Power firms to co-bid for Mindanao Coal’s Ippa

ABOITIZ Power Corp. and La Filipina Uy Gongco Corp. will jointly bid for the selection and appointment of the Independent Power Producer Administrator (Ippa) for the bulk energy of the 200-megawatt Mindanao Coal-Fired Thermal Power Plant (Mindanao Coal).

Both formed La Filipina Elektrika Inc. as the special-purpose vehicle that will participate in the auction scheduled on November 25.

“We’re partnering with La Filipina. As a matter of fact, they have the majority. We’re bidding. We’re definitely going for it and we will be very aggressive,” Aboitiz Power President and COO Antonio Moraza said.

Moraza said La Filipina has been a longtime partner of Aboitiz Power. They are both the shareholders of Steag State Power Inc. (SPI), majority owned by Steag GmbH.

“They are already our partner before,” Moraza said.

Located in Misamis Oriental, the Mindanao Coal plant was constructed in 2006 for a 25-year power purchase agreement under a build-operate-transfer scheme that ends in 2031 with Steag SPI.

The power plant, which supplies about a fifth of Mindanao’s power requirements, is 51-percent owned by Steag; 34 percent by Aboitiz Power; and 15 percent by La Filipina.

The Power Sector Assets and Liabilities Management Corp. (PSALM), the agency mandated by Republic Act 9136, or the Electric Power Industry Reform Act of 2001, to handle the sale of the remaining state power assets and financial obligations of the National Power Corp., will conduct the bidding.

The state firm recently met with the 12 prospective bidders for the Mindanao Coal, namely Conal Holdings Corp., FDC Davao del Norte Power Corp., FirstGen Northern Power Corp., GDF Suez Energy Philippines Inc., Masinloc Power Partners Co. Ltd., Meralco Powergen Corp., Nexif Pte. Ltd., SMC Global Power Holdings Corp., SPC Power Corp., Team (Philippines) Energy Corp., Therma Southern Mindanao Inc. and Vivant Energy Corp.

PSALM President Lourdes Alzona said the number of interested bidders was trimmed because there were some that partnered with other bidders.

“From the 12 interested bidders, only 10 of them actually bought bid documents. And of this, the number of bidders was reduced to six because some of them decided to form a group among themselves. One bidder partnered with another to form one group, and so on,” Alzona said.

Aside from the partnership between La Filipina and Aboitiz, First Gen of the Lopez group is reportedly partnering with a unit of Alcanta-led Alsons Power.

Alzona said there would still be some adjustments in the list as the auction date nears. “Some are still finalizing on their partnership. We will know more during the bidding.”
The PSALM board earlier agreed to include a three-year lock-in period in the contract terms for the selection and appointment of the Mindanao coal Ippa.

During the lock-in period, the winning bidder would have no choice but to adopt the existing power rate sold by current plant operator, Steag SPI. In this way, electricity rates will not go up because the rates that will be used are the rates currently imposed based on the contract with Steag.

The downside, however, is that this may discourage prospective bidders because they would not be in control of the pricing scheme for the first three years.

Alzona said bidders were already informed about this. “This is not the reason the number of interested bidders were trimmed. It’s just that some decided to partner or join forces.”