PSALM parries House criticism on Napocor privatization program

STATE-RUN Power Sector Assets and Liabilities Management Corp. (PSALM) said it welcomes inquiries into the privatization of National Power Corp.’s plants, which critics claimed has failed to bring down the country’s electricity rates.

Emmanuel Ledesma, PSALM president, said the agency would respond to queries on why the output of the Naga power complex in Cebu is up for sale to an independent power producer administrator (IPPA).

Under the Electric Power Industry Reform Act of 2001, PSALM is tasked to privatize Napocor’s power plants and contracted capacities, the latter through the selection of IPPAs who will take control of the output of contracted third-party power generators.

Ledesma’s pronouncement came after House Deputy Speaker Lorenzo Tañada 3rd warned of the continued increase in electricity rates because of PSALM’s questionable sales and bidding of power plants.

“Based on reports reaching my office, the bidding of the Naga [IPPA] contract is being negotiated by a power plant located beside the Naga IPPA,” Tañada said. In this regard, “we want PSALM to hold in abeyance the Naga IPPA bidding until it has clarified issues regarding how the bidding rules have been designed.”

Based on a land-lease agreement, Salcon Power Corp. was given the right to top by 5 percent whatever is the highest bid for the Naga IPPA.

“Can PSALM explain the right to top given to SPC through the land lease agreement? If that is the case, no interested bidder in his right mind will even bother to participate. They will all be discouraged,” Tañada said.

The Naga complex consists of the 106.8-megawatt Naga coal thermal power plants 1 and 2 and the 39-megawatt Naga diesel power plant, all of which are located in the town of Naga.

The plants are under a Rehabilitate-Operate-Maintain-and-Manage Agreement/Energy Conversion Agreement with the joint venture of Korea Electric Power Corp. and SPC. The said agreement will expire on March next year.

Questions raised by the lawmaker against PSALM also include the sale of the Manila Thermal Power Plant, the Bohol-Dingle plants, and the Pagbilao power plant IPPA bidding.

“We have the highest electricity rates in Asia at P8.14 per kilowatt-hour. This is a major reason why our industries are hardly competitive. Epira failed to arrest the financial hemorrhage of the PSALM and Napocor,” Tañada said, adding that “PSALM has only created more problems in the power industry.” –EUAN PAULO C. AÑONUEVO REPORTER, Manila Times