DOE plans to delay Mindanao coal plant privatization

MANILA, Philippines ­–The Department of Energy (DOE) wants to push back the privatization of the supply contracts for the output of the 200-megawatt (MW) STEAG Mindanao coal-fired plant to 2016 from September 2015.

Energy Secretary Jericho Petilla, whose term was extended until a replacement can be found, explained that the planned delay was due to concerns that an early auction could lead to power rate hikes.

This is because electric cooperatives would be forced to source power from the winning bidder who would be able to dictate prices due to lack of competition.

The Mindanao coal power plant supplies about a fifth of Mindanao’s power giving operators a large influence on how prices are dictated.

A better scenario, Petilla pointed out, would be to privatize the contracted capacity of the STEAG coal-fired power plant  sometime within the first half of 2016 when the new power plants of the power generation companies are expected to come on line.

Petilla plans to ask the state-owned Power Sector Assets and Liabilities Management Corporation (PSALM) to delay the privatization until the planned power plants of Aboitiz, Alsons or San Miguel have been put up.

“It’s better to hold off the privatization so that the consumers won’t be burdened only until such time when at least two power plants are up and running which is actually very soon, maybe in the first half of 2016,” explained Petilla.

Alson’s Sarangani Energy Corporation (SEC) is on track to begin commercial operations in the 4th quarter of 2015 for the first 105 MW section of its 210 MW coal-fired power plant at Maasim, Sarangani. The plant will begin commissioning within the first-half of 2016.

Alsons Power is also developing the 105 MW San Ramon Power, Incorporated coal-fired power plant in Zamboanga City.

Therma South Incorporated, a unit of Aboitiz Power, is building 2 x 300MW coal-power plant in Davao.

Likewise, SMC Davao is putting up a 600MW power facility.

Subsidiaries of the Lopez group, San Miguel Corporation, as well as Aboitiz power are among the 12 firms interested in managing the output of the 200-megawatt (MW) Mindanao Coal-fired Thermal Plant which PSALM plans to bid out on September 23 – Rappler.com