PSALM negotiates for Naga power complex

Business Mirror
WEDNESDAY, 21 MARCH 2012 19:25 PAUL ANTHONY A. ISLA / REPORTER


GOVERNMENT-RUN Power Sector Assets and Liabilities Management Corp. (PSALM) on Wednesday said it is negotiating a six-month operation and maintenance service contract (OSMC) for the Naga Power Plant Complex (NPPC) with SPC Power Corp. (SPC) pending a second round bidding for a one-year OMSC.


Emmanuel Ledesma Jr., PSALM president and chief executive, said the negotiated procurement for the services of SPC to operate and maintain the 145.8-megawatt (MW) NPPC will ensure the continuous operation of the Cebu-based power facility.


Ledesma said entering into an OMSC with SPC will allow minimal disruption of NPPC’s operation.


He said SPC is currently operating the complex pursuant to its outstanding contract with the National Power Corp. (Napocor),” Ledesma said.


The first bidding for the procurement of the OMSC for the Naga complex was declared a failure by the PSALM Bids and Awards Committee when no bid was received on the bid opening date last Feb. 27, 2012.


PSALM is seeking the services of an operation and maintenance operator for the NPPC in anticipation of the expiration of the rehabilitate-operate-maintain-and-manage agreement between NPC and SPC on March 25, 2012.


Ledesma said the negotiated procurement with SPC does not preclude PSALM from pursuing the privatization of the NPPC.


As successor-owner to Napocor pursuant to the Electric Power Industry Reform Act, PSALM procures the fuel requirements of the NPPC while awaiting the asset’s privatization.


The NPPC consists of the 106.8-MW Naga Coal Thermal Power Plants 1 and 2 and the 39-MW Naga Diesel Power Plant located in Naga, Cebu.


In October last year, PSALM deferred the privatization of the Naga power plant complex to grant the request of the Joint Congressional Power Commission (JCPC).


The JCPC requested PSALM to further review the allegedly unfair and illegal condition known as a “right to top” the highest bid previously granted to SPC Power Corp. (SPC) in the Land Lease Agreement executed by and among PSALM, Napocor and SPC in 2009.


PSALM recalled that the land lease agreement was executed by and among the parties pursuant to the Asset Purchase Agreement on the Naga Land-based Gas Turbine (LBGT) Plant acquired by SPC through public bidding in 2009.


In the agreement, PSALM granted SPC the right to top the highest bid on the sale or lease of the properties within the vicinity of the LBGT plant in order to give the winning bidder of the LBGT plant the opportunity to expand, subject to the payment of a premium of 5 percent over the highest bid on said adjacent properties.