‘Govt must privatize Agus-Pulangi power plant assets’

business mirror

SUNDAY, 07 AUGUST 2011 17:51 PAUL ANTHONY A. ISLA / REPORTER

ECHOING what North Cotabato Gov. Emmylou Taliño-Mendoza said last week that the Agus-Pulangi hydropower project should remain private, a top executive of Saranggani Energy Corp. said the government-run Power Sector Assets and Liabilities Management Corp. (PSALM) might want to consider privatizing the future outputs instead of selling the entire structure of the 982.1-megawatt (MW) Agus-Pulangi hydropower complex.

Joseph Nocos, Saranggani Energy Corp. vice president for business development, said on Friday that “maybe we should look at privatizing not the asset, but the future output or the future energy that will come out of these plants.”

Nocos said it’s similar to the independent power producer administrator (IPPA) concept.

He added that the approach could address other concerns Mindanaoans have over the sale of the Agus-Pulangi privatization, which is giving up their patrimony over this vital natural resource.

If what is privatized is just the output, Nocos said, “Then we need to address the ownership of the asset in the hands of the National Power Corp. or PSALM.”

Considering Agus-Pulangi’s generating capacity, Nocos said privatizing it as one asset brings the winning bidder close to the 30-percent market cap for a grid.

He added that privatizing the plants separately might cause some practical and operational problem among the winning bidders.

“The Agus system is a cascade of power plants. So you could just imagine Agus 1 is at the highest elevation, then you have Agus 2, 4, 5, 6 and 7.

What if the operator of Agus 1 either does not operate his plant efficiently or is upset at one plant downstream?” Nocos said.

He added that PSALM could bid out the operation and maintenance of the plant but without selling the asset.

“The sectors and industry players are advocating the outsourcing of the operation and maintenance for the plant,” he added.

Nocos said, if done properly, it will be beneficial to Mindanaoans, and privatizing the assets individually may not exactly be the most optimal way to privatizing this asset.

Nocos said if sold as one block, everyone runs into that capacity headroom or limit; “and if sold as individual plants, you run into operational and practical difficulties.”

From the perspective of prospective investors, Nocos said they would like to see all of these issues clarified and solved.

“Our interest here is to have a transparent, orderly and successful privatization effort,” he added.

Apart from the market cap and practical problems, Nocos also pointed out the need to address political issues such as the patrimony on the Agus system, which Mindanaoans claim to be part of their ancestral domain.

“But the privatization of the output of the Agus-Pulangi will be an effective way to privatize it without necessarily running into all these problems,” he said.

Energy Secretary Jose Rene Almendras earlier made it clear that the Agus-Pulangi hydropower complex is not yet for sale.

“We don’t want to sell it yet. How long that will be, will depend on how soon we can achieve true pricing and make the appropriate adjustments to fall to encourage investors,” Almendras said.