The Power Sector Assets and Liabilities Management Corporation (PSALM) has begun the process for the privatization of the contracted capacity of the Unified Leyte Geothermal Power Complex.

Based on the bid documents, interested parties may now start due diligence on the Unified Leyte plants located in Tongonan in Leyte province which have a combined capacity of 640-megawatts.

A pre-bid conference has been slated for June 16, 2010 while the bidding will be on July 30. The winning bidder gets to control state-owned National Power Corporation's (Napocor) contracted output with the Unified Leyte plants as an independent power producer administrator (IPPA).

First Gen Corporation, through its majority-controlled unit Energy Development Corporation, runs the Unified Leyte plants which include the 125-megawatt Upper Mahiao, 232-megawatt Malitbog, 180-megawatt Mahanagdong plants.

It also operates several optimization plants that generate additional electricity before steam is directed to the said geothermal plants.

PSALM vice president for asset management and electricity trading Conrad Tolentino said that once the Unified Leyte IPPA contract is privatized, the government's power sector privatization unit will proceed with the sale of the rest of Napocor's contracted capacities.

"In Luzon and Visayas we still have the Caliraya-Botokan-Kalayaan [hydroelectric plants], and the Naga diesel and coal [plants]," he said.

PSALM is the agency mandated by the Electric Power Industry Reform Act of 2001 to privatize at least 70 percent of Napocor's power plants and its contracts with third party power generators.

Once completed, open access and retail competition will be allowed in the power industry, which would give consumers, starting with bulk power users, the option to choose their power suppliers.

At present, PSALM has breached the privatization threshold for Napocor's power plants and is now only awaiting the sale of another IPPA contract to complete the EPIRA's requirements.

"Based on our computation 68 percent. So any plant after Ilijan will bring us to privatization threshold," he said.

Tolentino added that the sale of 650-megawatt Malaya diesel plant output, which has been scheduled for bidding on June 16, would allow PSALM to breach the privatization threshold.