State-run Power Sector Assets and Liabilities Management Corporation (PSALM) will be undertaking a competitive auction for the operation and maintenance service contract (OMSC) of the 150-megawatt Casecnan multi-purpose project (CMPP) that has both irrigation and power generation functions.

“PSALM intends to begin the procurement of the OMSC by the second week of September 2021 through a competitive bidding process,” company president Irene Besido-Garcia said.

She qualified that “the contract will be effective for one year until PSALM commences and completes the plant’s privatization by the end of 2022.”

The hydro plant will be turned over to the government in December this year by private firm developer CalEnergy International, through its subsidiary CE Casecnan Water and Energy Inc.— that will be following the lapse of the build-operate-transfer (BOT) contract of the facility.

The government-owned firm said it will have to engage O&M contractor for the Casecnan hydropower facility “to ensure the continuing operations of the CMPP’s irrigation component and the hydroelectric plant component.”

According to PSALM, it already cornered the concurrence of the National Irrigation Administration (NIA) this week for it to procure the OMSC for the Casecnan power plant so its electricity generation can continue to reinforce grid supply.

The company indicated it will also secure the approvals of the Department of Finance (DOF) and the Department of Energy (DOE) before it could auction the OMSC deal for the facility, based on the provisions of Republic Act 9184 or the Government Procurement Reform Act.

The Casecnan multi-purpose hydropower facility started commercial operations in 2002 and the co-operation period for the asset will expire on December 11 this year.

There is an existing power purchase agreement (PPA) between NIA and PSALM, and it was prescribed that “NIA will transfer 60-percent of the ownership of the CMPP to PSALM by the end of the PPA.”

Following that process, the state-owned firm noted it will “work on the terms of the privatization of the CMPP through public bidding” – and the asset sale target will be next year.

Garcia emphasized “all proceeds from the successful privatization of the Casecnan hydroelectric power plant will be divided by NIA and PSALM in accordance with their ownership interest in CMPP.”

The Casecnan power plant has been providing 19 million kilowatt-hours of electricity per month, and that is a scale of generation helping shore up supply in the biggest power grid of Luzon.

Additionally, the facility has been supplying irrigation services to roughly 139,200 hectares of farmlands in Nueva Ecija, Pampanga, Bulacan and Tarlac.