PSALM sets bid for Napocor IPP deals in August

The Power Sector Assets and Liabilities Management Corp. (PSALM) will bid out the initial batch of independent power producer (IPP) contracts of the National Power Corp. (Napocor) in August, a top company official said.

PSALM president Jose Ibazeta said they have conducted a series of consultations with the Philippine Independent Power Producers Association, potential investors, plant managers of IPPs, distribution utilities and financial institutions before finalizing the terms of reference and bidding rules for the selection of IPP administrators (IPPAs).

Ibazeta said they are also expected to select the IPPAs within the same timetable as the bidding of the IPP contracts.

Under the Electric Power Industry Reform Act (EPIRA), the privatization of at least 70 percent of the total capacity of Napocor’s generating assets and the transfer of the management and control of at least 70 percent of the contracted energy of IPPs in Luzon and the Visayas to IPPAs, are prerequisites for retail competition and open access in the electricity industry.

The state-run asset management firm is taking it slow on the bidding of IPPAs as this will mark the first time this scheme will be tested in the power industry.

“There is no model from any country on which to pattern the privatization of IPPs,” the PSALM official said.

PSALM is currently addressing major concerns and has solicited the input of all stakeholders to fine-tune the terms of reference and bidding rules in time for the Aug. 2008 launch date.

Aside from a report funded under the World Bank-assisted Power Sector Reform Project technical assistance which examines possible structures for the IPPA bidding, PSALM is considering the input from stakeholders in finalizing the structure by which the IPPA is to be tendered.

In addition to the recommendations of the WB-funded report and the input from the consultations, PSALM is drawing from its more than one year trading experience at the wholesale electricity spot market (WESM) to determine the structure and plant portfolios that will encourage investor interest in the bidding.

The energy output of Napocor’s IPP plants is currently being traded by PSALM’s trading teams into the WESM.

Among the IPP contracts with total installed generating capacity of 6,242 megawatts are the 1,200-mw Sual coal facility and the 1,200-mw Kepco Ilijan natural gas facility.

The other power plants are the Limay combined cycle (655-mw), Pagbilao coal facility (735-mw), Subic Power Corp. (116-mw), Hedcor Bacun (29-mw), Luzon Hydro Corp. (75-mw), CBK Botocan (21-mw), CBK Kalayaan (739-mw), Casecnan (150-mw), San Roque (411-mw), Malaya (650-mw) and Bauang Private Power Corp. (226-mw).

The IPPAs will sell the Napocor-IPP contracts through the wholesale electricity spot market or through bilateral contracts.