PSALM seeking advisor for Agus-Pulangui plants’ rehab

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

State-run Power Sector Assets and Liabilities Management Corp. (PSALM) is now in the process of shortlisting prospective institutions for transaction advisor for the planned P54-billion rehabilitation venture on the Agus-Pulangui hydropower complexes in Mindanao.

According to Energy Undersecretary Felix William Fuentebella, there are at least five firms in PSALM’s shortlist for the engagement of a transaction advisor on the proposed project.

As gathered from sources privy to the process, among the frontrunners are International Finance Corporation (IFC) of the World Bank Group, Asian Development Bank (ADB) and a Japanese institution.

Fuentebella indicated that decision will likely be rendered within the quarter on the advisor’s selection while timeline on the rehabilitation of the hydro assets would be firmed up within this year.

“That is now being discussed with the DOF (Department of Finance) and we have so far agreed on the parameters for the project,” he said.

Notably, it is Finance Secretary Carlos G. Dominguez III who is the chairman of the PSALM Board and it was also his proposal to pursue the rehabilitation of the Agus and Pulangui assets prior to divestment.

On the project’s funding, Fuentebella indicated that China financing “might not be the only option,” adding that such has also been part of the discussion at PSALM Board.

The Agus-Pulangui plants already have extremely de-rated capacities, hence, it is now very critical to get them overhauled to bring back their level of generation close to the installed capacity levels.

Industry stakeholders noted that the timing will be perfect, because there is not much need to run the Mindanao hydro assets to the ground this time given the overcapacity that the grid currently experiences.

The Agus-Pulangui hydropower complex remains to be “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.

With their mandated rehabilitation, Dominguez had opined that higher proceeds can be fetched once the State decides on the sale or privatization of the facilities.

Under the Electric Power Industry Reform Act (EPIRA), the Agus-Pulangui plants have been initially spared from privatization for around ten years. But at the time that their divestments were being mulled, Mindanao stakeholders have been extremely opposing plans.