MANILA, Philippines - The National Power Corp. (Napocor) will no longer pursue this year the P2.6-billion upgrade of a key hydropower plant in Mindanao.
The postponement was due to a new financing scheme approved by the National Economic and Development Authority (NEDA), a Napocor official who requested anonymity said.
“We cancelled the project because of the changes in the financing scheme approved, which is from bid plus financing to on-lending scheme,” the source said.
In March, Napocor announced that the upgrade of the Agus 6 (units 1 and 2) hydroelectric plant in Lanao del Norte will start in June. However, the first bidding was set on July 6, which was pushed back to August 6 before being scrapped altogether.
The source said the Napocor and the Power Sector Assets and Liabilities Management Corp. (PSALM) will still have to resolve an issue on the financing.
“Now, the money of PSALM will be used,” the source said.
“The Bids and Awards Committee of Napocor wants confirmation from the PSALM’s board of directors that PSALM will finance the project,” he added.
Approved budget for the contract is P2.598 billion. The power plant’s capacity will be increased to 69 megawatts (MW) or 34.5 MW per unit. To date, Units 1 and 2, which were commissioned in 1953, are generating only 20 MW each from its 25-MW capacity.
The bidders, foreign engineering firms Weir Plc, Andritz Group and Guangxi Construction Engineering Group, earlier wanted the government’s guarantee for the project cost.
Under the auction’s previous rules, the winning bidder will shoulder the financing for the upgrade of Agus 6, hindering the firms’ cash flow.
PSALM will start paying the winning contractor only six months after the hydropower plant restarts operations, which is in the next three years.
The source said the new invitation to bid, which will be published next year, will immediately allow the winning bidder to tap the funds as they need it.
The 30-month long upgrade will increase the generation capacity of the power plant and extend the units’ operation life for a minimum of 30 years.
In September 2011, the NEDA approved the upgrade plan for Agus 6. The project was subject to two failed competitive biddings in 2008. The newest of the Agus power plant is Agus 1, which went online in 1992.
The upgrade is also seen as a solution to the power crisis in electricity-starved Mindanao, which is reeling from 30 minutes to four hours of rotating brownouts due to supply shortage.