ADB study on CBK, Casecnan plants’ privatization out this month

Published January 21, 2021, 12:24 PM

by Myrna M. Velasco

The study undertaken by the Asian Development Bank (ADB) on the proposed mode of privatization for the 150-megawatt Casecnan and 728MW Caliraya-Botocan-Kalayaan (CBK) hydropower plants will be out by the end of this month, according to state-run Power Sector Assets and Liabilities Management Corporation (PSALM).

PSALM said the study covered options as well as prospective structure on the targeted divestments of the two major hydropower facilities.

“The final results of the study are expected to be released by the end of January 2021,” the state-run company has emphasized.

PSALM had attempted to privatize the CBK and Casecnan plants in recent years, but there had been ‘complexities’ that it needed to untangle in the divestment structure, that’s why it needed to tap the assistance of the ADB.

In the same vein, the state-run company previously indicated that the ADB study will help in drawing up the minimum bid price to be prescribed for the assets at auction phase.

Both hydropower facilities have been attracting multitudes of prospective buyers, but the major question to the interested bidders as well as with asset-seller firm PSALM is how to carry out the privatization so the government could fetch maximum proceeds from the sale.

For example, in the case of Casecnan, the ownership of the plant upon the expiry of its build-operate-transfer (BOT) contract will not just rest solely with National Power Corporation, because the National Irrigation Administration (NIA) also has a stake in the asset.

Under PSALM’s mandate, it is only authorized to privatize or divest the power plant-assets of NPC, thus, the NIA ownership in the Casecnan facility has to be legally sorted first.

For the CBK plant, there is a question on prospective viable structure of sale – if the plant has to be sold to just one buyer, or if it could be offered to several takers.

Once the ADB study is out, the next step for PSALM is to firm up the privatization timeline of the assets – starting with the kick-off of bid invitations up to the deadline of submission of tenders.

Aside from the two hydropower plants, the state-run company is also targeting the privatization of the power supply agreement of Mindanao coal-fired power facility; and eventually, the divestment of the Agus-Pulanggui hydropower plant in Mindanao.

For the latter, however, it was noted that the sale plan may be in for a complicated twist because the Bangsamoro Region will also need to give approval to it – and the privatization of the Agus-Pulangui hydropower complex has always been a contentious issue with the people of Mindanao.