TransCo to sell over P1 billion in assets

MANILA, Philippines - The state-run National Transmission Corp. (TransCo) expects to sell an additional P1 billion worth of its sub-transmission assets (STAs) to power distribution utilities (DUs) nationwide.

Based on the latest Electric Power Industry Reform Act (EPIRA) report, it was noted that TransCo has existing discussions with at least 22 DUs for sale and purchase of the STAs.

“Meetings and negotiations with some 22 DUs nationwide are underway to further push for the sale of STAs. Included in this drive is the negotiation for the sale of about 1,000 circuit-kilometers of sub-transmission lines worth P954 million,” the report said.

Under the EPIRA, TransCo is mandated to dispose off the STAs to ensure reliability of the transmission network.

The EPIRA also provides that the STAs shall be operated and maintained by TransCo until their sale to qualified DUs that are in a position to take over the responsibility for operating, maintaining, upgrading and expanding the assets.

As of end-April 2010, TransCo has been able to divest P3.42 billion worth of STAs including 325 MVA transformers to 56 DUs. Included in the sale packages are 40 lease purchase agreements with 32 electric cooperatives (ECs) under concessional terms amounting to about P2.46 billion.

The balance of over P960 million represents sales to private DUs. Some 31 sale contracts have been approved by the ERC amounting to P1.49 billion as of end-April this year.

The sale of TransCo’s STAs involves some 131 sale packages with 107 DUs, mostly electric cooperatives, expressing interest. In cases where more than one DU is connected to a transmission line, there is a need for the connected and qualified DUs to form a consortium to buy and thereafter operate the asset.

The STAs involved a total of about 6,200 circuit-kilometers comprising mostly of 69-kv transmission lines and 1,600 MVA of substation capacity.

The estimated cost of these assets is placed at about P7.6 billion based on Dec. 31, 2007 net book values.

From Nov. 1, 2009 to April 30, 2010, five sale contracts amounting to about P185 million were signed by TransCo. These include: Visayan Electric Co., P7.83 million; Manila Electric Co. (Meralco) P85.84 million; Leyte 4 Electric Cooperative Inc., P42.21 million Cami-guin Electric Cooperative Inc., P38.74 million; and Don Orestes Electric Cooperative Inc., P10.4 million.

TransCo, after leasing out its assets to the National Grid Corp. of the Philippines (NGCP), has been left with a single task — to oversee the privatization of STAs.

Privatizing the STAs will, in the long run, be beneficial to power customers. By purchasing these assets, distributors will be able to improve their operations and expand their franchise area, thereby serving more customers.

On the other hand, TransCo will be focusing on seeing to it that the concessionaire will improve the reliability and efficiency of the high-voltage transmission network.