Failure to sell Calaca won't derail privatization plan - PSALM

The Philippine Star

Posted at Feb 13 2009 02:47 AM | Updated as of Feb 13 2009 10:47 AM

The Power Sector Assets and Liabilities Management Corp. (PSALM) said their failure to sell the 600-megawatt (MW) Calaca power plant will not derail their privatization efforts.

PSALM president Jose Ibazeta said they are optimistic that the sale of the 620-MW Limay power plant will compensate for the supposed contribution of Calaca to the projected 70-percent privatization level for the year.

“The sale of Limay which has the same size as Calaca power plant will allow us to meet the 70-percent privatization target,” he said. Commissioned in 1993, the Limay combined-cycle power plant comprises two 310-MW modules, Blocks A and B, which consist of three 70-MW gas turbines and a 120-MW steam turbine, respectively.

From the supposed previous level of 70 percent, the privatization level went down to 54 percent because of the failed Calaca sale. Calaca, at 600-MW capacity, represents 16 percent of the 70 percent.

Industry stakeholders believe that the failure to sell Calaca is a step backward in the government’s privatization efforts.

Philippine Independent Power Producers Association (PIPPA) president Ernesto Pantangco said “this is a major setback for the privatization. The momentum has been significantly affected.”

According to some industry sources, the artificially low rates of the National Power Corp. (Napocor) could have been the major issue in the Calaca deal.

“The Napocor rate is not reflective of true costs especially with the recent ERC (Energy Regulatory Commission) rulings which have led to Napocor incurring losses which may have hampered its ability to maintain the plants,” the sources said.

Pantangco said the delay in the sale of Calaca will also hamper the implementation of the proposed interim open access (IOA).

“The backing out of Suez will delay the implementation of interim open access as the turnover of Calaca to the private sector was one of the conditions,” he said.

Under the ERC guidelines, the IOA will commence after the operations of Calaca is transferred to its new owner. The IOA will allow bulk users with one MW requirement to voluntarily choose where to source their power needs. 

To be able to make the IOA work, there should be enough available power for the big power buyers to purchase, thus the need for the entry of Calaca into the market.

Earlier, it was learned that Suez wanted an increase in the rates of Napocor before closing the Calaca deal.

When sold last October, a transition supply contract (TSC) from the National Power Corp. was attached to it to make it more palatable to the bidders.

Since the rates of Napocor are low, it was learned that the Calaca winning bidder is having second thoughts on closing the sale.