PSALM assures IMF of meeting privatization goal

The Power Sector Assets and Liabilities Management Corp. (PSALM) has assured the International Monetary (IMF) that the privatization targets for the country’s power assets are on track.

“The privatization of the government’s power assets is on track and we are optimizing the use of the privatization proceeds to reap maximum benefits for the Filipino people,” PSALM president Jose C. Ibazeta said.

Ibazeta met recently with IMF representatives to discuss power sector financial operations, particularly the outlook for 2007 and projections and plans for 2008.

“We informed the IMF regarding the status of our privatization efforts and how this will affect our financial projections for 2008,” Ibazeta said.

By the end of November this year, PSALM has successfully bid out about 43 percent of the total generating capacities in Luzon and Visayas against the 70 percent requirement for open access and retail competition.

Among the major assets sold were the 600-megawatt Masinloc coal-fired power plant, 600-mw Calaca coal-fired power plant and the 175-mw Ambuklao-Binga hydroelectric power plants auctioned off in July, October and November, respectively.

“Our commitment to meet the 70-percent privatization target for the generating assets is undiminished even if there is a proposal to amend the EPIRA (Electric Power Industry Reform Act) to lower the threshold from 70 percent to 50 percent,” Ibazeta told the IMF delegation.

PSALM also expects to finalize its review of the appropriate structure for the selection of independent power producers administrators (IPPAs).

“The bidding for the IPPAs is both complex and unprecedented, with no international experience to draw upon. However, we are confident that we will be able to issue the transaction documents for the bidding of the Luzon IPPA by the first quarter of 2008,” Ibazeta said.

Under the EPIRA, the privatization of 70 percent total generating capacities of Napocor generation plants and the transfer of control and management of 70 percent of the contracted output of Napocor IPPs to IPPAs are pre-requisites for open access and retail competition, which is seen to lead to cheaper electricity for consumers.

Ibazeta also updated the IMF team on the privatization proceeds, which include the full payment on the Magat hydroelectric plant by SN Aboitiz Power (SNAP) last October.

“We will maximize the use of the privatization proceeds by pre-paying Napocor’s debts,” he said.