PSALM to delay STEAG sale until supply stabilizes

Business World Online
Posted on September 27, 2015 06:03:00 PM

THE GOVERNMENT plans to defer the auction for the contracted capacity of the STEAG coal-fired plant until the supply situation in Mindanao stabilizes.

Zenaida Y. Monsada, officer-in-charge for the Energy department, said last week that the Power Sector Assets and Liabilities Management Corp. (PSALM) will discuss this plan at its next board meeting.

Bidding was originally schedule for Nov. 25.

“It would be best if the privatization will take place when supply is already stable,” Ms. Monsada said on the sidelines of a Senate hearing in Pasay City.

“That’s the direction that we intend to pursue. It will be discussed in the next board meeting of PSALM,” Ms. Monsada said.

She said various stakeholders have been pushing for the postponement of the bidding, saying this could further shoot up power rates in Mindanao.

“If we do that now, we will use the prevailing rates, so that will be high,” said Ms. Monsada.

“When supply is already stable, there will be not much pressure on the prices,” she added.

The official said the PSALM Board will finalize the timeline but the bidding will likely take place next year.

“It will just be a deferment. There are new plants coming in the first quarter,” Ms. Monsada said.

“Next year, the supply situation will be better,” she noted.

Last month, PSALM said it was expecting six investor groups to participate in the bidding of the independent power producer administrator contract for the plant.

This was lower than 12 companies that originally expressed since some companies formed partnerships.

PSALM in April named the 12 firms that attended the pre-bid conference for the privatization activity.

The list includes the top three generators in the country: SMC Global Power Holdings Corp.; FirstGen Northern Power Corp.; and Aboitiz-owned Therma Southern Mindanao, Inc.

Also on the list are the Gotianuns’ FDC Davao Del Norte Power Corp.; the Alcantara Group’s Conal Holdings Corp.; and Meralco PowerGen Corp.

Other interested investors are GDF Suez Energy Philippines, Inc.; Masinloc Power Partners Co. Ltd.; Team (Philippines) Energy Corp.

Listed firms SPC Power Corp. and Vivant Corp. via Vivant Energy Corp.; as well as Nefix Pte. Ltd. completed the list of prospective bidders.

Located in Misamis Oriental, the STEAG coal plant was constructed in 2006 under a 25-year Build-Operate-Transfer-Power Purchase Agreement scheme.

The plant -- which supplies about a fifth of Mindanao’s power needs -- has an installed capacity of 210 megawatts (MW) but the government’s contracted capacity is only at 200 MW.

The cooperation period of the government with the plant operator, STEAG State Power Inc., will end in 2031. -- Claire-Ann Marie C. Feliciano source