3 bidders still keen on Sual, Pagbilao IPP contracts

MANILA, Philippines - Three bidders remain keen on participating in the selection of independent power producer administrators (IPPAs) for the coal-fired Sual and Pagbilao plants, the Power Sector Assets and Liabilities Management Corp. (PSALM) said.

PSALM has set the new bidding date to June 26, 2009 from the earlier schedule of May 27. The three investor groups have been formally informed of the new bidding schedule. 

PSALM said in setting the bidding date, it considered the complexity of the IPPA selection process which it described as the first of its kind, thus has no precedent in any jurisdiction.

The winning IPPAs will manage the contracted capacities of the National Power Corp. in the Sual and Pagbilao power plants, which are at 1,000 megawatts (MW) and 700 MW, respectively. Both power facilities are being operated by Japanese firm Team Energy under a build-operate-transfer agreement.

The 1,700-MW aggregate output of the two power plants represent around 34.7 percent of the contracted capacity in Luzon and the Visayas, falling 35.3-percentage point short of the 70-percent requirement to privatize the contracted capacities under IPP contracts and meet the last precondition for open access and retail competition as stipulated in the Electric Power Industry Reform Act.

PSALM emphasized that a bidder could only win one IPP contract, a precautionary measure against market dominance.

While PSALM did not identify the prospective bidders, it hinted that one is a local company and two foreign firms, one of whom is a Japan-based firm.

Under the law, PSALM should be able to privatize 70 percent of Napocor’s generating assets in Luzon and the Visayas and 70 percent of Napocor contracts through IPPAs before it could proceed with open access.

PSALM has lined up six IPP contracts for privatization this year. The IPPAs will manage the contracted capacities of the government in IPP power plants.

After Sual and Pagbilao, PSALM will bid out next the IPP contracts for the Casecnan, Bakun and San Roque hydropower plants, which have a contracted capacity of 140 MW, 70 MW, and 95 MW respectively.

The third phase in the IPPA selection process will involve the sale of the 1,200-MW contracted capacity of the Ilijan natural gas plant, which has a take-or-pay contract with its gas suppliers.

PSALM expects to generate an estimated P13 billion for the IPP privatization.