The government considers the recent turnover of the Tiwi-MakBan geothermal power plants to private ownership as a significant milestone in its power restructuring program not only because the facilities are the first steam-powered structures to be successfully sold but also because their privatization is a big boost to the country’s campaign to promote renewable energy.
The turnover of the 289-megawatt (MW) Tiwi Geothermal Power Plant and the 458.53-MW MakBan Geothermal Power Plant to their new owner, AP Renewables Inc. (APRI), was made more important by the presence of President Gloria Macapagal-Arroyo. It was her first visit to the Makati office of the Power Sector Assets and Liabilities Management Corporation (PSALM) where the ceremonial turnover was held last Monday, 25 May 2009.
President Arroyo witnessed the handover of the ceremonial keys to the Tiwi-MakBan plants to the officials of APRI led by President and Chief Executive Officer Austin D. Herrick and Director Luis Miguel O. Aboitiz. Representing the Philippine government in the turnover were Energy Secretary Angelo T. Reyes, Finance Secretary Margarito B. Teves, and PSALM President and Chief Executive Officer Jose C. Ibazeta.
Also present at the occasion were National Power Corporation President Froilan A. Tampinco and APRI Chairman Antonio Moraza.
The government officials also received the ceremonial check of PhP8.778 billion (USD174.17 million) representing APRI’s upfront payment for the sale of the power facilities in compliance with the provisions of the Asset Purchase Agreement. The amount remitted to PSALM comprises 40% of APRI’s USD446.9-million bid for the facilities. The Tiwi and MakBan geothermal power plants were bid out on 30 July 2008.
APRI also paid PSALM PhP492.034 million (USD10.40 million) as its full payment of lease rentals for the land underlying the power facilities.
In his message, Mr. Moraza lauded PSALM for its conviction in ensuring the implementation of the government’s power privatization program and for the transparency and integrity it applies in its bidding exercises.
For his part, Secretary Teves noted the string of positive events in the power sector. He disclosed that PSALM’s debut USD1-billion bond offering was enthusiastically received by investors in the credit market. He described the Tiwi-MakBan turnover as “icing on the cake” as the government receives from APRI the USD174.17-million upfront payment.
“The proceeds from these milestones will go a long way in easing the government’s debt burden even as we continue to grapple with the adverse effects of the world’s financial turmoil,” Secretary Teves said.
Secretary Reyes described this latest development in the power sector as a “definite boost to the government’s ongoing campaign to promote renewable energy sources such as geothermal since it can significantly reduce our dependence on imported oil.”
“The benefits of privatization in the form of positive interventions, including the expansion and upgrading of the country’s power facilities, will help us achieve our goal of providing Filipino consumers with a reliable and quality supply of electricity at reasonable prices,” he said.
In his message, President Ibazeta said the turnover was a product of the hard work and the collaborative efforts of all concerned government agencies and the private sector represented by APRI.
“We laud the Aboitiz Group not only for continuing to support the government’s power privatization program, but also for taking the lead in promoting best practices in a restructured power industry,” he said.
Aside from the Tiwi-MakBan power complex, the Aboitiz Group has acquired the 360-MW Magat Hydroelectric Power Plant in Ramon, Isabela, the 75-MW Ambuklao and 100-MW Binga Hydroelectric Power Complex in Benguet province, and the 3.5-MW Talomo Hydroelectric Plant in Davao.
