PSALM may postpone sale of Palinpinon, Panay power plants

The Power Sector Assets and Liabilities Management Corp. (PSALM) is looking at the possibility of postponing the sale of the 192.5-megawatt (mw) Palinpinon and the 146.5-mw Panay power plants to end-January 2008.

PSALM vice president Froilan Tampinco told reporters over the weekend that this is one of the options being explored by the asset management firm as they have yet to resolve the issue of geothermal resources supply contract (GRSC) to be attached to the sale of the Palinpinon package.

The Joint Congressional Power Commission (JCPC), Tampinco said, was supposed to tackle this issue in a meeting last Friday but “the GRSC was not discussed”.

“We are assessing our options. One of the options is to hold the bidding of Palinpinon on January next year. We should have something decided by Monday (Dec. 17),” Tampinco said.

The sale of Palinpinon package was moved to Dec. 19 from Dec. 5 due to the unresolved GRSC concern.

The ability of PSALM to meet its 50-percent privatization target for 2007 hinges on the sale of Palinpinon.

So far, PSALM has only sold about 42.8 percent of generation assets in Luzon and Visayas.

If the 50-percent target is not met this year, the projected 70-percent privatization level for 2008 is also likely to be adjusted.

PSALM said that as much as it wanted to push through with the sale of Palinpinon package, it needs the resolution by JCPC of the GRSC issue.

Tampinco said they could not proceed with the sale of the Palinpinon geothermal facility without the steam supply contract would be attached which would need a JCPC approval.

PSALM and Napocor earlier announced a 225-mw supply contract would be attached to the sale of Palinpinon.

But sources said the level of transition supply contract was reduced to 205mw.

“Only Palinpinon will be allotted 205-mw supply contract and Panay will not be allocated a TSC as this may result to higher rates since it is a diesel-run plant.

 But the sources said these are all preliminary discussions and PSALM will finalize the supply contract level once it decides on the date of the Palinpinon bidding.

The existence of GRSC will ensure that the winning bidder will have a steady supply of fuel to run the Palinpinon power plant.

The Palinpinon geothermal power facilities supply about 60mw of power to Panay to augment the power supply in the island.

Commissioned in 1983, the Palinpinon geothermal power plant I and II use geothermal steam supplied by the Philippine National Oil Co.-Energy Development Corp. whose 60-percent government stake was recently turned over to First Gen. Power Corp.

The Palinpinon power plant supplies 18 percent to 20 percent of the electricity demand in the Cebu-Negros-Panay-Bohol-Leyte-Samar Grid.

The Panay Diesel Power Plant 1 and 3, on the other hand, are the only land-based facilities of National Power Corp. in the island. These diesel-run power plants are used to provide ancillary services such as backup power, load following, system frequency, and voltage regulation.