Government plans to privatize hydro plants under IPP contracts

MANILA, Philippines — The government is eyeing to privatize its hydropower plants under Independent Power Producer (IPP) contracts this year, with the study on the asset sale completed soon.

The Asian Development Bank (ADB) is expected to complete the study on the privatization options for Caliraya-Botocan-Kalayaan (CBK) hydroelectric power plant and the Casecnan HEPP within the month, Power Sector Assets and Liabilities Management Corp. (PSALM) president and CEO Irene Joy Besido-Garcia said.

“We are expecting the completion of the report from the ADB by end of January,” Garcia said.

PSALM tapped the ADB last year to conduct a study that will determine sound privatization options for the remaining IPP contracts.

In the 37th Electric Power Industry Reform Act (EPIRA) Implementation Status Report, the Department of Energy (DOE) said the privatization process for the CBK and Casecnan HEPPs would commence this year.

The CBK-HEPP is under an IPP administrator (IPPA) contract with CBK Power Co. Ltd. until Feb. 7, 2026. The IPP administers the plant’s contracted capacity of 797.92 megawatts (MW).

The Casecnan plant is under CE Casecnan Water and Energy Company Inc. – which sells the plant’s contracted energy of 228 gigawatt-hours (GWh) until April 5, 2022.

The DOE said the ADB hired a technical consultant commenced despite the declaration of enhanced community quarantine brought about by the pandemic.

The report did not disclose the technical consultant selected by the ADB, but the study process commenced in July last year.

In 2019, PSALM finalized the coverage of the study to be conducted by the ADB, which includes setting the minimum bid price and the timeline of the study.

In terms of chronology, the state-run firm said it was eyeing to privatize CBK HEPP first before Casecnan HEPP, which has a more complicated ownership structure.

PSALM, through the National Power Corp. (Napocor), owns only 60 percent of the Casecnan HEPP, while the remaining 40 percent is under the National Irrigation Administration (NIA).

Earlier, Garcia said the agreement between Napocor and NIA does not have implementing provisions on exactly how to divide the 60-40 ownership between the two once Casecnan HEPP is privatized.

PSALM is the agency mandated by EPIRA of 2001 to handle the sale of the remaining state-power assets and the financial obligations of Napocor.

It reduces debts through the privatization of government-owned assets, collection of the proceeds and its effective implementation of its liability management program.