Sale of Angat HEPP supported by EPIRA

30 Apr 2010

There is nothing controversial, illegal, or covert in the privatization of the 218-megawatt Angat Hydroelectric Power Plant (HEPP).

This was stressed by the Power Sector Assets and Liabilities Management (PSALM) Corporation, which declared the Korea Water Resources Corp. (K-Water) as the highest bidder with its USD440.88-million offer for the Angat HEPP in the bidding held recently.

PSALM belied misconceptions raised by various interest groups, including the Freedom from Debt Coalition (FDC), against the sale of the Angat HEPP, pointing out that the privatization of the Angat power facility stringently followed the provisions of the law, specifically the Electric Power Industry Reform Act (EPIRA), and was conducted in a transparent and objective manner.

"The FDC statement implying the controversial and midnight sale of the Angat power plant is baseless," PSALM stated. "There was nothing controversial about the sale of the Angat facility because PSALM strictly adhered to the provisions of the EPIRA. The controversy stemmed from unfounded speculations by groups who, unfortunately, are misinformed of the sale structure implemented by PSALM for the Angat HEPP."

PSALM stressed that only the power component of the Angat HEPP was privatized. The Angat Dam remains the property of the government. The EPIRA clearly states that "in cases of transfer of possession, control, operation or privatization of multipurpose hydro facilities, safeguards shall be prescribed to ensure that the national government may direct water usage in cases of shortage to protect potable water, irrigation and all other requirements imbued with public interest."

Thus, the law, through the National Water Resources Board (NWRB), ensures the security of water for drinking purposes and for irrigation.

PSALM pointed out that the privatization of the Angat HEPP will not give K-Water the sole authority and discretion to manage the use of water from the Angat Dam. The NWRB will strictly regulate the use of water based on the Water Code or Water Protocol that it drafted together with the National Power Corporation, the Metropolitan Waterworks Sewerage System, and the National Irrigation Administration. These government entities, along with PSALM and K-Water, will be the signatories to this protocol. Thus, K-Water will be bound by the rules that the NWRB imposes on the use of water from the Angat Dam.

The Water Code specifically provides that "in times of emergency, the use of water for domestic and municipal purposes shall have a better right over all other uses."

The regulatory environment under which K-Water will operate should also eliminate any apprehension about K-Water threatening national security.

Contrary to FDC's claim that the sale was conducted in a covert manner, the progress of the Angat HEPP privatization - from the Invitation to Bid that was published for three days last January to the bidding proper held on 28 April - was regularly announced to the public in various newspapers and the PSALM Web site. PSALM also invited local government units and various interest groups to a series of forums to inform and educate them and to get their feedback on the implications and benefits of the sale of the Angat facility.

During the bidding proper, representatives of various interest groups were invited to observe the Angat power plant privatization. These groups included the Philippine Chamber of Commerce and Industry, the Integrated Electrical Engineers of the Philippines, and Procurement Watch.

PSALM was never remiss of its obligations to properly inform its stakeholders, including various interest groups and the general public, of its power privatization activities. And it has done so transparently and objectively, not covertly.

Corporate Communications Division
Tel. No. (632) 9029067