As it earnestly prepares for the bidding for the selection of independent power producer administrators (IPPAs) for the Sual and Pagbilao coal-fired thermal power plants, the Power Sector Assets and Liabilities Management Corporation (PSALM) continues to work closely with industry stakeholders to ensure the realization of open access and retail competition in the electricity sector.

IPPAs will manage the contracted capacities of the government in IPP power plants.

Even while PSALM had already conducted a series of fora on the IPPA selection, stakeholders, particularly prospective investors, remain in constant touch with PSALM to raise and, hopefully, resolve issues and concerns that arise as the initial bidding scheduled on 27 May 2009 approaches.

PSALM’s most recent interface with stakeholders was a briefing on the IPPA appointment process and the Corporation’s privatization accomplishments with the officers of Benguet Electric Cooperative, Inc. (BENECO) last 16 April 2009.

BENECO, a buyer of electricity generated by the Sual power plant, sought a meeting with PSALM to gain a better appreciation of IPP administration and, in the process, help the cooperative prepare for its future business strategies.

PSALM reported that the National Power Corporation has a contracted capacity of 1,000 MW for the Sual power plant that will expire in 2024, and a 700-MW contracted capacity in the Pagbilao power plant that will end in 2025. Both power plants are being operated by Team Energy under a build-operate-transfer (BOT) agreement.

In the IPPA selection process for the Sual-Pagbilao plants, PSALM will use the ownership approach wherein bidders, when preparing their bid submissions, will have to factor in the contracted energy that they will assume, including the subsequent ownership of the power plant.

PSALM pointed out that a bidder could only win one IPP contract to eliminate concerns regarding market dominance since the 1,700-MW combined contracted capacity of the two power plants would already represent about 40% of the contracted capacities that the government would privatize.

Following the appointment of the Sual and Pagbilao IPPAs, PSALM will bid out the IPP contracts for the Casecnan, Bakun, and San Roque hydropower plants, which have a contracted capacity of 140 MW, 70 MW, and 95 MW, respectively. Since these BOT projects involve other government agencies, PSALM might employ a different approach and commercial structure for these contracts.

The third phase in the IPPA selection process will involve the sale of the 1200-MW contracted capacity in the Ilijan natural gas plant, which has a take-or-pay contract with its gas suppliers.

For IPPs that have energy conversion agreements and/or operations and maintenance contracts that expired in 2008 or will expire by 2010, PSALM explained that these plants would undergo the regular privatization process. These include the Limay combined-cycle, Malaya thermal, and Bauang diesel power plants.

PSALM was represented by Mr. Pablo B. Anido, manager of PSALM’s Electricity Trading Department 1 and head of the IPPA Selection Team.