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Bidders for 640MW Leyte plant auction are asking for deferment

Tongonan, Leyte Geothermal power plant, Philippines
Alexander Richter 19 Jul 2010

Some bidders in the auction for the privatization of the unified 640MW Leyte geothermal facilities in the Philippines, are asking for deferment of the auction to a later date.

“Some bidders in the appointment of Independent Power Producer Administrator (IPPA) for the 640-megawatt unified Leyte geothermal facilities have been batting for deferment of its privatization auction to a later date instead of the originally-scheduled July 30 this year.”, so the Manila Bulletin.

“We have requested for deferment but it is still to be decided by PSALM (Power Sector Assets and Liabilities Management Corporation),” Energy Development Corporation (EDC) executive vice president Ernesto B. Pantangco said.

In the same vein, the operator of the 650-megawatt Malaya thermal power facility reiterated its bid for deferment of the IPPA auction for the plant’s power contract, noting that the asset is still needed for security capacity in the Luzon grid.

As the first bidding for the Malaya IPPA ended in a failure, former Energy secretary Jose C. Ibazeta referred new privatization timelines for the asset as a matter to be decided upon by the new administration.

PSALM also made pronouncements that it will split the IPPA appointments for the various Leyte geothermal plants based on the prescriptions of the Electric Power Industry Reform Act (EPIRA). The Unified Leyte facilities include the: 125-MW Upper Mahiao plant; 232-MW Malitbog, 180-MW Mahanagdong and the 51-MW Optimization plants.

However, the bidding terms of reference just referred to an IPPA which shall “manage the contracted annual energy output from the power purchase agreements between National Power Corporation (NPC) and EDC,” silent as to reference on the number of IPPA/s to be chosen. The contracts are due to expire in 2025 and 2026.

From some industry players’ viewpoint, the planned appointment of IPPA for the Leyte geothermal plants is hobbled by array of factors; such as the commercial operation of the Wholesale Electricity Spot Market (WESM) in the Visayas and anticipated capacity additions to plug supply shortages in the area.

The timeframe being looked at to finally privatize the Leyte geothermal plant contracts would be 2012, when supply shortages in the grid is resolved; and for it to be aligned with the anticipated integration of the Luzon and Visayas electricity spot markets.

Pantangco said the company-seller will gain more leverage at fetching a better offer if there would be some degree of market stabilization – either injected by the WESM’s operations or with the supply deficit getting plugged with investment influx.

If PSALM decides to defer the privatization bidding for the two assets, it must count instead on the Naga thermal complex to finally meet the 70-percent IPP contracts privatization threshold as a legal requirement for open access.”

Source: Manila Bulletin