It was gathered that the plant’s permit to operate lapsed in 2003; and this was first extended by six months; and then by another three months; but the investors are not certain if a long-term permit would be there before PSALM could finally bid it out.
"The fact that Calaca does not have a permit to operate just shows how incompetent the handling of the NPC privatization is," one of the interested investor condescendingly remarked.
Prospective investors have been sounding off that despite the government’s insistence to re-bid the asset, Calaca is one of the most problematic facility it has been offering so far to private takers.
Aside from incessant questions on whether the facility has been complying with environmental standards set forth under the Philippine Clean Air Act and that one laid down by the World Bank, there are also other major issues hounding the plant’s viability; such as its fuel supply agreement and if a transition supply contract (TSC) be afforded as part of its privatization package.
The asset was first scheduled for privatization bidding last June 28; but since two of the expected interested parties backed out, the process was declared a failure.
In August, PSALM announced that Calaca was being placed on second round of auction; and that at least three parties are finally making it to join the bidding. Until now, however, the bidding date is yet to be finalized.
On fuel procurement, it was culled that the power facility is locked up into a 25-year contract for the supply of coal from the Semirara Mining Corporation developed by DMCI Holdings of the Consuji group; but some investors are batting that this be shortened to five years; so that future asset owners would gain leeway as to their own fuel procurement.
One of the interested investors pointed out that the long-term coal contract is one of the key factors that rendered the bidding a failure, among other major issues.
Similarly, the lack of TSC that would assure market of the facility’s output is also raised as another major roadblock in Calaca’s privatization.
For all of these loopholes being uncovered by interested investors in their process of scrutiny of the assets, the private energy firms cannot just help but criticize PSALM which is duly-constituted entity to carry out the divestment of the generation assets of National Power Corporation, for all of its ineptness in the implementation of what is considered a very important privatization exercise for the country.
They have further emphasized that unless the manner of carrying out the bidding process is set on a more predictable mode and that the rules be reasonable and consistent, private investors are seen to continue shunning the prospect of buying into the power plant assets.
With all these predicaments at hand, PSALM still assures that they are exerting utmost effort to consistently pursue to finalize supply contracts; and is currently engaged in negotiations with various private distribution utilities, electric cooperatives and different industrial corporations all over the country as potential offtaker of the facility’s output. (MMV)
