PSALM to bid out 3 more contracts

MANILA, Philippines - After successfully bidding out the independent power producer administrator (IPPA) contracts for the Sual and Pagbilao power plants, the Power Sector Assets and Liabilities Management Corp. (PSALM) is setting another auction for three more IPPA contracts by November this year.

PSALM, an entity created to oversee the privatization of National Power Corp. (Napocor) assets and contracts, has issued the invitation to bid for the 345-megawatt San Roque, 70-MW Bakun and 30-MW Benguet hydroelectric power plants.

Based on the ITB a due diligence process was scheduled on Sept. 1, a pre-bid conference on Sept. 30, and the bid proper on Nov. 11.

These plants are under build-operate-transfer (BOT) contracts between Napocor and a consortium of Japanese firm Marubeni Corp. and US company Sithe Energies for San Roque and Aboitiz Power Corp. (APC) for Bakun and Benguet.

Interested investors have until Sept. 18 to submit letters of interest for the hydro plants.

These three hydro IPPA contracts account for 11 percent of Napocor’s total third party contracted output.

Last week, San Miguel Corp.’s energy investment arm San Miguel Energy Corp. and Aboitiz subsidiary Therma Luzon Inc. were chosen as the IPPAs for Sual and Pagbilao contracts, respectively.

PSALM said the success of the IPPA biddings would usher the era of open access, wherein bulk power users will be given an option to choose where to buy their requirements.

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

The winning IPPAs will now manage the contracted capacities of Napocor in the Sual and Pagbilao power plants. Both power facilities are being operated by the Japanese-controlled TeaM Energy under a build-operate-transfer agreement.

The 1,700-MW aggregate contracted capacities of the two power plants represent around 34.7 percent of the contracted capacity of the IPP contracts for Luzon and the Visayas.

PSALM emphasized that a bidder could only win one IPP contract to allay concerns regarding market dominance.

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.