By Myrna M. Velasco
State-run Power Sector Assets and Liabilities Management Corporation (PSALM) is scheduling the privatization of the power purchase agreement (PPA) of the 200-megawatt Mindanao coal-fired power project in 2022.
That has been based on the timeline the government-owned company has set for the remaining assets of the National Power Corporation.
The Mindanao coal plant, which is currently operated by German firm-led STEAG State Power Inc., has a build-operate-transfer (BOT) contract that stretches until November 15, 2031.
That will be five years beyond PSALM’s corporate life cycle which will lapse in 2026; and the targeted privatization timeframe is also the tail-end year of the Duterte administration.
The supply contract of the Mindanao coal-fired power facility is among the remaining privatization exercises that PSALM has been lining up – and prior to that as earlier laid down by company President Irene Joy Garcia will be the 797.92MW Caliraya-Botocan-Kalayaan (CBK) hydro facility this 2020; and then the 150MW Casecnan hydro plant in 2021.
The divestment structure for the CBK and Casecnan hydro plants will undergo a feasibility study phase to be carried out by the Asian Development Bank – and that part of the process is set for completion in the next six months.
Beyond the three plants, PSALM is also eyeing to rebid this year the 650MW Malaya thermal power facility after its divestment last year had failed twice and even attempts at negotiated sale had not flourished.
Major remaining power asset that will be under PSALM’s charge is the 1001.10MW Agus-Pulangui hydropower complex that the state-run firm’s board had opted to place first on rehabilitation prior to any targeted sale.
After the overhaul of the hydropower facilities, the asset-seller firm noted that their privatization shall be “subject to consultation with Congress and PSALM Board’s policy direction.”
The Agus-Pulangui hydropower complex had already been prepped for privatization several instances in the past, but this had drawn strong opposition from stakeholders in Mindanao that even Congress had its hands tied on a decision on the asset’s divestment.
From this year, PSALM’s remaining corporate life will be six years – and it still has humongous power sector liabilities to settle, hence, it exceptionally needs additional cash from privatization proceeds to retire these financial obligations.