PSALM opens sale of Mindanao plant

MANILA, Philippines - The Power Sector Assets and Liabilities Management Corp., (PSALM)  the government agency overseeing the sale of state-owned power assets, has started another privatization activity for the year.

Through an invitation to bid published in newspapers yesterday, PSALM commenced the selection and appointment of an independent power producer administrator (IPPA) for the 200 megawatt coal-fired thermal power plant in Mindanao.

Operated by Steag State Power Inc. of Germany, the Misamis Oriental-based plant is under a 25-year build-operate-transfer (BOT) power purchase agreement scheme, which ends in 2031.

PSALM president Emmanuel Ledesma said interested parties have until April 7 to submit a letter of interest in order to participate in the bidding process.

The IPPA selection for the output of the Mindanao coal follows the launch of a similar activity for the output of the Unified Leyte geothermal power plants two weeks ago.

“The Mindanao Coal IPPA selection is the second privatization activity of PSALM for this year, following the launch of the IPPA selection for the bulk energy of the Unified Leyte Geothermal Power Plants (ULGPP) two weeks ago,” Ledesma said.

Interested parties must also submit a confidentiality agreement and undertaking with PSALM and pay a non-refundable participation fee of P120,000 either in cash, manager’s check or cashier’s check by April 13.

Furthermore, according to the timetable, the pre-bid conference, which primarily discusses PSALM’s bidding procedures, is set on May 6, while due diligence for prospective bidders will begin on April 13, until two business days before the bid submission deadline on Sept. 23.

PSALM, created by the Electric Power Industry Reform Act of 2001 (EPIRA), the landmark power reform law, has been privatizing existing power plants, decommissioned plants as well as IPPAs, which all comprise state-owned power assets.

As of October 2014, PSALM has generated $19.9 billion from the privatization of these assets, according to a status report on the implementation of EPIRA.

Of the $19.9 billion in proceeds, actual collection amounted to $9.3 billion.

One of the big-ticket power assets privatized last year is the Angat Hydroelectric Power Plant (HEPP) in Bulacan, which PSALM sold to Korea Water Resources Corp. (K-Water).

PSALM still needs to sell several power plants with a total capacity of 1,600 to 1,700 MW and expects to raise $3.2 billion to $3.4 billion from the sale of the remaining assets, which are lined up for privatization up to 2017.

The National Power Corp. (Napocor) owns the power assets privatized by PSALM as well as those in the pipeline.

Napocor had been a huge thorn on the government’s side for decades due to its P500 billion debts to creditors, which the government had to absorb in 2005 to bail out the bleeding firm.