Maintaining its focus to get independent power producer administrators (IPPAs) appointed this year, the Power Sector Assets and Liabilities Management (PSALM) Corporation formally opened today (23 July 2009) the second round of bidding for the selection of IPPAs to manage the contracted capacities of the National Power Corporation in the coal-fired Sual and Pagbilao power plants with the publication of the invitation to bid (ITB) in major dailies.
 
The 1,000-megawatt (MW) Sual power plant in Sual, Pangasinan and the 700-MW Pagbilao plant in Pagbilao, Quezon are both operated by Team Energy under build-operate-transfer contracts that will expire in 2024 and 2025, respectively.

PSALM launched the second round of bidding for the selection of IPPAs after the first exercise held last 26 June 2009 failed because the two participating bidders did not meet the reserve price set by the PSALM board for the contracted capacities of the Sual and Pagbilao power plants.

The ITB released by PSALM’s Bids and Awards Committee (PBAC) states that interested parties must submit a Letter of Interest (LOI) to PSALM not later than 5 p.m. of 03 August 2009. The PBAC stressed that only investors meeting the LOI submission deadline would be allowed to participate further in the appointment of IPPAs for the contracted capacities of the Sual and Pagbilao power facilities.

Interested investor groups are also required to pay a non-refundable fee of USD5,000.00 and execute a Confidentiality Agreement and an Undertaking with PSALM. The deadline for submission of these initial requirements is 04 August 2009.

Qualified investor groups can conduct their due diligence starting 23 July 2009 until two business days before the bid submission deadline on 28 August 2009.

The Pre-Bid Conference for prospective bidders is on 05 August 2009 at the PSALM offices in Makati City.

The PBAC pointed out that qualified bidders must submit an offer for both the Pagbilao IPPA and the Sual IPPA.  These bids, the committee said, are separate and distinct from each other, which means that one offer each must be submitted for the Pagbilao IPPA and the Sual IPPA.

In the ITB, the PBAC made it clear that there would be separate awards for the Pagbilao IPPA and the Sual IPPA. A bidder can only be declared the highest bidder for either the Pagbilao IPPA or the Sual IPPA.  If the bidder is the highest bidder for both the Pagbilao IPPA and the Sual IPPA, the PBAC will select which contracted capacity to award to the bidder to check concerns regarding market dominance.

The ITB stipulates that in case of a failed bidding for the Pagbilao IPPA and/or the Sual IPPA, PSALM will enter into negotiations in accordance with its negotiation procedures contained in the bidding package given to the qualified bidders.

The 1,700-MW aggregate contracted capacities of the Sual and Pagbilao power plants represent around 34.7% of the contracted capacity of the IPP contracts for Luzon and the Visayas.

PSALM is pursuing the selection of IPPAs as it seeks to hit the 70% requirement to privatize the contracted capacities under the IPP contracts this year to meet the last precondition for open access and retail competition as stated in the Electric Power Industry Reform Act.