Winning Tiwi-Makban bidder must rehabilitate 2 units

The winning bidder for the Tiwi-Makiling-Banahaw geothermal complex will be required to rehabilitate two units of the Makban plant despite declining steam volume, bid documents showed.

The Power Sector Assets and Liabilities Management Corp. (PSALM), the state agency tasked to oversee the privatization of power assets, has reportedly imposed the mandatory rehabilitation works for  units five and six of the Makban facility as contained in the bidding terms discussed in the second pre-bid conference last April 17.

“PSALM still maintained the mandatory rehab of Makban five and six despite the declining steam availability,” one of the prospective bidders said.

But it was learned that PSALM is still evaluating requests to make the rehabilitation works optional.

PSALM has likewise reportedly attached a 240-megawatt (mw) transition supply contract (TSC) to the sale of the Tiwi-Makban plants for offtakers other than the Manila Electric Co. (Meralco).

A TSC allocation assures the buyers of the power plants of a captured market, thus allowing PSALM to command a better price for the power assets to be sold. 

The rehabilitation of the units is in line with the mandated “Filipinization” of the facilities’ steam supplier – Chevron Geothermal Philippines Holdings Inc.

The bid covers the generating assets, which are being offered on an “as is, where is” basis, structures and improvements, spare parts and general plant equipment of the Tiwi and Makban power plants.

It also covers the steam field facilities and the geothermal resources sales contract or the supply contract between PSALM and the Philippine Geothermal Inc. (now Chevron Geothermal). 

This is contained in a settlement agreement entered into by Chevron with state-run National Power Corp. (Napocor) in 2004. This agreement is part of the understanding to resolve a long-standing legal dispute over the non-renewal of the steam supply contract which lapsed in the late 1990s.

According to industry sources, among those that have signified interest to join the bidding for the geothermal complex include AP Renewables Inc. of the  Aboitiz Group, Intergen, Philippine National Oil Co.-Energy Development Corp., (PNOC-EDC) San Miguel Energy Corp., AES Corp., Suez Tractebel, First Gen Corp., Korea Electric Power Corp., One Energy of China Light & Power and Mitsubishi of Japan.

The Tiwi-Makban complex will be the first geothermal facilities to be sold this year. Next in line is the 192-mw Palinpinon geothermal plant, which was lumped with the 110-mw Panay diesel plant.

PSALM is currently threshing out issues on geothermal supply with PNOC-EDC for Palinpinon which may be auctioned off in the latter part of the year.