PSALM starts consultations on bid for 2 power plants

MANILA, Philippines - The Power Sector Assets and Liabilities Management Corp. (PSALM) has started public consultations ahead of the bidding process for the selection of independent power producer administrators (IPPAs) for the Sual and Pagbilao coal-fired thermal power plants.

The IPPAs will manage the contracted capacities of the government in the IPP plants. The initial bidding has been scheduled on May 27.

PSALM said the National Power Corp. (Napocor) has a contracted capacity of 1,000 megawatts for the Sual power plant that will expire in 2024, and a 700-MW contracted capacity in the Pagbilao power plant that will end in 2025. Both power plants are now being operated by Japanese-owned Team Energy, which took over from bankrupt US energy giant Mirant, under a build-operate-transfer (BOT) agreement.

Under Republic Act 9186 or the Electric Power Industry Reform Act (EPIRA), PSALM is tasked to handle the finances and privatization of the Napocor power plants and contracts.

In the IPPA selection process for the Sual-Pagbilao plants, PSALM will use the ownership approach. This scheme will allow the bidders, when preparing their bid submissions, to factor in the contracted energy that they will assume, including the subsequent ownership of the power plant.

PSALM pointed out that a bidder could only win one IPP contract to eliminate concerns regarding market dominance since the 1,700-MW combined contracted capacity of the two power plants would already represent about 40 percent of the contracted capacities that the government would privatize.

Following the appointment of the Sual and Pagbilao IPPAs, PSALM will bid out the IPP contracts for the Casecnan, Bakun and San Roque hydropower plants, which have contracted capacities of 140 MW, 70 MW and 95 MW, respectively.

Since these BOT projects involve other government agencies, PSALM might employ a different approach and commercial structure for these contracts.

The third phase in the IPPA selection process will involve the sale of the 1,200-MW contracted capacity in the Ilijan natural gas plant, which has a take-or-pay contract with its gas suppliers.

For IPPs that have energy conversion agreements and/or operations and maintenance contracts that expired in 2008 or will expire by 2010, PSALM explained that these plants would undergo the regular privatization process. These include the Limay combined-cycle, Malaya thermal and Bauang diesel power plants. – Donnabelle Gatdula