Mindanao plant auction no-go

The Energy Department may defer again the selection of a company that will manage the output of the 200-megawatt, coal fired power plant in Mindanao  amid clamor from Congress.

“[It’s] for the sake of the people in Mindanao. If we privatize it now, the tendency is there would be high power rates because there is a shortage in capacity now,” Energy Department officer-in-charge Zenaida Monsada told reporters over the weekend.

Power Sector Assets and Liabilities Management Corp. is scheduled to bid out the contract to manage the output of the Mindanao coal plant on November 25.

“So, the direction now is that it would be best if the privatization would take place when supply is stable. So probably by next year,” Monsada said. “Congress is also insisting on a deferment until supply is stable.”

PSALM président Lourdes Alzona, however, said the agency was waiting for data from the Energy department on “power supply and rate assumptions.”

Alzona said that once PSALM received the data, the board would discuss department’s recommendation in early October.

PSALM is chaired by the Finance Department and co-chaired by the Energy Department, with the secretaries of Budget and Management, Justice and Trade and Industry as the other members of the board.

Former Energy Secretary Carlos Jericho Petilla sought a the deferment of the privatization of the Mindanao coal plant through the appointment of an independent power producer administrator before he stepped down from office in July.

Petilla raised concerns the privatization would increase power rates in Mindanao due to lack of other available supply.

As a compromise, PSALM offered to bid out the contract under a three-year lock-in period in which power rates would not go up.

Petilla earlier said there was no other supplier aside from the Mindanao coal plant, forcing electric cooperatives to accept the price of the winning IPP administrator.

“The rates will be the existing contracts with Steag. The rates will not go up under the lock-in period,” Petilla said.

Steag State Power Inc. of Germany operates the Misamis Oriental plant under a build-operate-transfer agreement with the government.

Steag owns a 51-percent stake in the coal plant, while Aboitiz Power Corp. and La Filipina Uygongco Corp. hold 34 percent and 15 percent, respectively.

Located in Misamis Oriental, the Mindanao coal power plant was constructed in 2006 under a 25-year build-operate-transfer power purchase agreement scheme that ends in 2031.

PSALM  earlier said around six companies were expected to participate in the bidding to manage the output of the Mindanao coal plant.

Alzona earlier said around 10 to 11 companies from the original 12 interested parties bought bidding documents.

She said said some of the companies forged joint ventures to trim the number of interested parties.

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