THE Department of Energy (DOE) has ordered the state-run Power Sector Assets and Liabilities Management Corp. (PSALM) to put off the bidding for the privatization of a 210-megawatt (MW) coal-fired power plant in Misamis Oriental in Mindanao.
Energy Secretary Carlos Jericho Petilla said privatizing the Misamis plant could lead to higher electricity rates since Mindanao is currently experiencing power shortages.
Petilla explained that once the Independent Power Producer Administrator (IPPA) contract of the Mindanao coal plant has been bid out, the private operator could dictate electricity rates.
“If there’s a shortage and you privatize that, cooperatives will get that [power]for any price and of course, dictate electricity rates,” he said.
Petilla said based on his discussions with PSALM, instead of going ahead with the privatization, the latter could just continue with the contract with Steag State Power Inc. (STEAG) until such time new as power projects in Mindanao come in.
“They [PSALM] have a counter proposal to lock in the generation cost for two to three years with their existing contract with STEAG. In other words, electricity rates will not increase,” he said.
The DOE expects more power projects to begin commercial operations this year. These include the 150-MW unit 1 of Therma South Inc. (TSI), a subsidiary of Aboitiz Power, and the first 105-MW section of the 210 MW coal-fired power plant in Maasim, Sarangani of the Alsons Group.
According to PSALM, at least 12 investor groups have already signified their interest in the IPPA contract.
These include Conal Holdings Corp., FDC Davao del Norte Power Corp., First Gen Northern Power Corp., GDF Suez Energy Philippines Inc., Masinloc Power Partners Co. Ltd., and Meralco Powergen Corp.
Other groups that have also signified interest are Nexif Pte Ltd., SMC Global Power Holdings Corp., SPC Power Corp., TeaM (Philippines) Energy Corp., Therma Southern Mindanao Inc. and Vivant Energy Corp.