Schemes for Agus Privatization proposed

Manila Bulletin 
By Myrna M. Velasco 
Published: August 23, 2013 
Stakeholders in Mindanao have been propounding “hybrid privatization schemes” that the Power Sector Assets and Liabilities Management Corporation (PSALM) may consider for the Agus hydropower complex.
Instead of outright sale of the hydro assets, the schemes reportedly lodged to the Mindanao Development Authority (MinDA) and the Department of Energy (DOE) include a privatization of just the kilowatt-hours that can be generated from the facilities.
According to DOE sources, it was proposed that “the net present value of the generated energy can be calculated and paid for by the bidders on payment terms to be dictated by government.”
It was further explained that “a portion of the proceeds can be set aside for the rehabilitation and upgrade of the plants.”
The other option will be for PSALM to contract out the operation and maintenance (O&M) of the plants to a third party.
In both modes of privatization, it was noted that “PSALM will continue owning the plants.” A future outright divestment of the assets may also be planned.
In a previous briefing with reporters, Philippine Independent Power Producers Association (PIPPA) president Luis Miguel Aboitiz opined that the Agus case is not a matter of privatizing, “but putting it into private entrepreneurial hands so it will produce power and yet satisfy politics and the people of Mindanao, and at the same time, PSALM.”
But the crucial step, he stressed, will be for PSALM and concerned executive agencies, like the Departments of Energy and Finance as well as the local government units (LGUs), to resolve their preferred privatization option for the Agus facilities.
The Agus facilities have been spared from privatization for 10 years from the passage of the Electric Power Industry Reform Act (EPIRA). That timeframe should have lapsed in 2011, but PSALM still had its hands tied when it comes to the hydro assets’ disposal because of stern opposition lodged by various sectors in Mindanao.
The Mindanao grid primarily, was also detached from the privatization processes largely undertaken in Luzon and Visayas grids in the past few years, hence, the lack of private sector capital flows in the area led to its severe supply crisis.
Without fully comprehending such outcome though, Mindanao stakeholders have been taking the frontlines grumbling about the supposed failure of EPIRA because of their crisis-gripped power grid.
Several privatization plans were already presented for Mindanao, but the government through MinDA and the DOE, might need to do more in terms of apprising ‘cost averse’ consumers in the area as to the available options toward their longer term energy security.  source