State-run Power Sector Assets and Liabilities Management Corp. (PSALM) plans to overhaul the aging Agus–Pulangi Hydropower Complex (APHC) in phases to reinforce the Mindanao power grid.

Dennis de la Serna, PSALM president and chief executive officer, said the agency expects to award the rehabilitation contract for the 1,000-megawatt (MW) facility to a private company by December.

The complex currently operates well below its installed potential due to deteriorating infrastructure, undercutting a critical generation source for the region.

“Our objective is to restore and sustain dependable generating capacity, improve plant efficiency and reliability, reduce forced outages, and allow the existing facilities to operate more consistently,” De la Serna told Manila Bulletin.

“These improvements can help reduce supply deficits during periods of high demand and lessen the need to rely on more expensive or less reliable replacement generation,” he added.

Restoring the facility is vital for Mindanao’s grid, which currently has an available generating capacity of around 3,196 MW against a system peak demand of roughly 2,488 MW, according to National Grid Corporation of the Philippines (NGCP) data from Aug. 20.

Mindanao also exports power to the Visayas via the Mindanao-Visayas Interconnection Project (MVIP). Any supply drop in Mindanao could impact the Visayas grid, which has suffered from prolonged yellow and red alerts since May.

However, De la Serna clarified that the overhaul is not a silver bullet.

“[The] rehabilitation of APHC should be viewed as one important component of the broader Mindanao power-supply strategy, rather than as the sole solution to the region’s supply-demand requirements,” he emphasized.

To prevent severe power disruptions, PSALM will implement the project in stages rather than shutting the plant down entirely.

“The purpose of the phased approach is to retain as much generating capacity as practicable during rehabilitation; coordinate the outage of individual units or plants with Mindanao grid supply and demand conditions; allow rehabilitation works to be sequenced based on the condition and priority of individual facilities; minimize the risk of a significant reduction in available generating capacity at any one time; and progressively return rehabilitated units to service so that restored capacity can support the grid while subsequent units are being rehabilitated,” De la Serna elaborated.

While no private firms have publicly confirmed their participation yet, PSALM remains on track to award the contract in December. The arrangement aligns with the Electric Power Industry Reform Act (EPIRA), which allows public-private partnerships or joint ventures to leverage private capital rather than drawing from public funds.

“The immediate priority is to recover and sustain the current capacity of APHC, improve its reliability, and ensure that it can continue to contribute to the grid—particularly when the system is under stress,” De la Serna said.