Rebidding Terms For Power Barges Seen Not Attractive To Investors

9 June 2012

MANILA, Philippines --- Even with the plan to rebid the power barges set for transfer to the Mindanao grid, prospective investors are indicating that it will just be an "exercise in futility" on the part of the government because of the "unattractive terms."

One of the companies originally interested in the assets noted that "based on our calculation, the resulting cost will be a lot higher than what is being offered by TMI (Therma Marine Inc.)," referring to the Aboitiz-owned power barges which have been strategically augmenting Mindanao's supply when there are shortages.

"It's a market issue that the government must address first. If the bidding terms will not be modified, I don't think PSALM (Power Sector Assets and Liabilities Management

Corporation) would be able to regain any interest at all," the firm said.

The prospective bidders are also fretting about the fact that PSALM has not even secured right-of-way permits yet for the transfer site in Mindanao.

"That is another big hurdle. And if the government would require a transfer of the facilities by next year, it would be impossible to meet," the bidder-firm added.

The relocation of the power barges had been among the major solutions offered by government to plug short-term generation deficiency dilemmas in the Mindanao grid, especially during the high demand months of summer.

Another option is to bring the 100-megawatt Iligan plant back to operation, which the Alsons group has been targeting to accomplish soon.

Energy Secretary Rene D. Almendras has already told media that PSALM will schedule another round of auction for the power barges.

The Department of Energy (DoE) in particular is preparing for the next peak demand season in the grid which is October this year. If it will have its way, the agency would have wanted a clearer solution to the grid's immediate power supply dilemmas next year.

Based on the gestation period of power plant investments that will provide the baseload solution to the grid's problems, Mindanao may suffer recurring brownouts until the next 3 years.

The 300-MW coal plant of the Aboitiz group will be on stream around 2015 yet, along with the planned 300 megawatts of aggregate capacity of the Alsons group in Sarangani and Zamboanga provinces.