Prebid terms for Mindanao power plant output ready by Sept

MANILA, Philippines – Contract terms for the selection and appointment of the Independent Power Producer Administrators (IPPAs) for the bulk energy of the Mindanao Coal-Fired Thermal Power Plant will be available to prospective bidders ahead of the September auction date, Energy Secretary Carlos Jericho Petilla said.

“In the pre-bidding, bidders were not yet informed. But PSALM can do another pre-bid if it has to inform everybody because the lock-in period will be included in the terms of reference,” Petilla said.

The Department of Energy and the Power Sector Assets and Liabilities Management (PSALM) Corporation have agreed not to temporarily halt the auction for the output of the Mindanao coal plant. Instead, a lock-in period of two to 3 years would be implemented to prevent triggering power rates increase.

“In our discussion with the PSALM OIC (officer-in-charge) I asked for a suspension of the privatization. A counter offer was made. The privatization will push through as scheduled but there will be lock-in period of two to 3 years,” Petilla said.

The power plant supplies about a fifth of Mindanao’s power requirements. The Energy chief has raised concerns that an early auction could result in power rate hikes. He said electric cooperatives would be forced to source power from the winning bidder, which could dictate prices due to lack of competition.

Petilla said a delay in the privatization until new power plants of Aboitiz Power, Alsons and San Miguel Corporation are set up. More power plants would mean more choices for electric cooperatives and distribution utilities to source power from.

These new power plants are seen to be put up by the first half of 2016.

The energy secretary admitted that an imposition of a lock-in period between the winning bidder and the off-taker would discourage potential bidders to participate in the bidding.

During the lock-in period, the winning bidder would have no choice but to adopt the existing power rate sold by current plant operator Steag State Power Inc of Germany.

“In this way, electricity rates will not go up because the rates that will be used are the rates currently imposed based on the contract with Steag. Yes, it is possible that no one will be interested anymore and if that happens then the asset won’t be privatized. However, consumers will be spared from high electricity rates,” Petilla said.

The Mindanao Coal plant was built in 2006 under a 25-year Build-Operate-Transfer-Power Purchase Agreement scheme with the government. The cooperation period with Steag officially ends in 2031.

The power facility is made up of two units with a generating capacity of 105 megawatts each.

PSALM has scheduled the bidding for the Mindanao Coal IPPA appointment on September 23.

The 12 prospective bidders are Conal Holdings Corporation; FDC Davao Del Norte Power Corporation; FirstGen Northern Power Corporation; GDF Suez Energy Philippines, Incorporated; Masinloc Power Partners Company Limited; Meralco Powergen Corporation; Nexif Private Limited; SMC Global Power Holdings Corporation; SPC Power Corporation; Team (Philippines) Energy Corporation; Therma Southern Mindanao, Incorporated; and Vivant Energy Corporation. – Rappler.com