AC Energy, the power arm of Ayala Corp. (AC), would rather wait for further instructions from policy-makers on the privatization of the Malaya Thermal Power Plant before it decides to join any auction.
AC Energy President Eric Francia said the power firm is open to studying the possibility of participating in the bid, though the best approach for now is to “wait for guidance.”
The Power Sector Assets and Liabilities Management (PSALM) Corp., which manages the assets and liabilities of National Power Corp. (Napocor) as mandated by the Electric Power Industry Reform Act of 2001, has yet to seek board approval on the privatization of the Malaya facility.
The sale of Malaya plant was previously deferred because of the plan of the Department of Energy to convert it into a liquefied natural gas (LNG) plant. The Psalm has yet to receive a final word from the DoE on the natural-gas policy, which will be included in the plant’s sale terms of reference.
Francia said an LNG project is capital intensive and there are so many factors to consider before it takes off.
“It’s not specific to Malaya, but it is challenging for gas to make commercial sense in the Philippines because, first, we need an LNG terminal. Once you have that, then comes a gas plant,” Francia said. “Your capex [capital expenditure] is now similar to a coal pant if you look at it, but fuel is much expensive than coal plant. How can you justify that unless you have a long-term contract? How can I have that in this environment?”
The PSALM has postponed the auction for the plant, which was supposed to be sold to four interested bidders who earlier submitted letters of interest.
The four bidders are APT Global Inc., Phinma Energy Corp., Riverbend Consolidated Mining Corp. and AC Energy Holdings Inc.
Energy Secretary Alfonso G. Cusi has been vocal of his intention to require the winning bidder of the power asset to convert it to an LNG facility. The agency intends to transform the Malaya plant into a base-load plant to augment the country’s capacity.
A base-load power plant provides continuous supply of electricity throughout the year with some minimum power-generation requirement.
“What the DOE wants is to make sure there is really energy production. What we don’t want to happen is to bid it out then the winning bidder would not operate it. We will be short of power,” Cusi said. “That is 600 megawatts.”
The Malaya plant was rehabilitated in 1995 by the Korea Electric Power Corp. under a 15-year rehabilitate-operate-manage-maintain agreement. It consists of a 300-MW unit with a once-through type boiler and a 350-MW unit fitted with a conventional boiler.
Lectura, L. (January 30, 2018). AC Energy awaits government signal for joining Malaya bid round. Business Mirror. Retrieved from https://businessmirror.com.ph/ac-energy-awaits-government-signal-for-joining-malaya-bid-round/