DOE may further delay Steag coal plant privatization


THE Department of Energy (DOE) may further push back the privatization of the independent power producer administrator (IPPA) contract for a 210-megawatt (MW) coal-fired power plant in Misamis Oriental because of the current high power rates in Mindanao.

DOE officer-in-charge (OIC) Zenaida Monsada said privatizing the IPPA contract for the Misamis coal plant would only result in higher electricity costs for residents.

“For the sake of the people in Mindanao,” she said when asked by reporters the reason why a further delay was being considered. “If we privatize it now, the tendency is there would be high power rates because there is a shortage in capacity now.”

State-run Power Sector Assets and Liabilities Management Corp. (Psalm) is set to auction the IPPA contract for the Mindanao coal plant on November 25 this year.

Monsada has proposed that the privatization be done next year when power supply is expected to become stable.

“So, the direction now is that it would be best if the privatization would take place when supply is stable. So probably by next year,” she added.

In addition, she said “Congress is also insisting on a deferment until supply is stable.”

Lourdes Alzona, Psalm president, earlier said that six companies have signified their intention to join the bidding process.

The coal plant in Misamis Oriental is operated by Steag State Power Inc. under a 25-year build-operate-transfer (BOT) power purchase agreement scheme until 2031. Germany’s Steag AG owns 51 percent of Steag State Power, with AboitizPower owning 34 percent and La Filipina the remaining 15 percent.

Psalm earlier set the deadline for the payment of the nonrefundable participation fee and execution of a Confidentiality Agreement and Undertaking (CAU) last April 13.

It held the pre-bid conference on May 6 in preparation for the bidding proper scheduled on September 23. However, it announced that it has pushed back the bidding for the IPPA contract from September 23 to November 25 after considering the DOE’s directive to defer the auction.

Psalm is tasked to take ownership of all existing generation assets, liabilities, Independent Power Producer (IPP) contracts, real estate and all other disposable assets of the National Power Corp. (NPC) and manage the disposition and privatization of such assets with the objective of liquidating all NPC financial obligations and stranded contract costs in an optimal manner.


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