Sale of geothermal plants with sales contracts set
Monday, February 27, 2006
By MYRNA M. VELASCO
The stumbling block previously impeding the privatization of the geothermal assets of the Philippine National Oil Company-Energy Development Corporation (PNOC-EDC) has finally been cleared, with the Joint Congressional Power Commission (JCPC) endorsing sale of the power plants with attached steam sales agreement.
This, as the bicameral congressional oversight body endorsed such privatization mode through a Joint Resolution, which the JCPC members will be putting to a final vote this week.
It would be noted that PNOC-EDC is main suppliers of steam to the geothermal power plants of the National Power Corporation, namely the 720-megawatt Tongonan 1-3 plants; 192-MW Palinpinon and 108-MW Mt. Apo geothermal complexes.
It was contained in the JCPC endorsement that in keeping with the intent and letter of the Electric Power Industry Reform Act, an individual steam sales agreement (SSA) shall be attached to the plants’ sale package "to ensure the availability of a reliable steam supply to a particular geothermal plant."
The JCPC resolution stated that "the Commission endorses the proposed plan of PNOC-EDC to sell each geothermal plant combined with a long-term SSA as a package…"
It has also been specified as a condition that within 45 days from the date of endorsement, PNOC-EDC and the Power Sector Assets and Liabilities Management Corporation (PSALM), which takes charge of NPC assets privatization, "shall submit for the approval of the Commission the SSA packaged with each of the geothermal power plants.
It was further proffered in the JCPC resolution that "each SSA shall be assigned to the private sector buyer of the corresponding geothermal plant."
Meanwhile, for the other components of PNOC-EDC’s geothermal assets, such as the common pipelines and surface infrastructure assets, it was prescribed that they just be disposed of at a later time; and targeted buyers would be the future owners of the divested geothermal plants.
Section 47 (g) of the EPIRA prescribes that "the steamfield assets and generating plants shall not be sold separately. They shall be combined and each geothermal complex shall be sold as one package through public bidding."
Though the Senate contingent of the JCPC has been described by Senator Miriam Defensor Santiago as "fatally divided" on the issue, the body is confident that this privatization exercise will finally get its way through.
Though the proposal was a diversion from the original divestment plant set forth by PNOC-EDC, officials of the company said they are already amenable to it at least that will not make them in any way impediment to the privatization of the NPC generation assets.
posted by philpower @ 12:33 PM,
