PSALM readies bidding for IPPAs

19 Mar 2008

The Power Sector Assets and Liabilities Management Corporation (PSALM) held a series of consultations in February and March this year with the Philippine Independent Power Producers Association, potential investors, plant managers of independent power producers (IPPs), distribution utilities and members of financial institutions to ensure that all perspectives are taken into account as PSALM finalizes the terms of reference and bidding rules for the selection of IPP Administrators (IPPAs).

PSALM is set to hold the initial bidding and selection of the IPPAs in August 2008.

Under the Electric Power Industry Reform Act (EPIRA), the privatization of at least 70% of the total capacity of generating assets of National Power Corporation and the transfer of the management and control of at least 70% of the contracted energy of IPPs in Luzon and the Visayas to IPPAs, are prerequisites for retail competition and open access in the electricity industry.

There is no model from any country on which to pattern the privatization of IPPs. PSALM is currently addressing major concerns and has solicited the input of all stakeholders to fine-tune the terms of reference and bidding rules in time for the August 2008 launch date.

Aside from a report funded under the World Bank-assisted Power Sector Reform Project-Technical Assistance on IPPA submitted to the Department of Energy in August 2007, which examines possible structures for the IPPA bidding, PSALM is considering the input from stakeholders in finalizing the structure by which the IPPA is to be tendered.

In addition to the recommendations of the WB-funded report and the input from the consultations, PSALM is drawing from its more than one year trading experience at the Wholesale Electricity Spot Market (WESM) to determine the structure and plant portfolios that will encourage investor interest in the bidding. The energy output of National Power's IPP plants is currently being traded by PSALM's trading teams into the WESM.