The Philippine Star 09/22/2006
At least 40 foreign and local companies have expressed interest in bidding for the two decommissioned plants of the National Power Corp. (Napocor) set to be auctioned off within this year, a ranking Power Sector Assets and Liabilities Management Corp. (PSALM) official said.
PSALM vice president for asset management and disposal Froilan Tampinco said most of the interested bidders are Chinese firms.
He said they intend to put in the auction block in the last quarter of the year either the Bataan Thermal or Manila Thermal power plant, both decommissioned power facilities.
Tampinco said PSALM has decided to sell these power plants as scraps.
The PSALM official has admitted that while they plan to sell either of these two decommissioned power plants, they have yet to firm up the terms of reference (TOR) for the bidding .
"We have yet to decide on the TOR. We have to make sure that those that will bid are qualified and has capacity to pay for the plants," he said.
He said one of the areas in the TOR that they are closely looking at is the bid security. "If possible, we are trying to put a quite significant bid security so that not just anybody could comply."
Tampinco said they are also making sure that they have the correct valuation for each of the decommissioned asset that would be sold. "We have to make sure that we have the right weight. It will depend on the equipment in the plant that we will sell."
Recognizing the difficulties tied to the disposal of the retired plants of Napocor, PSALM decided in April this year to hire the services of a third party auctioneer as an alternative strategy in the auction of these decommissioned facilities.
The main function of the third party auctioneer, who will provide a comprehensive asset disposal service to PSALM, involves formulating an appropriate sale strategy and methodology for the decommissioned power plants. This includes the administration of an inventory of the assets, the preparation of the assets, the strategic conduct of the auction, and the removal of the assets from their respective sites.
Napocor currently has at least five retired plants in its portfolio: the 225- megawatt (MW) Bataan (bunker), the 54-MW Cebu II (diesel), the 200-MW Manila (bunker), the 22.3-MW General Santos (diesel), and the 108-MW Aplaya (diesel) power plants.
By engaging the services of a third party auctioneer, PSALM hopes to gain ground in selling these decommissioned power facilities, three of which underwent unsuccessful bidding exercises in 2005.
The Bataan thermal plant, which is scheduled for a negotiated sale this year, underwent two rounds of failed biddings in April and September last year.
The first auction for both the Cebu II and Manila plants held in the first quarter of 2005 were declared failures.
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The Philippine Star 09/18/2006
The National Power Corp. (Napocor) said over the weekend that it would soon start paying claims for damages by individuals affected by the oil spill in Semirara Island.
Napocor sources said the amount of payment for the claims would reach P9 million.
"We are now finalizing the lists of claimants and would start the release of payments soon," a source said.
The Government Service Insurance System (GSIS) is the main insurer of the state-run power firm for oil spill damages.
The GSIS will, in turn, hand over the Napocor insurance claims to its reinsurers (British Marine Insurance and GTS) which will then negotiate with the adjusters.
While awaiting the disbursement of fund, Napocor is currently shouldering all the cost for the clean-up operations.
Last May, the state-owned power firm secured a provisional certificate of completion from the Philippine Coast Guard (PCG) for the clean-up of the oil spill in the 114-hectare area in the island of Semirara .
The certificate, the PCG acknowledged Napocor’s effort to complete and finish cleaning the affected areas which include sandy and rocky beaches as well as mangroves.
The clean-up was conducted by Napocor together with a PCG-accredited private company specializing in oil-spill clean-up, First Response Marine Services Inc. (FRMSI).
Aside from the clean-up and settlement of damage claims, livelihood assistance for the affected residents are also entering the final phase of processing.
With the clean-up substantially finished, the rehabilitation of the affected mangrove areas, under the direction and guidance of the Department of Environment and Natural Resources, had also started.
On Dec. 18, 2005, Napocor-owned Power Barge 106, ran aground off the coast of Semirara Island, in Caluya, Antique, after encountering strong winds and waves due to inclement weather.
More than 210,000 liters of Bunker C fuel oil were spilled due to the accident. The strong sea currents subsequently brought the spilled oil to Kaybelo Cove, affecting some 113 hectares of shoreline, sandy and rocky beach, and mangroves.
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The Philippine Star 09/18/2006
National Power Corp. (Napocor) president Cyril del Callar is urging employees of Mirant Philippines Inc. to submit their formal request for assistance from Napocor.
"We are willing to listen to them. But we need them to provide us with information on the status of the separation package they are asking from Mirant Corp.," Del Callar told reporters over the weekend.
Del Callar said the extent of help that they may give would "depend on the merits of the information provided to us."
Napocor wants Mirant to seek prior consent before Mirant proceeds with the equity sale.
Specifically, Mirant employees have asked Napocor to make the severance pay as part of the transaction documents for the sale of Mirant Philippines’ equity to ensure that the employees’ welfare is protected.
Up to now, the employees of Mirant Philippines claim that there are no clearer and more definite guidelines on their separation packages should any of them be retrenched as a result of the planned sale of the company by the US-based Mirant Corp.
A source who declined to be named said that employees are "uneasy" over the assurance given by Mirant Philippines president Jose Leviste Jr., that employees will be treated fairly.
"At present the company has no written separation policy. At best what the company has are practices which are not binding on the new owners should they decide to fire people," the source said.
The source added that the close to 1,200 employees of the company will lobby for the payment of two and a half months of pay for every year of service once the sale is consummated.
"Employees feel that this is only fair considering that they have made Mirant one of the top profit makers in the country all these years," the source said.
The source said they may raised this concern to the Napocor which has yet to give its consent to the sale.
"They are hoping that Napocor will take up their cause and that of the Filipino worker by compelling Mirant to protect their years of service by paying severance once the sale is completed as Mirant should not pass this burden to the new owner," the source said.
Leviste, during a Congressional hearing earlier this week said that Mirant employees are among the best compensated in the industry, and that the company presently has a generous severance package.
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The Philippine Star 09/18/2006
The National Power Corp. (Napocor) will need P10.14 billion worth of fuel for its barges and power facilities for the period May to December 2006.
Documents showed that the oil-based requirements will reach 453,415 kiloliters.
The bidding for the fuel requirement will be undertaken through open competitive bidding procedures using non-discretionary pass/fail criteria.
Interested bidders were asked to submit bids and eligibility requirements last April 25.
It was not known if Napocor has already awarded the contract for the supply and delivery of the fuel requirement for the eight-month period.
On top of this, Napocor will need P191.33 million (57,500 metric tons) worth of coal to cover the requirement of Naga-Cebu thermal power plant for the rest of the year.
The bidding, which is also through open competitive bidding, for the Naga power plant’s requirement was conducted last Sept. 12 this year.
The pre-bid conference was held last Aug. 31 at the Napocor compound in Quezon City.
In 2004, coal bulk of the generation mix of Napocor at 16,194 GWh or 28.9 percent of total.
But the share of coal in the company’s generation mix has gone down to 15,307 MW or 26 percent in 2005.
It is expected that in 2006, the share of coal in the gross generation of state-run power firm will further decrease to 25.3 percent.
Based on the Department of Energy (DOE) data, the country’s utilization of local coal has jumped to 28.7 percent in 2004 from only 10 percent in 2000, spurred by rising domestic demand.
Napocor is exploring the possibility of increasing the volume of local coal that is being used to run its coal-fired power plants.
The state-run power firm is currently blending 10 percent of local coal every month to generate power for its coal-fired facilities.
In 2004, Napocor had started to bid out for blended coal at that time when there was coal shortage in China.
Napocor is currently importing most of its coal requirement. Using blended coal, on the other hand, will enable the power firm to diversify its coal sources.
Aside from Pagbilao and Naga, Napocor runs the Calaca, Masinloc, Sual and Batangas coal-fired power plants.
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The Philippine Star 09/18/2006
The International Finance Corp. (IFC), the financial advisor for the privatization of the areas under the Small Power Utilities Group of the National Power Corp. (Napocor), has reported that at least 12 investors have expressed interest to participate in the bidding for SPUG in the province of Masbate.
In a report to Energy Secretary Raphael P.M. Lotilla, IFC, the investment arm of the World Bank, said the 12 investors have already submitted their respective expressions of interests (EOIs) for Masbate.
Launched last July 25, 2006, IFC said, the private sector participation (PSP) in the Napocor-SPUG Areas for Masbate had positive results in as far as EOIs are concerned.
The IFC issued requests for proposals last month while submission of bids are expected to come in by mid-October, to be followed by the announcement of the winning bidder by end of October this year.
The report has also indicated that activities relative to the second PSP has also been started in Occidental Mindoro.
"Due diligence report was completed in March 2006. There are legal and contractual issues that need to be resolved. IFC will submit its formal recommendations to address these issues," the report said.
The third batch of the PSP for SPUG, comprising of the three islands of Sulu, Basilan and Tawi-Tawi in Mindanao, will start this September, with the signing of a memorandum of agreement (MOA) with each of the island’s electric cooperatives.
The privatization of SPUG Areas was mandated by Department of Energy (DOE) Circular No. 2004-01-001 issued on Jan. 26, 2004. It calls for the periodic assessment of the requirements and prospects of bringing power generation and associated power delivery systems to commercial viability on an area-by-area basis, including a program to encourage private sector participation in the SPUG areas.
The said circular prescribed the guidelines for private sector participation in existing National Power — SPUG areas. This undertaking is consistent with the objectives of the Electric Power Industry Reform Act (EPIRA) and its implementing rules and regulations. In 2005, Napocor identified the first wave areas comprising of 14 islands nationwide.
The program is part of a determined effort of the DOE and Napocor to turn over to the private sector the generation of power in these islands, which hopefully will result in some annual operating cost savings of P1.5 billion.
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The Philippine Star 09/18/2006
The Board of Investments (BOI) has approved the application for registration of GNPower Ltd. Co.’s P43.903 billion 600 megawatt (MW) coal-fired power plant.
According to its application with the BOI, GNPower will develop, construct and operate two 300 MW clean pulverized coal-fired power plant at a 75 hectare parcel of coastal land located at Barangay Alasain, Mariveles, Bataan.
The planned plant site will be an integrated energy complex with state-of-the-art generating plants as well as modern, environmentally-compliant fuel handling facilities.
The energy complex will have a reserved space for the coal fired power plants, a liquefied natural gas (LNG) power plant and an import terminal.
The coal plants will be identical 300-MW power blocks which will use pulverized coal technology.
Imported ultra low sulfur and low ash coal will be the major fuel used throughout the life of the plant with low sulfur bunker fuel oil only used during start-up.
The coal-fired power plants will meet the forecast capacity shortage in the Luzon grid by the year 2010.
The BOI-approved GNPower coal fired power plant is on a pioneer status because of the magnitude of investment of P43.903 billion which exceeds the requirement of over P1 billion.
Likewise, power generation projects using non-renewable energy source is listed as a preferred activity under the 2005 Investment Priorities Plan (IPP).
GNPower Ltd. Co. is a 100 percent foreign-owned (Nauruan and American) company.
Its listed major stockholders (partnership) is Power Partners Ltd. Co. (99 percent) and PMR Holding Corp. (one percent).
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