State-run Power Sector Assets and Liabilities Management Corp. (PSALM) is preparing the terms for the auction next year of the propounded 25-year concession deal for the rehabilitation of the 932-megawatt Agus-Pulangui hydropower assets in Mindanao.

According to PSALM President Dennis Edward A. Dela Serna, “the commencement of bidding for the rehabilitation will be second semester of 2024; and start will be in 2025.

He qualified that there is no concrete valuation yet how much investment shall be required from the private concessionaire on the rehabilitation plan for the country’s major hydropower assets in the southernmost power grid.

The target of the government-owned firm, he said, is to engage the help of the International Finance Corp. (IFC) or the World Bank Group for comprehensive assessment on the targeted capital outlay for the overhaul of the facilities.

On the proposed long-term concession arrangement, Dela Serna emphasized that part of the policy consideration being weighed is whether or not there is a need to seek Congress’ approval before PSALM could even carry out the targeted bidding next year.

Under the Electric Power Industry Reform Act (EPIRA), it was stipulated that PSALM has to seek the approval of Congress on any planned divestment or privatization for the Agus and Pulangui hydropower complexes.

There is no direct sale that will happen for the assets; but since the recommendation for rehabilitation will entail engagement of a private sector concessionaire, PSALM is weighing if the imprimatur of the legislative branch has to be secured.

In the previous calculation of the National Power Corp. (NPC), which is the precursor-company of PSALM, the scale of capital expenditure for the Agus-Pulangui facilities’ rehabilitation would range from P35 billion to P54 billion.

That estimate, however, was drawn up in 2019 or before the strike of the Covid-19 pandemic; and in that timeframe, the costs of equipment, steel and other construction materials were still not at elevated proportions.

Since then, NPC has been pursuing minor rehabilitation works – primarily at the Agus facility – including replacement of transformers and some equipment.

There had been three options initially sorted out for the hydropower facility’s overhaul: first is to retain its capacity; second is to decrease its capacity by 10-percent; and the third one delves with water management on the six river systems that have been providing the water being utilized for electricity generation at the Agus and Pulangui plants.

In the past Duterte administration, NPC already recommended tapping the World Bank to evaluate the ‘best option’ plan for the assets’ rehabilitation; and that initial engagement was proposed to be followed with a feasibility study that should have been completed within one-year.

As correspondingly targeted, the outcome of the feasibility study should have served as the basis for the bidding of the contract for the rehabilitation work on the Agus-Pulangui facilities.

But since the global pandemic happened, the rehabilitation plan for the Agus-Pulangui assets had been among those that were no longer given priority by government leadership – because the past three years mainly centered on easing the impact of the health crisis on the people and the economy.

For several decades, the Agus-Pulangui facilities had been the major traditional power supply source of Mindanao grid; and throughout their years of operations, the plants’ capacities had already been deteriorating on a yearly basis – hence, the sweeping call on the government to already pursue overhaul work on the assets while Mindanao grid is still on a surplus capacity mode.