SMC, MGen keen on joining bidding for Meralco’s PSAs

By Lenie Lectura – July 23, 2019
from Business Mirror

SAN Miguel Corp. (SMC) and Meralco PowerGen Corp. (MGen) are interested to participate in the Manila Electric Co.’s (Meralco) three power-supply contracts that are up for bidding via competitive selection process (CSP).

SMC President Ramon Ang, in a text message, affirmed that the conglomerate’s power business unit will bid for Meralco’s power supply contracts. However, he has yet to decide which of the three contracts his company would make a bid offer for. “I will check,” he added.

Similarly, the power generation arm of Meralco is interested. “We will probably not join all of the three,” said MGen President Rogelio Singson in a text message.

Meanwhile, Semirara Mining and Power Corp. (SMPC) Chairman Isidro Consunji said he “is still thinking” about joining the auction, saying the published requirements “carry very difficult conditions.”

Meralco will bid out three power supply contracts with a total capacity of 2,900 megawatts (MW).

A 500 MW, five-year power-supply contract that starts on December 26, 2019, will be bid out on September 11, 2019. Meralco prefers mid-merit power plants, or those that can adjust the power output as demand for electricity fluctuates throughout the day, to supply this requirement.

Bidders must post a bid security fee of P2.3 million per MW of offered contract capacity.

Another power contract will be bid out on September 10 this year. This involves 1,200 MW capacity for 20 years starting September 2024.

For this contract, Meralco prefers baseload plants—one that usually provides a continuous supply of electricity throughout the year with some minimum power generation requirement. Baseload plants will only be turned off during periodic maintenance or upgrading.

The baseload power plant should achieve commercial operations not earlier than March 2024 for the first unit, with full contract capacity by September 2024. In case the plant has four units, two of these must attain commercial operation date (COD) by March 2024.

If there is a delay in the CDO, Meralco may terminate the PSA and forfeit the P3.6-billion performance security.

Interested power suppliers have until July 29 to submit their expressions of interest, purchase bid documents and pay a participation fee of P6 million.

Meralco requires that the capacity of the plant must not be contracted with any other plant. Also, the power plant that will supply Meralco must not experience more than 30 days of scheduled power outage and not more than 15 days of forced outage.

The third contract involves another 1,200 MW capacity that will supply Meralco for 10 years starting December 26, 2019.

Interested bidders must pay a P2,500 fee per MW of offered contract capacity, submit an expression of interest and confidentiality undertaking and purchase bid documents until July 26.

The CSP requires distribution utilities (DUs) to hold competitive bidding for their supply requirements as against securing power deals via bilateral contracts. This is meant to ensure transparency and fair competition.

Meralco earlier inked seven PSAs with several power-generation companies, including two from MGen, which is building power plants under Redondo Peninsula Energy Inc. and Atimonan One Energy Inc.

The remaining five are with St. Raphael Power Generation Corp., Meralco’s joint venture with Consunji-led SMPC; Central Luzon Premiere Power Corp. (CLPPC); Mariveles Power Generation Corp. (MPGC); Panay Energy Development Corp. and Global Luzon Energy Development Corp.

CLPPC and MPGC are under SMC Global Power Holdings, the power arm of SMC.

However, these PSAs, with a total capacity of over 3,500 MW, were not implemented following the Supreme Court order which stemmed from allegations that the Energy Regulatory Commission gave due preference to Meralco by extending the deadline for compliance of CSP.

The SC decision requires all power-supply agreements (PSAs) forged after June 30, 2015, to undergo CSP.