By
Lenie Lectura - February 6, 2017
THE power sector is
weighing options on how best to proceed with the privatization of
the hydroelectric power plants that are part of the Agus and Pulangi
power-plant complexes.
The Agus complex has
728 megawatts (MW) of installed capacity, consisting of six cascading-power
plants strategically located along the Agus River.
The Pulangi complex is
a 255-MW hydropower facility with three generating units. Both facilities,
however, already have de-rated generation. Still, both supply Mindanao
electric-power consumers with more than 50 percent of its total electricity
requirements.
The power facility is
owned by the Power Sector Assets and Liabilities Management Corp. (PSALM), the
agency tasked to manage state-owned power assets and is operated by state-run
National Power Corp. (Napocor).
“Our mandate is to
dispose in three years all of the remaining assets, including the
Agus-Pulangi plants. The target for Agus-Pulangi was originally set within
this year,” PSALM Officer in Charge Lourdes Alzona said.
Alzona said PSALM is
mulling over a number of options. These are “outright sale, it could just
be the service component also, or corporatization.”
Alzona said the asset
could be placed in a new government-run corporate entity, the proposed Mindanao
Power Corp.
While options are being
thoroughly studied, Energy Secretary Alfonso G. Cusi has directed PSALM to
study the reallocation of the power facility’s output to “the poorest of
the poor” in the Autonomous Region in Muslim Mindanao (ARMM) and
Philippine Economic Zone Authority (Peza) locations in Mindanao.
“I have written a
letter to PSALM to study allocating the output of Agus-Pulangi to the poorest
of the poor. That means to say the ARMM region and the Lanao area and
Maguindanao, so that we can help in the development of the area.
“The rest will be
directed to Peza so that we can encourage investments in Mindanao, so that we
can compete against our neighbors for having cheaper electricity to offer to
the manufacturing companies,” he said.
Electricity from the
power asset is being sold to various electric cooperatives (ECs).
“The contracts [with
ECs] have expired. All ECs wanted to get longer contracts, but at most, we can
give them one year to have transition. The intent of transition is to give time
to ECs to make adjustment and for PSALM for the dispatch with NGCP
[National Grid Corp. of the Philippines],” Cusi said.
If implemented, the
target 2017 privatization would be delayed.
“That is now being
studied,” Cusi said. “But let’s not mix objective and direction. Redirecting
the allocation of Agus-Pulangi has nothing to do with privatization. It’s just
now that we want to give benefits to the poorest of the poor and promote
industries in the region.
When sought for
comment, Alzona acknowledged this requirement from the Department of
Energy (DOE).
“In response to the
directive of Secretary Cusi, PSALM is currently studying the legal, financial
and operational feasibility of the proposed exclusive allocation of
Agus-Pulangi hydro plants’ energy output to Mindanao’s marginalized sector and
the ecozones,” she said, adding a Technical Working Group (TWG) has been
created for this purpose.
She said resource
persons from the energy sector and oversight agencies have been designated to
assist the TWG.
“The results of the
study will be reported to the energy secretary as soon as completed,” the PSALM
official said in a text message.
Former Napocor
President Guido Alfredo Delgado, in a paper, said it is a “very big challenge
privatizing” the facilities.
He said the plants’
combined capacity of 983 MW is “too large to sell to a lone owner.”
“Having the plant owned
by a single entity will result in a near-monopoly market structure—a situation
the government must avoid since the essence of the Electric Power Industry
Reform Act is to promote fair competition among players,” Delgado said.
To sell the power
facility in parts is also “problematic,” saying it is essential for the
operation and maintenance activities of the plants to be synchronized.
“This will make the
operations complex, and the financial contracts even more complicated,” Delgado
said.
One option aimed at
keeping the interests of consumers without sacrificing the efficiency of
private-sector funding and management is for PSALM to enter into power-supply
agreements (PSAs) with a life span of 25 years before it starts selling the
hydro plants, Delgado said.
“PSALM should avoid
pitfalls of the government in previous privatization deals where the government
sold plants individually without any PSA. Doing this will result in either of
the following situations: Prices will go up immediately after privatization
and/or government sale price will be low. Either way, the government and
consumers will be the losers in the equation,” he said.
Since PSALM announced
its intent to privatize the Agus-Pulangi complexes, many have expressed
interest to participate in the auction.
“We are waiting for the
TOR [terms of reference]. I would say we are interested in such a big
project,” said Tomas Alcantara, chairman of Alsons Consolidated Resources
Inc. (ACR).
AboitizPower Corp.
President Erramon Aboitiz had said his company remains interested in power
assets that will be sold by PSALM.
“We would like to take
a look at Agus and Pulangi. We’ll definitely look at it,” he said.
Meanwhile, San Miguel
Corp. (SMC) has called on the government to take advantage of the glut in power
supply by overhauling old power plants.
“Nag-overbuild tayo,” said SMC
President Ramon Ang, referring to numerous power plants being constructed and
will be put up across the country. “But if we overbuild, then we have the
time to repair old plants. If I were the government, I would shut down Agus
right away and repair it while there is oversupply.”
Ang said Agus’s
capacity has deteriorated to less than 50 percent now.
“Pag tumaas na uli ang
demand, then back to 100 percent na
ang capacity ng
Agus. Iyong Luzon
plants na luma dapat mag
shutdown din, then
’pag may demand na, ibalik sila uli. In short,
we now have the opportunity to repair old plants,” Ang said.
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