Aboitiz to bid on gov’t power plants (9/27/2010)

Listed Aboitiz Power Corp. said it is still interested in bidding for the independent power producer administrator (IPPA) contracts of the remaining generation assets of the government.

Aboitiz Power president and chief executive Erramon I. Aboitiz told reporters that the company is awaiting the go signal of the Power Sector Assets and Liabilities Management Corp. (PSALM) for privatization.

“We’re still interested in Unified Leyte, we’re interested in the [hydroelectric power plants of the National Power Corp. (Napocor)] whether it be Caliraya, Botocan, Kalayaan or the one in Mindanao, Agus, if they sell it. We’re just waiting for PSALM to continue their privatization,” said Mr. Aboitiz.

PSALM, the government body mandated by the government to privatize Napocor’s generating assets, indefinitely deferred the privatization of the 640 megawatt (MW) Unified Leyte geothermal power plants in Leyte and the 149 MW Naga power plant complex in Cebu to give more time for bidders to study new terms in the contract. PSALM is also in the process of rescheduling the rebidding of the 650 MW Malaya thermal power plant in Pililia, Rizal after the failure of the first bidding in June when only one bidder submitted its documents.

The agency said the PSALM board is still discussing the new bidding dates for the three generating assets.

Privatizing at least 70% of the Napocor’s IPPA contracts is one of the preconditions to usher in open access and retail competition in the power industry under Republic Act no. 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001. PSALM achieved 68% of this target after the sale of hydropower IPPAs last December.

PSALM breached the 70% threshold for privatization of the state’s generating assets, another precondition for open access, in July 2009 after the successful sale of the 600-MW Calaca coal-fired plant to DMCI Holdings, Inc.

The successful bidding out of any of these three assets would push the threshold for open access. Open access allows distribution utilities choice in power generation units to source its energy.

PSALM is the government body mandated by EPIRA to manage the privatization of the state’s power assets as well as to handle the liabilities of Napocor.

http://www.bworldonline.com/main/content.php?id=18383

Read Full Post »

PSALM to Sell 2 Power Barges (9/20/2010)

The Power Sector Assets and Liabilities Management Corporation, the agency tasked by the government to manage and sell its energy assets, (PSALM) is scheduled to privatize two power barges late this year.

“So far, we are set to put in auction block Power Barges 101 and 104 by December, 2010 to January, 2011,” said PSALM vice president for asset management and electricity trading Conrad Tolentino.

These Power Barges have a total capacity of 128 megawatts (MW).

Tolentino said they do not expect to privatize any time soon the remaining big ticket items such as Unified Leyte geothermal power and the Naga power plant’s contracts.

The privatization of the contracted capacities were scheduled for this year but have been opposed by some sectors. “No definite date so far for Unified Leyte and Naga,” he said.

Aside from these power barges, other Napocor power facilities yet to be privatized by PSALM are: 982 MW Agus-Pulangi Hydroelectric complex, 850 MW Sucat thermal plant and 630 MW Malaya thermal plant.

PSALM has also yet to bid out the contracted capacitities of the 131.8 MW Naga power plant, 559 MW Unified Leyte geothermal capacities, 728 MW Caliraya-Botokan-Kalayaan hydro plants, 100 MW Western Mindanao Power Corporation, 50 MW Southern Philippines Power Corporation, 200 MW Mindanao Coal plant, 92.52 MW Mt Apo 1 and 2 geothermal project and 165 MW Casecnan hydropower plant.

The Department of Energy (DoE) had earlier said it is not keen on pushing through with the sale of the Agus-Pulangi power plants.

PSALM has successfully sold 26 generating plants and five decommissioned plants. It had also successfully bidded out 91.73 percent of the generating assets in the Luzon and Visayas grids.

The agency also privatized 68.7 percent of the total contracted capacities of the Luzon and Visayas grids to the independent power producer administrators.

PSALM has generated $3.47 billion from the sale of the generating assets and $3.23 billion from the IPP contracts.

http://www.mb.com.ph/articles/277873/psalm-sell-2-power-barges

Read Full Post »

Firm wants to upgrade plant — DoE (9/08/2010)

A PRIVATE sector proposal to rehabilitate the Agus hydropower plant in Mindanao has been received by the Department of Energy (DoE), and the agency wants to get permission to lead the project.

The plant is supposed to be privatized, and the government is barred by the law that mandated the sale of state power assets from entering power generation anew.

“There is a technical proposal to rehabilitate the [plant] but we’re not allowed to do it yet. We have to go ask permission from Congress if the sale can be deferred and we can rehabilitate it … This is about P2 billion,” Energy Secretary Jose Rene D. Almendras said.

The proposal calls for the capacity upgrade of the plant’s sixth unit, he said.

The DoE said last month it wanted to retain ownership of both the Agus and Pulangi hydropower plants in Mindanao to allow the government to manage electricity prices in Mindanao. The department argues that if pricing is managed in Mindanao, more investors will be encouraged to invest in the power sector.

Under the Electric Power Industry Reform Act of 2001, all government power assets should be privatized to allow “open access” to electricity.

The Agus hydropower plant in Lanao del Sur has seven units, with a combined generation capacity of 700 megawatts (MW). The first of seven units was constructed in 1953 and the newest one began operation in 1992.

The Pulangi hydropower plant in Bukidnon generates 255 MW. It began operations in 1985.

The DoE said the rehabilitation of the power plants requires board resolutions from the Power Sector Assets and Liabilities Management Corp. and the National Power Corp., as well as the department’s endorsement to Congress.

Various groups have called for the removal of the Agus and Pulangi plants from the privatization list, fearing an increase in power prices in Mindanao.

http://www.bworldonline.com/main/content.php?id=17346

Read Full Post »

Energy dep’t explores settlement of attached agencies’ obligations (9/07/2010)

THE ENERGY department is exploring the best arrangement for it to settle about P932.12 billion in obligations of agencies attached to it.

Energy Secretary Jose Rene D. Almendras said during a public hearing yesterday of the House of Representatives Committee on Energy that, of the total, the Power Sector Assets and Liabilities Management Corp. (PSALM) accounted for P785 billion; National Power Corp. (Napocor), P47.97 billion; and the National Transmission Corp. (TransCo), whose operations were taken over last year by the National Grid Corporation of the Philippines, P99.15 billion.

“It’s a combination of loans and contingent liabilities. The reason why I want to look at contingent liabilities is because we’re trying to do balance sheet engineering [sic]. I’m trying to get the cost so we can talk about it,” Mr. Almendras said in an interview after the hearing, referring to loans guaranteed by the national government.

He said Department of Energy (DoE) is allowed to recover up to half of the obligations through the universal charge in consumers’ bills; the rest will have to be shouldered by the government.

Under a recent filing of PSALM with the Energy Regulatory Commission, nearly P500 billion in stranded debts and stranded contracts will need to be recovered through the universal charge over 17-25 years. But this amount involves only PSALM and Napocor debts.

Mr. Almendras said DoE is currently discussing with the Department of Finance how it can best pay off the obligations.

But he stressed the need for payment terms to be as light as possible, saying the government has to “stagger it, stretch it out.”

PSALM Vice-President Conrad S. Tolentino said via text that the obligations of PSALM would have been greater without the privatization of assets. “It would have been bigger without the privatization. The $10-billion proceeds, more or less, would instead be additional debt or obligations of the Napocor,” said Mr. Tolentino.

Many of the debts of PSALM stem from the old debts of Napocor and its generating assets that the former took over after privatization.

http://www.bworldonline.com/main/content.php?id=17280

Read Full Post »

Agus-Pulangi privatization deferred to attract investors (8/19/2010)

PRIVATIZATION of the Agus-Pulangi hydroelectric power plant in Mindanao has been deferred by the Department of Energy (DoE) in hopes of managing electricity prices in the region to attract investors.

Energy Secretary Jose Rene D. Almendras told reporters that the DoE is recommending to Congress to amend the Electric Power Industry Reform Act of 2006 (EPIRA) to freeze privatization of the hydroelectric plants.

“I’ve informed PSALM (Private Sector Assets and Liabilities Management Corp.) to recommend that Agus and Pulangi not be sold and explain to the Congress why we do not want to sell it yet,” Mr. Almendras said.

The Agus hydropower plant has seven units with a combined generation total of 700 megawatts (MW). The first of the seven units was constructed in 1953 and the newest one started operation in 1992. Agus is located in Lanao del Sur.

The Pulangi hydropower plant in Bukidnon generates 255 MW and began operations in 1985. Both hydroelectric plants were scheduled to be privatized next year.

PSALM vice-president for electricity trading Conrad S. Tolentino said in a phone interview with BusinessWorld that it would follow instructions from the DoE.

“We look to the DoE for directions. If we need to sell then we have to go through our board, we just look to instructions to us,” Mr. Tolentino said.

One of the companies that expressed interested in the sale of the two hydropower plants Aboitiz Power Corp., through its joint venture with SN Power Corp., said the halting in privatization “has nothing to do” with them.

“If the government announces that it will sell it, then we will evaluate if we are interested. The decision really has nothing to do with us,” said Luis Miguel O. Aboitiz, Aboitiz Power group vice-president for energy, in a separate telephone interview.

Mr. Almendras said the freeze in the privatization of the two plants could mean the pricing can be managed in the region and attract additional generating capacities from investors.

“Investors have said they will build plants if the right pricing structure is in place. The solution for Mindanao is the appropriate use of hydroelectric plants not just for supply but in the pricing equation,” Mr. Almendras said.

Groups in Mindanao earlier requested that Agus-Pulangi not be included in the assets sold under the EPIRA for fear of an increase in electricity prices.

Under the EPIRA, all government generating assets should be privatized to push open access to electricity.

http://www.bworldonline.com/main/content.php?id=16166

Read Full Post »

FDC seeks stop to sale of remaining NPC assets (7/30/2010)

THE FREEDOM from Debt Coalition has urged the government to suspend the sale of the remaining assets of National Power Corp., pending a comprehensive review of the Electric Power Industry Reform Act (Epira).

“It will be truly judicious if the scheduled asset sale of the Power Sector Assets and Liabilities Management Corp. (PSALM) is put on hold indefinitely and a review process on Epira set into motion,” said FDC secretary general Milo Tanchuling.

Aside from postponing the bidding for the independent power producer administrator (IPPA) contract covering the 640-MW Unified Leyte geothermal facilities, FDC is also urging the government to hold the privatization of the Angat hydroelectric power plant in Bulacan and the Agus-Pulangi hydro complexes in Mindanao.

FDC, along with electric cooperatives and national and local consumer groups, claimed that electricity rates would “certainly go up once these assets are sold to private players while communities lose control of their most valuable natural resource for energy and water.”

FDC reiterated its call for the creation of a review panel on Epira.

In a statement, the group said its calls for review of the Epira were ignored by the former administration despite the “glaring” indicators of its evident failure in bringing down electricity rates and ensuring reliability of supply.

Once put in place, the FDC said it wanted the review panel to look into why electricity rates continue to rise.

FDC also wants to know whether PSALM’s privatization thrust is consistent with Epira’s declared policy; why the wholesale electricity spot market is not working; why there is no de-monopilization happening in the industry; why Napocor is still saddled with so much debt; if the Energy Regulatory Commission is keeping true to its mandate and if there are other alternatives outside of the Epira frame.

FDC also said that the review process must involve not only industry experts but also consumers.

http://business.inquirer.net/money/topstories/view/20100729-283916/FDC-seeks-stop-to-sale-of-remaining-NPC-assets

Read Full Post »

JCPC asked to probe power privatization pitfalls (6/25/2010)

The alleged privatization pitfalls committed in the assets of the National Power Corporation (NPC) finally reached the corridor of the Joint Congressional Power Commission (JCPC) which is being asked to investigate the manner in which some facilities were disposed of and on the transactions sealed with private sector takers.

It was gathered from the Congressional oversight body that a resolution will be drafted and will be routed for sponsorship, so that “investigation can be initiated upon the takeover of the new administration and at the start of the next Congress.”

The administration of President-elect Benigno Simeon Aquino III is being put to task to look at the privatization deals entered into by the Power Sector Assets and Liabilities Management Corporation (PSALM) as well as the level of indebtedness it incurred in the last several years.

The incoming Chief Executive is set to name his Energy Secretary anytime from now. As of weekend, the name hinted to media taking the Department of Energy’s helm is Jose Rene Almendras, who is currently the president of Manila Water Company.

As far as privatization of power assets are concerned, the divestments sought to be probed include those on: The sale of the Panay-Bohol diesel power plants; divestment of the Malaya thermal facility, the fixed exchange rate allegedly warranted in the concession agreement for the National Transmission Corporation (TransCo)’s privatization; as well as the operation and maintenance agreement (OMA) sealed between PSALM and NPC which left the latter always short of cash in efficiently operating the power facilities still under its charge. It will then be up to the JCPC to subpoena the documents and establish the veracity of issues raised against the privatization of the identified power assets. In the summary of issues forwarded to the JCPC, it was indicated that the sale of the Panay and Bohol plants without an attached transition supply contract (TSC) left NPC having insufficient capacity to meet its contractual obligations to supply power to its Panay customers. It has been emphasized that PSALM’s failure to attach TSC to the assets is in flagrant violation of the Privatization Guidelines under Rule 23 Section 4 (I) of the implementing rules and regulations of the Electric Power Industry Reform Act (EPIRA), which provides that: “The sale, transfer or disposition of NPC assets shall not affect existing NPC contractual obligations.”

PSALM and NPC reportedly entered into a memorandum of agreement with SPC Power (formerly Salcon), the new owner of the Panay-Bohol plants, wherein the deal entails NPC-PSALM paying P3.00 per kilowatt-hour to the power generated by SPC using fuel supplied and paid for by NPC. It was noted though that this violates EPIRA’s provision prohibiting NPC from entering into any new form of power purchase agreements.

On the sale of the decommissioned Manila thermal power plant, it was pointed out that PSALM agreed to a relatively lower price of US$3.0 million in the negotiated deal with buyer Gagasan Steel. The deal also included spare parts which should have fetched separate junk value of about $2.0 million (as appraised). The resulting sale price then was lower than the US$5.0 million offered by the same buyer (Gagasan Steel) in the third auction which was declared as “failed bid” by PSALM.

In the TransCo privatization, it was reported that a deal was entered into with the National Grid Corporation of the Philippines (NGCP) whereby PSALM agreed to a fixed conversion rate of the remaining dollar payments (still amounting to $.30 billion out of the $3.95-billion winning bid) that NCGP was obligated to pay for the rest of the 25-year concession deal.

It is also being brought to the next administration’s knowledge that the fixed conversion rate agreed upon was at P42 to US$1.0, which was actually lower than the prevailing rate of P45-$1.00 when the deal was closed in January 2009. Given that, it is alleged that the deal would have been disadvantageous to the government and will result in losses because PSALM itself will need dollars in servicing its debts.

http://www.mb.com.ph/articles/263602/jcpc-asked-probe-power-privatization-pitfalls

Read Full Post »

‘Zero’ valuation set by PSALM for Malaya plant pressed for review (6/24/2010)

The ‘zero’ value set by the Power Sector Assets and Liabilities Management Corporation (PSALM) for the 650-megawatt Malaya thermal power facility is being pressed for review, with other concerned government-run energy agencies vouching on the continuing operational efficiencies of the facility.

It was gathered that the various energy agencies in the PSALM Board are not necessarily in agreement on the ‘zero valuation’ for the asset. The Malaya plant is due for turnover to the government January next year after the lapse of the National Power Corporation’s contract with Korea Electric Power Corporation.

Had the appointment of Independent Power Producer Administrator (IPPA) for the Malaya plant turned out successful last week, it was noted that PSALM, or the government for that matter, not have been able to fetch the best privatization value for the assets.

It was explained that PSALM treated the asset to have been ‘fully depreciated’, that is in spite of the fact that the generating units can still be operated efficiently, especially when there are baseload capacity being taken out from the system.

Nevertheless, after the visit of some members of the PSALM Board at the Malaya facility last June 14, it was gathered that moves to review the facility’s valuation has been pressed.

In documents culled from plant operator KEPCO Philippines Corporation, it was noted that after the generating units were rehabilitated in 1998, capacity restoration brought the two units back to aggregate 650 megawatts from 430 MW prior.

It has been emphasized that the rehab done on the plant’s two generating units improved their operational efficiencies to about 34-35 percent from a lower base of 28 to 32 percent.

The operator also vouched on the critical role that the facility assumed and continues to play in plugging capacity shortages in the Luzon grid, especially during the simultaneous shutdown of power plants early this year.

“In early 2010, Malaya played a significant role to prevent brownout in Luzon grid,” Kepco Philippines has told PSALM Board officials who visited the facility. In those instances, the Korean firm emphasized that the plant “accomplished emergency role without any delayed start and equipment trouble.”

http://www.mb.com.ph/articles/263400/zero-valuation-set-psalm-malaya-plant-pressed-review

Read Full Post »

Leyte consumers ask PSALM to defer sale of plants in Leyte (6/23/2010)

Power consumers in Leyte have appealed to state-led Power Sector Assets and Liabilities Management Corp. (PSALM) to defer the bidding for the right to manage the supply contracts of the Unified Leyte geothermal plants pending a review of the government’s privatization policies and pricing scheme in the power sector.

In an open letter signed by members of the Multi-Sectoral Electrification Advisory Council of the Leyte II Electric Cooperative, Inc. (Leyeco II), PSALM was asked to give the incoming Aquino administration a chance to review the government’s privatization policies and pricing scheme in the power sector.

Members of the council are worried that bidding out the independent power producer administration (IPPA) contracts for the Leyte plants would lead to higher electricity rates in the province. The council said the government has been maximizing its revenue from the sale of the power assets of the National Power Corp. (Napocor) by setting a reserve price based on the market price of brand-new power plants.

“It is very unfortunate that government is benefiting from the privatization at the expense of the consuming public who will pay again for the assets that have been paid before through the rates of the Napocor,” the letter stated.

Leyte Governor Carlos Jericho L. Petilla, for his part, said that if the appeal of the consumers would not be heeded, at least 25% of the total power capacity produced at the Tongonan geothermal fields should be reserved for Leyte and Eastern Visayas as provided by law.

Mr. Petilla also reiterated his call for power suppliers to lower electricity rates in the region by separating from the Visayas grid.

Under the “one grid, one rate policy,” expenses for power supplied to other regions are also passed on to consumers in Leyte. The governor stressed that separating from the Visayas grid would mean the consumers would only be paying for generation and transmission charges and not carry the cost of power transmission to other regions.

PSALM earlier announced that four companies have signified interest in bidding on June 25 for the right to manage the government’s power supply contract with the 540-megawatt Unified Leyte geothermal power plants.

Apart from the Unified Leyte contract, PSALM is also bidding out the IPPA rights for the 650-MW Malaya thermal power plant. PSALM said in its statement interested parties that have completed their initial requirements for the bid exercise are now ready to conduct their due diligence.

The Unified Leyte facilities include the Upper Mahiao Plant, Malitbog Plant, Mahanagdong Plant, and the Optimization plants, all located in Tongonan, Ormoc.

http://www.bworldonline.com/main/content.php?id=13033

Read Full Post »

KEPCO renews call for Malaya plant sale freeze (6/21/2010)

With the failed bidding outcome on the appointment of Independent Power Producer Administrator (IPPA) for the 650-megawatt Malaya thermal power plant (MTPP), its plant operator Korea Electric Power Corporation (KEPCO)-Philippines renewed its appeal to the Power Sector Assets and Liabilities Management Corporation (PSALM) on the deferment of the asset’s privatization, at least in the next three years or until such time that power supply in the Luzon grid stabilizes.

“We reiterate our request for the Philippine government, thru PSALM, to reconsider its position on the privatization of the MTPP and consider deferring the same until the time when a substantial generating capacity has been added to the Luzon grid that will normalize the existing precarious power supply situation,” KEPCO Philippines President Bok-Yull Lee said.

Kephilco is the government’s counterparty in the 15-year Rehabilitation Operation Maintenance and Management (ROMM) agreement (a variance of Build-Operate-Transfer deal) that entered into by state-run National Power Corporation (NPC) for the facility. The arrangement is due to lapse January next year, entailing that the Malaya plant will already be turned over then to government hands.

For this, even government energy planners see the logic of aligning the Malaya facility for ‘security capacity’, one that will plug capacity gap or provide voltage support to the grid, especially during outages of any of the major generating units in the Luzon grid.

The other facility eyed by PSALM for security capacity is the mothballed 850-megawatt Sucat thermal power facility, but since the plant has not been operating in the past 10 years, there is no guarantee that it can still perform such function or if it can even be operated at all.

“In government hands, the 650-MW Malaya thermal power plant can be relied upon to significantly contribute to the security of power supply in the Luzon grid for at least three more years without a major rehabilitation,” Lee said.

KEPCO recently invited the NPC Board Review Committee headed by Finance Undersecretary Jeremias N. Paul and Philippine Electricity Market Corporation (PEMC) president Melinda L. Ocampo at the Malaya plant to discuss the extent of the rehabilitation done at the units and also to brief them on the significant role the facility plays in the Luzon grid.

Aligned by the system operator as a must-run unit (MRU), it must be noted that the Malaya plant was relied upon heavily during the periods when the grid was suffering from recurrent supply shortages.

There have been assessments that if the Malaya facility will be transferred into private hands, it will end up a losing proposition for the taker because it immediately needs to shell out cash for the facility’s rehabilitation to make it compliant with the emissions standard under the Clean Air Act.

Given the additional investment that the buyer will cough up as well as the higher cost of procurement for cleaner fuel to run the facility, it has been noted that the electricity to be drawn from the Malaya facility will turn out more expensive.

http://www.mb.com.ph/articles/262838/kepco-renews-call-malaya-plant-sale-freeze

Read Full Post »