PSALM recasting strategy on sale of Casecnan plant

By Myrna M. Velasco – October 25, 2018, 10:00 PM
from Manila Bulletin

State-run firm Power Sector Assets and Liabilities Management Corporation (PSALM) is re-modeling its strategy on the planned privatization of the supply contract of the 150-megawatt Casecnan hydro power facility next year.

PSALM President

Irene Joy B. Garcia

“Casecnan is in our privatization schedule next year,” PSALM President and CEO Irene Joy B. Garcia said; adding that the company may still have leeway to privatize the asset’s power

“The turnover is 2021, so we have two years remaining on the plant’s ECA (energy conversion agreement),” she explained, referring to the supply contract that may be placed under the charge of independent power producer administrator (IPPA) once the asset is privatized.

She qualified though that the plant’s divestment will require a different strategy “because we won’t fully own the plant, we share its ownership with NIA (National Irrigation Administration).”
In fact, the company’s previous plan was to ‘buy out’ the remaining duration of the asset’s supply contract and then it will just strike a deal with NIA on how they can enforce direct sale of the hydro facility.

That was being studied by PSALM as a privatization track for the last 4-5 years already, but so far the company was not able to come up with a definitive plan on the asset’s divestment.

“There’s still a period for us to privatize the contract, but its structure is very unique, so we will also study the proposed buyout first…it’s really different how that contract was structured,” Garcia stressed.

She added that in the previous divestment of assets carried out by PSALM, “the plant or the contract was entirely owned by PSALM, but in Casecnan plant, we have a co-owner which is NIA.”
That will then entail deeper study and a distinctive strategy on the divestment option – and that is a matter that PSALM has been targeting to sort out until the end of this year, so privatization can be advanced as targeted in 2019.

The company has been accelerating the divestiture of existing power assets so it can raise additional cash to pay off outstanding financial obligations prior to the conclusion of PSALM’s corporate life in 2026.