PSALM reworks privatization package for IPP contracts

Published November 21, 2018, 12:00 AM

by manilabulletin_admin

By Myrna M. Velasco

With the aid of a third party consultant, state-run Power Sector Assets and Liabilities Management Corporation (PSALM) will rework divestment packages for its remaining energy conversation agreements (ECAs) or supply contracts with independent power producers (IPP).


The company is dangling P22.6 million as professional fee to the proposed consultancy services that will be drawn up for the specified power assets. This will be integrated in the state-owned company’s 2019 budget.

The assets to be covered by the consultancy work shall include proposed privatization packages for the Caliraya-Botocan-Kalayaan (CBK) and Casecnan hydro facilities; the Unified Leyte geothermal plant; Mindanao 1 and 2 geothermal power plants and the Mindanao coal-fired power facility.

“PSALM will evaluate the most beneficial and feasible privatization options and structures for its remaining IPP contracts through the assistance of a third party consultant,” the company said.

On the consultancy engagement, PSALM noted that bid opening will be held on December 4 this year. “Interested bidders who submitted eligibility documents and have paid the applicable fee amounting to P25,000 will be shortlisted,” the state-run firm stipulated.

The consultancy work will be for a period of five months (150 days) from the time that the notice to proceed had been served to the winning bidder.

PSALM qualified that “the winning firm is tasked to study the technical, contractual, legal, commercial and plant-specific issues affecting the IPP contracts.”

At the same time, the third party consultant shall “review relevant agreements and applicable laws, conduct consultations with concerned agencies and private entities and conceptualize technical, financial and legal frameworks for the proposed privatization options and structures.”

The power supply contracts of the IPPs originally contracted by the National Power Corporation (and eventually transferred to PSALM) are generally privatized through the appointment of IPP Administrators (IPPAs) that will be trading and selling their respective capacities.

Nevertheless, for some of the assets, there have been unique features to resolve relative to their privatization pathway – such as the post-build operate transfer (BOT) ownership of the Casecnan hydro plant.

And for the Unified Leyte geothermal facility, the proposed privatization of its bulk capacity will likewise be re-evaluated following some hurdles that IPPAs had run into on the privatized 40-megawatt “strip capacities” of the facility.