Salcon turns over Naga plants to gov't

CEBU, Philippines - The Salcon Power Corporation (SPC) formally turned over to the government-run Power Sector Assets and Liabilities Management Corp. (PSALM) the power plants at the Naga Power Plant Complex (NPPC) with yesterday's expiration of its contract to rehabilitate, operate, maintain, and manage the facility.

SPC President Dennis Villareal turned over the plants in simple ceremonies yesterday morning to Atty. Ina Alazas, who represented PSALM. Also present was Napocor division manager Jun Amigable.

SPC vice president for operation Rene Lastimoso, however, said SPC shall continue operation of the plants, which produces 145 megawatts of power under a six-month contract with PSALM.

Lastimoso said that this is to ensure continued operation pending the second round of bidding for a longer service contract for the facility's operation and maintenance.

"We turnover the facility yesterday but another contract for six months was executed for SPC to continue operating and maintaining the power plant while some documents have to be processed yet," Lastimoso told The FREEMAN.

As successor-owner to Napocor pursuant to the Electric Power Industry Reform Act, PSALM procures the fuel requirements of the NPPC while awaiting the asset's privatization.

Villareal and Alazas said entering into an agreement with SPC means minimal disruption of operation of the NPPC. SPC is currently operating the complex pursuant to its outstanding contract with Napocor.

The first bidding for the procurement of the OMSC for the Naga complex was declared a failure by the PSALM Bids and Awards Committee when no bid was received on the bid opening date last Feb. 27, 2012.

Alazas said the negotiated procurement with SPC does not preclude PSALM from pursuing the privatization of the NPPC.

Constructed during the 70s by Napocor, the NPPC houses the 106.8-MW Naga Coal Thermal Power Plants 1 and 2 and the 39-MW Naga Diesel Power Plant of Napocor. During the early 90s, the old power plants kept on conking out and caused extended power outages in Cebu. To solve the crisis, Napocor entered a 15-year "Rehabilitate, Operate, Maintain, and Manage (ROMM) contract" between SPC Power Corp. in 1994. The ROMM was extended to 2012 when it was about to end in 2009.

In October last year, PSALM deferred the privatization of the NPPC to grant the request of the Joint Congressional Power Commission (JCPC).

The JCPC requested PSALM to further review the allegedly unfair and illegal condition known as a "right to top" the highest bid previously granted to SPC in the Land Lease Agreement executed by and among PSALM, Napocor and SPC in 2009.

PSALM recalled that the land lease agreement was executed by and among the parties pursuant to the Asset Purchase Agreement on the Naga Land-based Gas Turbine (LBGT) Plant acquired by SPC through public bidding in 2009.

In the agreement, PSALM granted SPC the right to top the highest bid on the sale or lease of the properties within the vicinity of the LBGT plant in order to give the winning bidder of the LBGT plant the opportunity to expand, subject to the payment of a premium of five percent over the highest bid on said adjacent properties. — (FREEMAN)