MANILA, Philippines — The Department of Energy (DOE) has stopped the privatization of the 650-megawatt (MW) Malaya Thermal Power Plant (TPP) in Rizal as the agency eyes a deeper study before proceeding to sell the asset, a ranking energy official said.
The DOE’s Electric Power Industry Management Bureau (EPIMB) has come up with a memo to conduct a study on the power facility, which will be approved by Energy Secretary Alfonso Cusi, DOE assistant secretary Leonido Pulido said.
“We feel that the status quo is safer until we finish the study. The power bureau was given a week to come up with that memo, and that memo has to be approved by the secretary,” he said.
Conducting a thorough study would, in turn, further delay the privatization of the Malaya plant, he said.
“I think our stand is that the delay is reasonable. It would be better to be delayed until we come up with a firm policy regarding Malaya,” Pulido said.
“We don’t have an immediate privatization schedule in mind precisely because that study is required before a firm policy is established,” he said.
State-run Power Sector Assets and Liabilities Management Corp. (PSALM), the entity created by the Electric Power Industry Reform Act (EPIRA) to privatize government-owned assets, originally set the Malaya auction on March 8, 2017 on an “as is, where is” basis.
The sale has been reset to March 30, 2017 and then deferred until further notice to take into consideration the DOE policy to ensure sufficiency of the power supply in the Luzon grid.
PSALM was directed to include in the terms of reference Malaya plant’s conversion from running on diesel fuel to coal or liquefied natural gas to become a baseload plant.
“That’s part of the discussions now, whether it’s DOE, PSALM or the investor. But right now, we’re leaning towards DOE footing the bill,” Pulido said.
Under the proposed study, the agency will determine the importance of the Malaya plant in the power grid and the financial viability of the conversion to a coal or LNG technology.
“We will determine kung if we really need the power plant. And if it will be prviatized, is it financially viable to convert to LNG or coal,” the DOE official said.
Currently, the Malaya TPP—which runs on diesel—was designated as a must-run unit (MRU) by the DOE to address supply deficiency when operating power plants in the grid suddenly bog down or become unavailable.
It will operate as an MRU until the DOE finalizes its privatization schedule.
However, Pulido said the running the power plant is very costly for the consumers.
“One of the problems of Malaya is it’s costly as P8 billion per run, it’s a significant amount and we are shouldering that as consumers, the cost of running Malaya,” he said.
The state-run firm earlier said it will seek its board’s definitive policy on the privatization of Malaya plant as it 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.
“The PSALM Board has been coordinating, cooperating with us. They really want to privatize and their target is this year. The problem is DOE’s concerns. It has a significant impact on the grid, in our availability of supply so we have to be very careful about it,” Pulido said.
Rivera, D. (February 5, 2018). DOE halts sale of Malaya plant. The Philippine Star. Retrieved from http://www.philstar.com/business/2018/02/05/1784569/doe-halts-sale-malaya-plant