PSALM-STX deal for Malaya overhaul questioned

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STATE-run Power Sector Assets and  Liabilities Management Corp.   (PSALM) has entered into a questionable deal for the overhaul and maintenance of Malaya Thermal Power Plant, Bayan Muna Rep. Neri Colmenares said.

Colmenares said the contract entered into by PSALM with Korean firm STX Marine Service Co. Ltd. is “flawed” as the latter has no experience at all in maintaining power plants.

Colmenares noted that PSALM awarded the one-year Operations and Maintenance Service Contract (OMSC) to STX even though it has no track record in handling power operations and maintenance.

“Malaya Thermal Power Plant is currently managed under OMSC by STX Marine Service Co. Ltd., whose main experience is shipping and not maintaining power plants,” he said.


After awarding the OMSC to STX, PSALM conducted another separate bidding for maintenance and overhaul of the Malaya 1 Turbine unit, a Siemens HP barrel-type turbine.
“The overhaul and maintenance bidding of the Malaya turbine were participated in by three bidders: Weir Engineering Services Ltd., a British company with experience in turbine overhaul; a Chinese company with unknown maintenance exposure, and STX Marine Service Co., with no experience in overhaul of turbines,” Colmenares said.

After post-evaluation of bids, Colmenares said PSALM awarded the contract to STX, even though it was not able to provide a list of similar projects it has completed concerning overhauling of turbines, especially on the Siemens HP barrel-type turbines.

The Manila Times made several attempts to contact the office of PSALM President Emmanuel R. Ledesma Jr. for a reaction to Colmenares’ allegations, but was unable to get a comment from the agency.

He said during the implementation of the contract starting December 03, 2014, STX sub-contracted the opening of the HP turbine to IWHA, another Korean company without experience in the major overhaul of turbines.

The work was again sub-contracted, this time to SHILOH, a Korean-Philippine company set up in order to supply local manpower and some tools needed for the turbine overhaul.

Work delayed
After a month of overhaul practice by IWHA, Colmenares said the turbine overhaul is now delayed, and because of IWHA’s inexperience on Siemens HP turbine, some parts like coupling bolts were also damaged.

“The fact that the subcontractor company subcontracted the job several times only shows that they are incapable of doing the job. This is very alarming considering that this inexperience will cause delay in the overhaul,” he added.

Colmenares explained that if STX or its Korean partner contractor cannot remedy the situation, the expected start-up of Malaya 1 will not take place on schedule, and the turbine itself could also be damaged.

“This is very critical because the overhauled Malaya 1 is expected to back up power in the Luzon Grid, but it will not be completed by the summer months of 2015,” he pointed out.

Conflict of interest
Colmenares also questioned the awarding of the overhaul contract to the OMSC operator STX.

“In this case, the activities under the overhaul will be biased since there is no check and balance between managing and overhauling,” he said.

Because of this, Colmenares advised PSALM to think twice in awarding a contract to an inexperienced contractor.

He stressed that any delay in the overhaul of Malaya would affect the power supply of Luzon.

“This is very dangerous because it would imperil the power supply of Luzon and in essence PSALM is sabotaging our country by this deal,” he said.

If brownouts take place, Colmenares said the Department of Energy and PSALM must be held accountable for their failure to revive Malaya, which could have provided more than 600 MW power supply.

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