PSALM no longer lining up privatization; up to DOF

By Myrna M. Velasco – October 15, 2018, 10:00 PM
from Manila Bulletin

State-run Power Sector Assets and Liabilities Management Corporation (PSALM) has indicated that it is no longer lining up the privatization of the Agus and Pulangui hydropower assets, unless the Department of Finance (DOF) would give go-signal to it.

PSALM President Irene Joy B. Garcia

PSALM President and CEO Irene Joy B. Garcia disclosed that “at the moment, there is no instruction to privatize Agus and Pulangui,” referring to the biggest hydro assets of the country in the Mindanao grid.

“While it is an asset in the list of PSALM, it’s not something that we will be privatizing anytime soon, unless we get any instruction to do so,” the PSALM chief executive stressed.

Finance Secretary and PSALM Board Chairman Carlos G. Dominguez III made previous pronouncements that he would want the plants to undergo rehabilitation first before the State decides on their privatization fate.

As noted by Garcia, “on the rehabilitation of Agus, the DOF is really in the driver’s seat with respect to that activity,” adding that they are also coordinating with the World Bank Group when it comes to funding the feasibility study on the rehab plan for the assets.

“We are at that stage of coming up with a feasibility study that would really assess how to rehabilitate – and what is the cost of the rehabilitation. Once that is approved, the rehab will be turned over to Napocor (National Power Corporation) for implementation,” Garcia said.

Past divestment plans on the hydro facilities had always been politically charged and tension-laden as many stakeholders in Mindanao are opposed to relinquishing the assets into the hands of the private sector.

There have been proposals to just undertake ‘corporatization’ of the Agus-Pulangui plants and place them under a company that shall be managed by Mindanao stakeholders; but that had not passed legislative maze when it was lodged in Congress.

With Mindanao’s power supply on surplus mode at this point, relevant industry players deemed it “a perfect timing” now to pursue the assets’ rehabilitation so their electricity generation can be optimized.

These two major hydro plants have aggregate installed capacity of 982 megawatts, but they have been de-rated over the years as they were ran to the ground when they had to serve bulk of the power needs of Mindanao.

As initially crunched, the cost of rehabilitation may run up to P54 billion – and four multilateral lending firms have already expressed interest to extend financing, including that of the International Finance Corporation of the World Bank Group; Asian Development Bank as well as Japanese and Chinese funding entities.

The Agus-Pulangui hydropower complex remains as ‘prized assets’ of the government – that even at de-rated capacities, they still yield P8.0 billion to P10 billion in operating income for PSALM annually.