Malaya plant rebidding awaits natural gas policy

MANILA, Philippines — The government is awaiting the issuance of the country’s natural gas policy before it can re-bid the 650-megawatt (MW) Malaya Thermal Power Plant (TPP) in Rizal, a ranking Department of Energy (DOE) official said.

DOE Undersecretary Felix William Fuentebella said the Power Sector Assets and Liabilities Management Corp. (PSALM) is waiting for the Philippine Natural Gas Regulation (PNGR) for inclusion in the terms of reference for the privatization of the Malaya plant.

“PSALM is waiting for the policy because one of the conditions for Malaya is once natural gas is available in the country, it should be converted into a gas-fired plant,” he said.

The PNGR is the policy framework that will guide the development of the natural gas industry in the country in preparation for the depletion of indigenous natural gas supply from Malampaya by 2024.

The policy has gone through a series of public consultations and is expected to be finished by end-October, Fuentebella said.

Earlier, the DOE said the direction for the Malaya plant is to convert it from running on diesel fuel to coal or liquefied natural gas (LNG) to become a baseload plant.

Baseload power plants are power generating facilities that can operate reliably and efficiently generating electricity 24 hours a day, seven days a week. This can be served by coal, LNG and nuclear plants.

Another reason for the conversion is that diesel will have additional burden in the form of taxes once the Tax Reform for Acceleration and Inclusion (TRAIN) bill is passed into law, Fuentebella said.

PSALM, the entity created by the Electric Power Industry Reform Act (EPIRA) to privatize government-owned assets, set the auction originally on March 8 this year. The asset was to be sold on an “as is, where is” basis.

The sale had been reset to March 30 and then deferred until further notice to take into consideration the DOE policy to ensure sufficiency of the power supply in the Luzon grid.

Currently, the Malaya TPP, which runs on diesel, 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.