PSALM taps independent assessors for Malaya plant valuation

MANILA, Philippines — State-run Power Sector Assets and Liabilities Management Corp. is tapping government or third party evaluators to determine the valuation of the 650-megawatt (MW) Malaya thermal power plant (TPP) so it can proceed with the sale, its top official said.

PSALM has committed to start privatizing the Malaya TPP before the end of the year.

However, it needs to complete the plant’s valuation first before it can finalize the bidding schedule of the power asset, PSALM president and CEO Irene Joy Besido-Garcia said.

“We are hoping to finish privatization by December or January. The thing, though, is we need to do the valuation first. Once we are able to set the timetable for the valuation, we can roll out the dates for the bidding of the Malaya plant,” she said.

“We are still in talks with several third party evaluators, but we might procure the services of one of the GFIs, like DBP (Development Bank of the Philippines),” Garcia said.

Meanwhile, PSALM will no longer put the three-year must-run condition of the power plant in the terms of the Malaya plant sale.

Removing this would make the power asset more attractive to the private sector, Garcia said.

“If you remember, there was an instruction from the DOE (Department of Energy) to put a must-run provision. But then we were looking at the general condition of the plant and the value, and the supply and demand,” she said.

“We are looking at all these factors and we figured it might not be very attractive to bidders if you impose that requirement that they have to run for three years,” the PSALM chief said.

The Malaya power plant was designated as a must run unit (MRU) by the DOE to address supply deficiency when operating power plants in the grid suddenly bog down or become unavailable. 

It will operate as an MRU until the DOE finalizes its privatization schedule.

The Malaya TPP will also be sold on an as is, where is basis and will no longer require the winning bidder to convert the diesel-fired facility to run on coal or liquefied natural gas (LNG).

PSALM had originally set the Malaya auction on March 8, 2017. The sale was reset to March 30, 2017 and then deferred until further notice to take into consideration the DOE policy to ensure sufficiency of the power supply in the Luzon grid.

PSALM is the agency mandated by Electric Power Industry Reform Act (EPIRA) of 2001 to handle the sale of the remaining state-power assets and the financial obligations of Napocor. 

The Malaya TPP is currently being managed by PSALM through an operation and maintenance service contract.   It recently declared Korean firm Soosan ENS Co., Ltd. as the lone bidder for the operation and maintenance contract.

Located in Pililia, Rizal, the facility consists of a 300-MW unit with a once-through type boiler and a 350-MW unit fitted with a conventional boiler.

It was last rehabilitated in 1995 by Korea Electric Power Corp. under a 15-year rehabilitate-operate-manage-maintain agreement.