Mandated study further delays 650MW Malaya plant’s sales
By Myrna M. Velasco – February 4, 2018, 10:00 PM
from Manila Bulletin
The divestment of the 650-megawatt Malaya thermal power facility will further be held in abeyance following the mandate of the Department of Energy (DOE) on the conduct of a study that shall validate first the continuous “usage of the asset as a must-run-unit” or its proposed conversion to gas or coal-fired power facility.
In an interview with reporters, Energy Assistant Secretary Leonido J. Pulido III disclosed that the energy department is requiring “a specific study on ancillary (power reserve) requirements, meaning, do we really need to keep Malaya running as a must-run-unit?” A must-run-unit (MRU) is a power plant that can be called for dispatch during certain conditions in a power system – and for the Malaya plant, it had been on cases of supply tightness being experienced in the Luzon grid.
Pulido emphasized that cost-wise, “one of the problems of Malaya is that, it has been costing us R8 billion to run it. It’s a significant amount and we are shouldering that as consumers – the cost of running Malaya.” Further, the DOE official noted that the other core of the required study is to assess if it is viable to shift the plant’s fuel use to either gas or coal once sold to private investors.
“The initial mandate of the Secretary (Alfonso G. Cusi) was that, on the privatization of Malaya thermal power plant, there must be a requirement to convert it into either LNG (liquefied natural gas) power plant or coal-fired power plant. However, we want to require that a study be made,” he stressed.
Another sphere of contemplation is on funding source of the mandated study – whether or not this could be feasibly shouldered by the DOE, the prospective investors or asset-seller Power Sector Assets and Liabilities Management Corporation (PSALM). Pulido nevertheless conveyed that “right now, we’re leaning towards the DOE footing the bill for the study.”
The energy official similarly dropped hints that given current developments, it is highly likely that the power plant’s divestment will be further delayed.
“Our stand is that the delay is reasonable, it would be better to be delayed until we can come up with a firm policy on what to do with Malaya…we feel that the status quo is safer until we finish the study,” he said.
The initial step of the department had been directing its Electric Power Industry Management Bureau to draft a memorandum that shall be submitted to the energy secretary for action.
State-run PSALM previously indicated to media that it will revert to the DOE on “definitive approach” relating to Malaya plant’s divestment, as this is among the assets it has been targeting on the auction block this year.
As reiterated by Pulido though, “currently, we don’t have immediate schedule in mind, because that study is required before we set a firm policy on Malaya’s privatization.
