PSALM set to complete Limay power plant sale

MANILA, Philippines – The State-run Power Sector Assets and Liabilities Management Corp. (PSALM) expects to complete the sale of the Limay power plant before the end of this month, a top company official said.

“We are hoping to complete the privatization of Limay within the month.” PSALM president Jose Ibazeta told reporters yesterday 

He said after the Limay sale, PSALM would be concentrating on the sale of other power barges.

The Aboitiz Group and San Miguel Energy Corp. (SMEC) have earlier expressed interest to bid for Limay. But while the Aboitizes remain keen on the asset,, the San Miguel power subsidiary decided to forego its bid for the diesel-fired power facility.

“It was dropped because converting it was expensive. There might be future negotiations because there’s no one interested in it. It’s right beside Petron’s refinery. Even before I was pushing to bid for it, but when we looked at the rates to convert it –it turned out to be expensive,” SMEC consultant Alan Ortiz said.

Ortiz, however, did not dismiss the possibility of San Miguel’s renewed interest in LImay.

“At the same time, you’ll have to build a new industry around it. You cannot just do it to serve your power requirements. We need to go all out into a natural gas industry – using LNG (liquefied natural gas). And that’s a whole new investment. We’d like to but the economics must support the reality,” he added.

During the pre-bid conference for Limay, PSALM had informed interested bidders that it has extended its operations and maintenance (O&M) agreement with Alstom Philippines Inc. to ensure the maintenance of the plant until its eventual turnover to the winning bidder. 

The winning bidder will then have the option to pre-terminate the O&M contract without incurring penalties, as long as it can assure PSALM of the closure of the Limay plant sale. 

In 1992, the government, through the National Power Corp., entered into an O&M agreement with ABB Power Generation Ltd. for the operation, maintenance, and repair of the Limay plant.

In 2000, Alstom became Napocor’s counter-party of National Power to the O&M agreement, which expired in April 2008 for Block A and in October 2008 for Block B.

Commissioned in 1993, the Limay power plant comprises two 310-megawatt modules, Blocks A and B, which consist of three 70-MW gas turbines and a 100-MW steam turbine, respectively.

Located in Limay, Bataan, approximately 145 kilometers west of Manila, the plant is designed to meet the base-load demand of the Luzon grid.