Naga and Leyte plants up for sale this year in Indonesia

Naga and Leyte plants up for sale this year in Indonesia Tongonan, Leyte Geothermal power plant, Philippines
Alexander Richter 1 Jul 2011

Indonesia's PSALM plans to put out an auction for three power plants up this year, two of them geothermal power plants, the Naga Power Plant complex and the Unified Leyte geothermal plants.

Reported earlier today, the Philippines plan to sell of three power plants. Two of them are geothermal plants, the Naga Power Plant complex, and the Unified Leyte Geothermal Plants.

The plants “will be put on the auction block, according to the Power Sector Assets and Liabilities Management Corp. (PSALM).

Emmanuel Ledesma, PSALM president and CEO, said the sale of these power plants and a few power barges will reduce the universal charge reflected in the electricity bills of consumers. The Naga facility will be offered to investors this July with the Leyte and Casecnan power plants following soon after. The sale of the power barges may happen by year-end.

Operating and maintenance losses, according to the PSALM CEO, will also be avoided when these state-owned power generation units are privatized.

PSALM filed before the Energy Regulatory Commission (ERC) Tuesday its application for stranded debts (SD) and stranded contract costs (SCC) amounting to P139 billion. PSALM asked the ERC to apply the SD of P0.0313 per kilowatt-hour (kWh) and SCC of P0.3666 per kWh to the universal charge.

The SCC can go down to P0.06 per kWh, according to PSALM, if the ERC will approve a recovery period of 15 years instead of the four years provided in ERC’s current guidelines.

Ledesma said the universal charge can go down even more if the government extends the corporate life of PSALM by 10 more years. The longer corporate life, Ledesma said, will enable them to extend the recovery period to 25 years from the current 15 years.

The PSALM president said a liability management program is also being implemented to enable PSALM to “attain the most appropriate currency mix and average maturity of these debts in order to avoid foreign exchange losses and bring down interest costs.”

Comment: It was pointed out that PSALM is not actually selling the underlying plants, but selling “dispatching rights that NPC has under the power purchase agreements, called IPPA. (thanks for pointing this out)

Source: GMA News