PSALM To Settle Bidding Matters On Pagbilao And Sual Coal-Fired Power Stations In Philippines

The Power Sector Assets and Liabilities Management Corporation (PSALM) is collaborating with industry stakeholders concerning the May 27, 2009 first bid for coal supply and delivery to Pagbilao and Sual coal-fired power stations. PSALM is preparing for the bidding for the selection of independent power producer administrators (IPPAs) for the Sual and Pagbilao coal-fired thermal power plants. IPPAs will manage the contracted capacities of the government in IPP power plants.

Stakeholders, particularly prospective investors, remain in constant touch with PSALM to raise and resolve issues and concerns that arise as the initial bidding scheduled on May 27, 2009 approaches.

BENECO, a buyer of electricity generated by the Sual power plant, sought a meeting with PSALM to gain a better appreciation of IPP administration and, in the process, help the cooperative prepare for its future business strategies.

PSALM reported that the National Power Corporation has a contracted capacity of 1,000 MW for the Sual power plant that will expire in 2024, and a 700-MW contracted capacity in the Pagbilao power plant that will end in 2025. Both power plants are being operated by Team Energy under a build-operate-transfer (BOT) agreement.

In the IPPA selection process for the Sual-Pagbilao plants, PSALM will use the ownership approach wherein bidders, when preparing their bid submissions, will have to factor in the contracted energy that they will assume, including the subsequent ownership of the power plant.

PSALM pointed out that a bidder could only win one IPP contract to eliminate concerns regarding market dominance since the 1,700-MW combined contracted capacity of the two power plants would already represent about 40% of the contracted capacities that the government would privatize.

Following the appointment of the Sual and Pagbilao IPPAs, PSALM will bid out the IPP contracts for the Casecnan, Bakun, and San Roque hydropower plants, which have a contracted capacity of 140 MW, 70 MW, and 95 MW, respectively. Since these BOT projects involve other government agencies, PSALM might employ a different approach and commercial structure for these contracts.