DOE assures investors on sale of Napocor assets

MANILA, Philippines - The Department of Energy (DOE) has assured investors in the country’s power sector that the privatization of the National Power Corp. (Napocor) assets and contracts will be pursued.

 “We will be pushing through with the bidding for the Naga power plants by June or July,” Energy Secretary Jose Rene Almendras said as big power producers urged government to sustain its privatization efforts.

Earlier, the Philippine Independent Power Producers Association (PIPPA) said the government should not wane on its efforts to put the Napocor assets in private hands.

Almendras, on the other hand, stressed the IPP contracts of the Unified Leyte geothermal plants are also likely to be disposed off by the third quarter of this year.

He said the Power Sector Assets and Liabilities Management Corp. (PSALM) , which is tasked to handle the privatization of Napocor assets, is currently threshing out the issue of how the Unified Leyte plants will be privatized.

The energy chief said they are also in discussions with Congress on the privatization of Agus-Pulangi hydropower complex which, under the Electric Power Industry Reform Act (EPIRA), should be auctioned off 10 years after the passage of the power bill. EPIRA was passed on June 26, 2001.

The privatization of Napocor assets and contracts is crucial for the government to cut off on Napocor’s debts.

“The completion of the privatization program is necessary to check the further accumulation of debts because, historically, the remaining generation assets and the IPP plants operate at a loss. Further delays in the privatization program, on the other hand, may increase the amount of the indicative shortfall,” PSALM said.

As of end-2010, an estimated $4.85 billion was collected out of the generated privatization proceeds, of which $4.84 billion was used to pay down Napocor’s obligations.

Collection of the remaining privatization proceeds amounting to $16.07 billion, including interest, will continue until 2029.

A total of 30 assets, which include 26 generating plants and four decommissioned facilities, have been successfully bid out by PSALM to private entities. Twenty of these 30 assets represent 91.73 percent of PSALM-owned capacities in the Luzon and Visayas grids.

Moreover, PSALM has assigned the contracted capacities of five IPPs to IPP administrators (IPPAs). This covers 67.59 percent of PSALM’s contracted capacities in the Luzon and Visayas grids.

The remaining generation assets held by PSALM include Power Barges 101-104, the Agus-Pulangi hydroelectric power plant, and the Malaya thermal power plant. The decommissioned plants on its auction list include the Sucat thermal power plant and the Bataan Thermal Power Plant.

PSALM will also transfer to new IPPAs Napocor’s contracted capacities in the following IPPs: Naga, Unified Leyte, Western Mindanao Power Corp., Southern Philippine Power Corp., Mindanao coal-fired power plant and Mt. Apo geothermal power plants.