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EDC withdraws from PSALM contract as IPP administrator

EDC withdraws from PSALM contract as IPP administrator Tongonan, Leyte Geothermal power plant, Philippines
Alexander Richter 21 Nov 2013

Energy Development Corp.'s Unified Leyte Geothermal Energy Inc. will not accept the award by PSALM to make it an independent power producer administrator, due to the destruction caused by the super typhoon Yolanda in the Eastern and Western Visayas in the Philippines.

Reported today from the Philippines, Energy Development Corp. (EDC) announced that “its wholly owned subsidiary Unified Leyte Geothermal Energy Inc. (ULGEI) has informed the Power Sector Assets and Liabilities Management Corp. (PSALM) that it would not accept the award that would make it an independent power producer administrator (IPPA).

“ULGEI has written PSALM that it cannot accept the award of the winning bids as the physical and economic conditions underlying the bidding process and the IPPA administration agreements required to be executed pursuant thereto have been dramatically altered by the severe and widespread destruction caused by super typhoon Yolanda in the Eastern and Western Visayas regions,” the disclosure read.

PSALM auctioned off Unified Leyte’s contracted capacity in “strips” and “bulk” in a bidding held on Nov. 7, where ULGEI was declared as one of the highest ranking bidders.

ULGEI submitted a bid price of P5.21 per kilowatt-hour for 40-megawatt (MW) capacity under the “strips of energy” category. It also submitted a P215-million offer for the “bulk energy” category.

PSALM President and Chief Executive Emmanuel R. Ledesma, Jr. had said the highest ranking bidders will still have to undergo and pass the post-qualification stage before being declared as winning bidders.

However, EDC last Tuesday said that the Unified Leyte and 112.5-MW Tongonan geothermal power plants sustained heavy damage amid the onslaught of super typhoon, making around 650-MW of capacity unavailable.

The Unified Leyte complex — which straddles Ormoc City and municipality of Kananga — is composed of the 125-MW Upper Mahiao plant; 232.5-MW Malitbog plant; 180-MW Mahanagdong plant; and 51-MW optimization plants.

“The company is exerting all best efforts to return all the power plants back to service at the soonest possible time,” EDC said.

Asked about PSALM’s forward plans for the plant, Mr. Ledesma said in a text message yesterday: “We are still studying the matter.”

PSALM was formed under Republic Act 9136 or the Electric Power Industry Reform Act of 2001 to assume ownership of and manage all Napocor’s assets, liabilities, contracts with independent power producers, real estate and other disposable assets.”

Source: Business World Online