Government defers CBK power plant privatization

MANILA, Philippines — The government is pushing back the privatization of the Caliraya-Botocan-Kalayaan (CBK) hydroelectric power plant (HEPP) to focus first on the sale of another hydropower plant under Independent Power Producer (IPP). The Asian Development Bank has completed the study on the privatization options for the CBK HEPP, according to Power Sector Assets and Liabilities Management Corp. (PSALM) president and CEO Irene Joy Besido-Garcia.

The study covers the setting of the minimum bid price for the asset, among others.

“They presented to us the study. However, the focus now is really to privatize the Casecnan Multi-Purpose Project (CMPP) first before we go into privatization of the CBK,” Besido-Garcia said.

In the 37th Electric Power Industry Reform Act (EPIRA) Implementation Status Report, the Department of Energy said the privatization process for the CBK HEPP and CMPP would commence this year.

Originally, PSALM was eyeing to privatize CBK HEPP first before CMPP because the latter has a more complicated ownership structure.

PSALM, through the National Power Corp. (Napocor), only owns 60 percent of the Casecnan HEPP, while the remaining 40 percent is under the National Irrigation Administration (NIA).

However, the government has scheduled the sale of Casecnan HEPP first, with the recent concurrence of the Department of Finance and the Department of Energy.

The CMPP is covered by a build-operate-transfer (BOT) contract between the NIA and the independent power producer CE Casecnan Water and Energy Company Inc., which sells the plant’s contracted energy of 228 gigawatt-hours (GWh) until April 5, 2022.

Under CE Casecnan, the plant started commercial operations in 2002 and will expire on Dec. 11, 2021.

The CMPP is covered by a power purchase agreement (PPA) between NIA and PSALM, wherein NIA will transfer 60 percent of the ownership of CMPP to PSALM by the end of the PPA.

To ensure its continued operations once it is turned over to the government in December, PSALM recently announced it would bid out next month a one-year operations and maintenance (O&M) contract for the CMPP.

The ultimate plan is to pursue PSALM’s privatization of CMPP in 2022, consistent with the clear instruction in the EPIRA.

The CMPP is a combined irrigation and power generation project producing 165 megawatts (MW) in Pantabangan, Nueva Ecija. The two runoff weirs and intake structures of CMPP constructed along the Casecnan and Taan Rivers in Peleway, Municipality of Alfonso Castañeda, Nueva Vizcaya.

Meanwhile, CBK HEPP is currently under an IPP administrator (IPPA) contract with CBK Power Co. Ltd. until Feb. 7, 2026. The IPP administers the plant’s contracted capacity of 797.92 MW.

PSALM is the agency mandated by EPIRA to handle the sale of the remaining state-power assets and the financial obligations of Napocor.

It reduces debts through the privatization of government-owned assets, collection of the proceeds and its effective implementation of its liability management program.

As of end-June, PSALM’s debts reached P367.9 billion, down by P14 billion. This consists of outstanding debts amounting to P267.4 billion and IPP lease obligations of P100.5 billion.