Government’s geothermal assets to be sold with steam sales contracts

The geothermal assets jointly run by the state-owned NPNOC-Energy Development Corp. (PNOC-EDC) and National Power Corp. (Napocor) will be sold with an attached steam sales agreement (SSA), industry sources said.

Sources said the Joint Congressional Power Commission (JCPC), approved in principle to endorse the privatization plan of the Napocor geothermal assets with a SSA from PNOC-EDC.

JCPC is created by Republic Act 9136 or Electric Power Industry Reform Act (EPIRA) of 2001 to oversee the restructuring of the power sector including the privatization of the Napocor assets.

According to sources, the JCPC will put to a final vote this week the resolution to formalize the privatization mode for Napocor geothermal assets.

PNOC-EDC supplies steam to the Napocor geothermal power plants, namely the 720-megawatt Tongonan 1-3 plants; 192-MW Palinpinon and 108-MW Mt. Apo geothermal complexes; which were identified for sale under the EPIRA.

Sources said the JCPC’s endorsement is consistent with the provisions of the EPIRA which stated that individual SSA shall be attached to the plants’ sale package "to ensure the availability of a reliable steam supply to a particular geothermal plant."

JCPC has directed PNOC-EDC and the Power Sector Assets and Liabilities Management Corp.(PSALM) to submit within 45 days for the approval of the JCPC the SSA packaged with each of the geothermal power plants.

Sources said the JCPC resolution also states that"each SSA shall be assigned to the private sector buyer of the corresponding geothermal plant."

The JCPC, the sources said, also resolved that the other components of PNOC-EDC’s geothermal assets, such as the common pipelines and surface infrastructure assets would be disposed of at a later time.

It was expected that the new owners of the geothermal power plants would be the buyers of these other geothermal-related assets.

Under the EPIRA, "the steamfield assets and generating plants shall not be sold separately. They shall be combined and each geothermal complex shall be sold as one package through public bidding."

So far, there are at least 11 companies that have expressed keen interest to participate in the PNOC-EDC privatization.