Psalm eyes CBKHPP, Casecnan hydro power plants as the next in line to privatize
By Lenie Lectura – July 5, 2019
from Business Mirror
THE Power Sector Assets and Liabilities Management Corp. (PSALM) has set its sights on Caliraya-Botocan-Kalayaan Hydroelectric Power Plant (CBKHPP) and Casecnan multipurpose hydropower plant as the next power assets to be privatized.
“We are set to bid out this August the Malaya power plant. We are targeting the privatization of the CBKHPP and Casecnan next as soon as we have completed the study that aims to determine the privatization structure most suitable for these security assets,” PSALM President Irene Joy Garcia said.
The state firm announced last month that public bidding for the 650-megawatt (MW) Malaya Thermal Power Plant (Malaya TPP) and its underlying land is scheduled next month.
PricewaterhouseCoopers (PwC) Philippines will craft financial models and analyses to optimize value for the land and structures of Malaya TPP.
After the sale of Malaya TPP, PSALM hopes to privatize the two hydro-power facilities by next year. Garcia said the state firm is currently conducting a study on options for the sale of the 728-megawatt CBKHPP in Laguna and the 140-MW Casecnan multipurpose hydropower plant in Nueva Ecija.
“We are hoping we can get help from the Asian Development Bankwhich was the direction set by the Department of Finance. We’ve already started working with the DOF for us to be able to get assistance from ADB for the feasibility studies also for determining the structure that will be best suitable on how we can privatize it,” Garcia said.
The CBK hydrofacility consists of the 22.6-MW Caliraya in Lumban, 20.8-MW Botocan in Majayjay and the 684.6-MW Kalayaan I and II in Kalayaan, Laguna.
J-Power and Sumitomo Corp. of Japan operate the CBK power plants.
The 140-MW Casecnan project, meanwhile, was built following the signing of a build-operate-transfer contract between the National Irrigation Administration and California Energy Casecnan Water and Energy Co. Inc. (CE Casecnan) in 1994.
CE Casecnan’s contract with the government will lapse on April 5, 2022, while that of J-Power will end on February 7, 2026.
She said the feasibility study should be finished this year, followed by the sale in 2020.
“The study should be finished so we can figure out what is the ideal corporate structure to dispose of it so that next year we can bid it out,” said Garcia, adding the study will provide the direction as to how the Casecnan asset, which is 60 percent owned by PSALM and 40 percent by the National Irrigation Administration (NIA), would be sold.
PSALM, she added, will also pursue the auction for the contracted capacity of the 210-MW Mindanao coal plant in Villanueva, Misamis Oriental.
Located in Misamis Oriental, the Mindanao coal plant was constructed in 2006 for a 25-year Power Purchase Agreement under a build-operate-transfer scheme that ends in 2031 with Steag State Power Inc. of Germany.
The power plant is 51-percent owned by Steag; 34 percent, Aboitiz Power; and 15 percent, by La Filipina.
“STEAG sale is being eyed in 2021. It’s part of the study. We will start with CBK then Casecnan and STEAG,” said Garcia.
So far, PSALM has privatized 31 generation assets including the Magat HPP, Tiwi-Makban geothermal power plants, Pantabangan-Masiway HPPs, Masinloc coal—fired thermal power plant and Batangas (Calaca) coal-fired thermal.
PSALM is the entity created by the EPIRA, the law that restructured the power industry by privatizing the assets of National Power Corp. (Napocor).
From a high of P1.24 trillion financial obligation that PSALM had to absorb from Napocor, it is now down to P433.8 billion as of end-May 2019. Garcia said 2018 was a difficult year for the state firm due to the Peso depreciation. At end-2017, it was P49.9 to a dollar.
Then the peso depreciated to P52.7. This resulted to a net foreign exchange (forex) loss of P13.4 billion, or P7 billion for every peso depreciation.
“We had dollar gain of P5.6 billion, offset against P19 billion forex losses, thus net of P13.4 billion. Notwithstanding this forex losses, we managed to still remit P31.5 billion debt payment and P29.1 billion for IPP [Independent Power Producers] obligations, or a total of P60.6 billion for principal obligations alone, and P14.4 billion payment of interests,” she said.
“We managed to do these because of successful collection of non-current accounts and also the continuing privatization proceeds- P2 billion from PEZA, P800 million from IEMOP, P1.5 billion interests from advances we made for San Roque plant,” Garcia said.
