Government on track with sale of power assets despite setbacks

MANILA, Philippines - The Aquino administration is on track with the privatization of state-owned power assets despite setbacks encountered over the years since Congress approved the landmark power reform law that mandated the privatization of the power sector.

In an interview on Friday on the sidelines of the Annual Reception for the Banking Community hosted by the Bangko Sentral ng Pilipinas (BSP),  Finance Undersecretary Jose Emmanuel Reverente, head of the Privatization Group, said the privatization of power assets is on target and is seen to continue on the back of improving investor interest.

“I’m optimistic it will still continue. I am optimistic we are on track….We’ve done several rounds already we’ve done what works. We know how to package the deals. We’re confident we’ll get the transactions done,” Reverente said.

He cited the success of the Power Sector Sector Assets and Liabilities Management (PSALM) Corp. in the privatization process including the sale of the 218-megawatt Angat hydropower plant to K-Water Resources Corp. of Korea, among other transactions.

Reverente also expressed optimism that the sale of the 982-MW Agus-Pulangi hydropower plants in Mindanao would finally push through after years of opposition.

“It will be easier now because of the anticipation that we will have better business climate (because of the peace and order situation) and better payment performance…so there’s more appetite from the business sector to invest,” he said.

PSALM still needs to sell several power plants with a total capacity of 1,600 to 1,700 megawatts and it expects to raise $3.2 billion to $3.4 billion from the sale of the remaining assets, which are lined up for privatization up to 2017.

PSALM is the entity created by the Electric Power Industry Reform Act (EPIRA) of 2001, the law that restructured the power industry by privatizing the assets of the National Power Corp. (Napocor).

Napocor had been a huge thorn on the government’s side for decades due to its P500 billion debt to creditors which the government had to absorb in 2005 to bailout the bleeding firm.

Napocor’s power assets include plants and contracted capacities of independent power producers.

According to the Department of Energy, as of June 2012, the government has privatized generating plants with a total aggregate capacity of 4,115.2 MW.