PSALM resumes Naga plant auction

Manila Times.net

STATE-RUN Power Sector Assets and Liabilities Management Corp. (PSALM) has resumed its privatization program with the auction of the contracted output of the Naga power complex in Cebu later this year.

Emmanuel Ledesma Jr., PSALM president and chief executive officer, said tenders for the Naga Independent Power Producer Administrator (IPPA) would start this month to maximize proceeds from the sale of the asset.

“Recent developments in the Visayas grid, not the least of which was the start of operations of the Wholesale Electricity Spot Market, necessitated a restart of the Naga IPPA bidding,” he said, referring to the independent power producer administrator contract of the facility.

The Naga complex consists of the 106.8-megawatt coal thermal power plants 1 and 2, and the 39-megawatt diesel power plant, all of which are located in Naga town of Cebu.

The plants are under a Rehabilitate-Operate-Maintain-and-Manage Agreement/Energy Conversion Agreement with Kepco Salcon Philippines Corp., which is set to expire in March 2012.

The winning bidder for the asset will take control of the power plants’ contracted output.

The first round of bidding for the Naga IPPA, as well as other government power assets, was deferred late last year as the new PSALM board sought to review previous privatization activities.

The new round of bidding for the Naga asset formally began with PSALM’s publication of the Invitation to Bid (in local newspapers last Tuesday. The ITB indicates that prospective bidders have until July 22, 2011 to submit a Letter of Interest as a preliminary requirement. The bidding package, which includes the bidding procedures, will be issued to interested parties who will execute a confidentiality agreement and undertaking with PSALM, and pay the non-refundable participation fee of $5,000 not later than 5 p.m. of July 25.

PSALM will hold a pre-bid conference for prospective bidders on August 12 at its main office in Makati City to discuss the bidding procedures and other concerns. Deadline for bid submission is on October 10.

Ledesma said the resumption of the agency’s privatization program would help lower the universal tariff that would be levied on consumers to raise money to settle the government’s power sector debts.

Under the Electric Power Industry Reform Act of 2001, proceeds from the privatization of state-owned National Power Corp.’s assets shall be used to pay off its obligations. If the privatization proceeds were insufficient to pay for all the debts, then a universal charge would be imposed on consumers to settle the remaining amount.EUAN PAULO C. AÑONUEVO