PSALM open to bidding process inquiries

MANILA, Philippines - The Power Sector Assets and Liabilities Management Corp. (PSALM) said it welcomes any inquiry on the bidding processes for the assets of the National Power Corp. (Napocor).

“PSALM is open to any inquiry on why the Naga (Cebu) plant is being privatized as an IPPA (independent power producer administration),” PSALM president Mandy Ledesma said.

House Deputy Speaker Lorenzo Tañada III warned earlier of more escalations in the cost of electricity as certain players in the power sector have allegedly been engaging in questionable sales and bidding of power plants with PSALM.

Tañada issued the warning after receiving reports on alleged anomalous selling and bidding of power plants that are being facilitated by PSALM, a government-owned company created under the Electric Power Industry Reform Act (EPIRA) tasked to handle the privatization of government power plants.

Under the EPIRA, the privatization or sale of Napocor’s generating power plants to several companies will trigger competition on the generation side. In addition, its privatization will allow government to shift the burden of ensuring continuous financing for the construction, operation and maintenance of hugely capital-intensive power generating plants to the private sector.

But 10 years after EPIRA’s implementation, only a few players own the privatized assets.

Tanada insisted that “PSALM should hold in abeyance the Naga IPPA bidding until it has clarified issues regarding how the bidding rules have been designed.”

Based on a land lease agreement, Salcon Power Corp. was given the right to top by five percent whatever is the highest bid for the Naga IPP, it was learned.

“Can PSALM explain the right to top given to SPC through the land lease agreement? If that is the case, no interested bidder in his right mind will even bother participate. They will all be discouraged,” Tañada said.

“We have the highest electricity rates in Asia at P8.14 per kilowatt-hour. This is a major reason why our industries are hardly competitive. EPIRA failed to arrest the financial hemorrhage of the PSALM and Napocor,” Tañada said.

Ledesma, on the other hand, said “the right to top has been put in place under land lease agreements to address concerns of bidders of power assets and to maximize value of these plants.”

“In case one decides to prevent the bidding of the Naga plant, anyone may file a case for injunction before the Supreme Court as stated in Sec 77 of the EPIRA,” the PSALM executive said.