PSALM set to achieve 70% privatization level by yearend

27 Feb 2008

The era of open access and retail competition in the Philippine electricity industry is moving closer to reality as the board of the Power Sector Assets and Liabilities Management Corporation (PSALM) formally approved the 2008 sale schedule of National Power Corporation's generation assets to bolster the government's objective to achieve the targeted 70% privatization level before the year ends. The privatization of at least 70% of the total capacity of the generating assets of National Power in Luzon and the Visayas is one of the remaining preconditions for the implementation of open access and retail competition.

The generating assets up for sale this year include the 225-megawatt (MW) Bataan Thermal plant (May); the 289-MW Tiwi Geothermal and 458.53-MW MakBan Geothermal plants (June); the 0.8-MW Amlan Hydroelectric plant (June); the 146.5-MW Panay Diesel and 22-MW Bohol Diesel plants (July); the 620-MW Limay Diesel plant (July); the 192.5-MW Palinpinon Geothermal plant (August); 112.5-MW Tongonan Geothermal plant (September); the 114-MW Iligan I and II Diesel plants (October); the 150-MW Bacman Geothermal plant (October); the 116-MW Subic Diesel plant (November); and the 108-MW Aplaya decommissioned and 22.3-MW General Santos decommissioned facilities (December).

PSALM will publish the Invitation to Bid for the Tiwi-MakBan geothermal complex beginning today (Wednesday, 27 February 2008) to officially start the privatization of the two power plants. The Tiwi facility is located at Tiwi, Albay, while the MakBan plant is situated in the Laguna and Batangas provinces.

The sale schedule shows the Panay and Bohol power plants being offered as one package, with the Palinpinon facility being sold independently. The final combination, however, will depend on the decision of the Joint Congressional Power Commission (JCPC), the overseer of the government's power privatization program, on the proposed amendments to the long-term steam supply agreement to be attached to the Palinpinon plant. Under JCPC Resolution 2006-1, the agreement, now known as the geothermal resources supply contract (GRSC), is subject to the commission's approval, which is expected soon.

If the JCPC approves the proposed amendments to the GRSC, PSALM will push through with the bidding for the Palinpinon-Panay package, which was the original combination that was scheduled for privatization in December 2007 until it was deferred. There are five prospective bidders for the Palinpinon-Panay package.

If the JCPC decides to retain the original GRSC, PSALM will follow the 2008 sale schedule for the Panay and Palinpinon facilities, with the Panay and Bohol power plants being offered first. New terms of reference will be drafted for both the Panay-Bohol package and the Palinpinon plant located in Puhagan, Valencia, Negros Oriental.

As it awaits the JCPC decision, PSALM is currently preparing the preliminary asset review for the Amlan hydro plant in Amlan, Negros Oriental, and the six diesel-fired power plants for sale this year to enable interested investors to begin their due diligence as soon as possible.

Strategic Communications and Partnership Division
Tel. No. (632) 9029067