALM is required to appoint IPPAs to manage and control Napocor-IPP plants until such time that the contracts have expired.

Based on earlier proposals, the IPPAs will handle the contracts of Napocor with total 4,221 MW capacity.

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.

But the PSALM chief said the scheduled sale of assets will still depend on the market situation.

“These plans, as which PSALM’s overall schedule for the privatization of generation assets, depend on a confluence of factors such as investors’ interests and plant-specific concerns,” Ibazeta said.

PSALM is optimistic it could meet the 70 percent privatization level target this year as this will allow the start of open access.

Open access will give bulk electricity users with more than one MW requirement to choose where to source their power needs.

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