Napocor to pursue P2.6-billion upgrade of Agus plant

MANILA, Philippines - The National Power Corp. (Napocor) will pursue early next year the delayed P2.6-billion repair and upgrade of a key hydropower plant in Mindanao.

Napocor will minimize the effects of the repair on the grid through sequenced works, an official said.

“We will be coming up of the announcement of the new schedule within the year,” Napocor president Froilan Tampinco told reporters.

Actual bidding will be conducted in January or February next year “unless the prospective bidders ask for an extended or an added period,” he said.

In March, Napocor announced that the upgrade of the Agus 6 (Units 1 and 2) hydroelectric plant in Lanao del Norte will start in June. However, the first bidding set on July 6, was pushed back to Aug. 6, before being scrapped altogether.

Tampinco said the delay resulted from the change in the terms of reference on financing the project.

“What we planned to bid out was the winning bidder will finance the repair,” he  said.

However, he said the Power Sector Assets and Liabilities Management Corp. said it will instead fund the project through an on-lending scheme, adding  it had to go back to the National Economic and Development Authority for approval.

Approved budget for the contract is P2.598 billion. The power plant’s capacity will be increased to 69 megawatts (MW) or 34.5 MW per unit. To date, Units 1 and 2, which were commissioned in 1953, are generating only 20 MW each from its 25-MW capacity.

Under the auction’s previous rules, the winning bidder will shoulder the financing for the upgrade of Agus 6, hindering the firms’ cash flow.

The bidders, foreign engineering firms Weir Plc, Andritz Group and Guangxi Construction Engineering Group, earlier wanted the government’s guarantee for the project cost.

Tampinco said the awarding of the contract is scheduled three months after the bidding.

“When you start the rehabilitation, you will not shut down all plants,” Tampinco said, adding that the shutdown will be sequenced to minimize the impact on the grid.

The 30-month upgrade will increase the generation capacity of the power plant and extend the units’ operation life for a minimum of 30 years.

“In the long run, we will have a better plant with an extended life,” Tampinco said.

In September 2011, the NEDA approved the upgrade plan for Agus 6. The project was subject to two failed competitive biddings in 2008. The newest of the Agus power plant is Agus 1, which went online in 1992.

The upgrade is also seen as a solution to the power crisis in electricity-starved Mindanao, which is reeling from rotating blackouts due to supply shortage.