Alcantara power firm opts for IPPA for Agus-Pulangi

Published : Monday, August 08, 2011 00:00

Written by : EUAN PAULO C. AÑONUEVO

CONAL Holdings Corp. wants the government to offer the output of the Agus-Pulangi hydropower complex to interested bidders instead of the physical asset.

Joseph Nocos, CHC vice president for business administration, said the privatization of the 700-megawatt Agus-Pulangi hydro facility would help spur competition in the country’s second largest island as the plant provides more than half of the region’s power supply during normal weather conditions.

“We’re deregulated, privatized and competitive industry. The Agus-Pulangi resource is a very competitive generating source. And it will be essential to any generation strategy that any power company can come up with in Mindanao,” Nocos said.

Under the Electric Power Industry Reform Act of 2001, the government should privatize the hydro complex 10 years after the law’s passage or after June 2011.

The privatization of the asset, however, has been put on the backburner largely because of ownership issues given its size, and local opposition to the sale.

Under current regulations, power producers are not allowed to exceed a market share of 30 percent in each of the grid systems in the Luzon, Visayas and Mindanao.

As such, the Agus-Pulangi hydropower complex would put any buyer over the cap. Dividing the asset would not be viable because the facility is a series of cascading power plants running on a single water source.

Should the government hurdle these issues it would still have to address local concerns over the sale of a vital natural resource in Mindanao.

Nocos said the government should consider sellling the output of the hydro facility similar to the privatizatoin of state-owned National Power Corp.’s contracted output with third-party power generators through the selection of independent power producer administrators.

“With the IPPA already enforced in the Luzon grid, I think they have the framework that will be necessary to implement the same in the Mindanao,” Nocos said.

The government’s power sector privatization program is anchored on the sale of Napocor’s power plants, which include the Agus-Pulangi facility, and the selection of IPPAs who will market the power generated by plants with which the government has outstanding build-operate-transfer contracts.

CHC is a joint venture between the Alcantara Group, a local conglomerate with interests in power generation and property development, and EGKO of Thailand.