THE Power Sector Assets and Liabilities Management Corp. (PSALM) will seek approval to pursue a negotiated sale for the 650-megawatt Malaya Thermal Power Plant, citing unsustainable maintenance costs and following years of failed auctions to dispose of the rarely-used facility, the Department of Energy (DoE) said.
“PSALM shall proceed and get Board approval to immediately commence the negotiated process of privatization,” the DoE said in its 37th Electric Power Industry Reform Act (EPIRA) Implementation Status Report. The report covers developments and updates on the power industry operating under EPIRA between May to October 2020.
The DoE said it costs about P1.2 billion a year to maintain the plant, located in barangay Malaya, Pililla, Rizal.
“PSALM (seeks) to dispose of said assets due to increasing substantial losses in continuously maintaining it. Based on the losses for the last 10 years (2010 to 2019), the average annual net loss of PSALM… is P1.2 billion,” the DoE said.
In 2014, the DoE classified the plant as a “must-run unit” (MRU), defined by the Wholesale Electricity Spot Market as a generating unit that is required to operate only when required for energy security.
While PSALM was running Malaya as an MRU between 2015 to 2019, PSALM sustained average yearly net losses of P556.2 million, the DoE said.
In September, PSALM declared a failure of its third-round auction to sell the plant and the underlying land. The two pre-qualified bidders, Panasia Energy, Inc. and AC Energy Philippines, Inc., did not submit bids.
The auction floor price was set at P2.19 billion, less than half of the previous round’s floor price of P4.48 billion.
Last month, the PSALM sold via auction real estate assets in Bohol and Cagayan provinces. The winning bidder for PSALM’s Loboc, Bohol and Camalaniugan, Cagayan properties were Sta. Clara Power Corp. and Cagayan II Electric Cooperative, respectively.
PSALM is privatizing assets to settle financial obligations assumed from the National Power Corporation. — Angelica Y. Yang