Saturday, 29 August 2009

Philippine power privatisation moves ahead

San Miguel bags Sual, Aboitiz gets Pagbilao
Jose Bimbo F. Santos

The government on Friday announced that it had bid out the right to utilize the output of two major power plants, moving a step closer to an open access regime which is expected to result in lower electricity costs.

A unit of conglomerate San Miguel Corp., San Miguel Energy Corp., bagged the independent power producer administrator (IPPA) contract for the 1,000-megawatt (MW) Sual in Pangasinan, while Aboitiz Power Corp. unit Therma Luzon, Inc. won the 700-MW Pagbilao facility in Quezon during a second bidding round on Thursday.

San Miguel Energy offered $1.07 billion for Sual, higher than the $1.02 billion offered by Therma Luzon. Pagbilao went to Therma Luzon after it offered $691 million, higher than SMEC’s $651 million.

The Power Sector Assets and Liabilities Management Corp. (PSALM) said both bids had met reserve prices. PSALM said it would issue notices of award after verification of bid documents.

Both companies had participated in the first bidding last June 26, which was declared a failure after their offers failed to meet the government’s reserve prices.

The companies will manage the contracted capacity of Sual and Pagbilao, which are operated by Team Energy under a build-operate-transfer agreement.

The two plants represent around 34.7% of the contracted capacity of the IPP contracts for Luzon and the Visayas, about half of the 70% required under the Electric Power Industry Reform Act. The privatization rule is a precondition for the declaration of open access and retail competition.

San Miguel Energy has now won two power assets in a week after it also bagged the 620-MW Limay Combined Cycle Power plant in Bataan last Wednesday. The firm acquired the plant for $13.5 million in a negotiated sale.

Limay was its first successful bid for a generation asset after a number of failed attempts.

Aboitiz Power, meanwhile, also concluded last July 31 a negotiated bid for the purchase of two barge-mounted diesel plants in Mindanao with a generating capacity of 100 MW each. The prices offered for the two, known as PB 117 and PB 118, were $16 million and $14 million, respectively.

PSALM said that it was now set to implement Phase II of its IPPA selection process, which will involve the contracts of the Casecnan, Bakun, and San Roque hydropower plants. The contracted capacities of these facilities are 140 MW, 70 MW, and 95 MW, respectively. —

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