Business Mirror
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POWER plant operators called for the privatization of Mindanao’s major hydro facilities to attract investors in the region.
Ernesto Pantangco, Philippine Independent Power Producers Association president, said the government should consider privatizing the 700-megawatt Agus-Pulangi hydro complex and attaching longer transition supply contracts to the asset.
”So at least the investors in Mindanao can begin to plan out. That’s a model, but you still have to privatize the asset,” he said.
TSCs are bilateral agreements inked by state-owned National Power Corporation with distribution utilities and are attached to power plants as contract sweeteners for the government’s privatization program.
Although TSCs guarantee buyers of state plants’ a secured market for the facilities’ output, contract rates are indexed to Napocor’s subsidized rates and would lapse once open access and retail competition starts. Under open access, consumers may choose the power plants that provide their electricity.
Pangtangco said government should consider lengthening the TSC that would be attached to the Agus-Pulangi hydro facilities by at least five years.
Mindanao is suffering from thin power reserves, which could lead to regular power interruptions in the near future should no plants be put up soon.
Government, however, is barred from putting up new plants under the country’s power sector reform and structuring program. The private sector has been lukewarm to investing in Mindanao because more than half of the region’s power supply comes from Napocor’s Agus-Pulangi complex, which offer very low rates.
The privatization of the asset, however, has been put on the back burner largely because of ownership issues given its size, as well as by opposition from residents who do not want the facility sold to private companies.
Under current regulations, power producers are not allowed to exceed a market share of 30 percent in each of the grids in the Luzon, Visayas and Mindanao.
Pantangco said the facility should be divided into three and any technical issue resulting from the division could be addressed through the imposition of a water protocol.
Earlier, Joseph Nocos, Conal Holdings Corporatino vice president for business administration, said government should consider offering the output of the Agus-Pulangi hydropower complex to interested bidders instead of the asset itself to help push through its privatization.
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