POWER SECTOR ASSETS AND LIABILITIES Corp. will start bidding out National Power Corp.’s independent power producer contracts in November.

In an interview, PSALM vice president for asset management and electricity trading Froilan Tampinco said a forum with potential investors would be held.

By the end of the month, he said the PSALM board was expected to approve the final bidding method and terms of reference for the auction. The contracts to be auctioned off will then be offered for due diligence to prospective bidders.

From November to the first week of December, the first round of bidding would be held, he said.

“We’ll offer all plants for due diligence so the investors can choose what they want to bid for. They want to build their own portfolios, so we won’t be doing the groupings anymore,” he explained to reporters.

Instead of bundling small plants with big ones, he said PSALM would be grouping small plants for bidding. Big assets will be offered separately.

“This was what investors wanted,” he said.

Also, he said PSALM had decided to go with the ownership approach in bidding out the IPP Administrator contracts.

PSALM had formulated two business models for IPPAs, one of which would be used as the method for privatization of IPP contracts.

The agency approach entails purely trading operations on the part of the IPPAs. This means only the power from the plants whose contracts they manage will be sold. Winning bidders will have no actual stakes in the facilities.

Napocor will also continue to be the fuel supplier for the plants, and will become the eventual plant owner at the end of the build-operate-transfer period.

The ownership approach calls for the grouping of various plants into portfolios that would be offered to bidders for management.

Only 60 percent of the shares of the plants in the portfolio will be privatized. The balance will remain under government control.

The IPPAs, however, will be allowed to procure fuel for the contracts that they will be handling.

PSALM was also considering ways to enable the IPPAs to eventually buy the plants to which the IPP contracts they were managing were attached, when the build-operate-transfer contracts for these lapse.

The transfer to IPPAs of at least 70 percent of the capacity covered by Napocor’s IPP contracts was one of the prerequisites for the implementation of retail competition and open access.

The total rated capacity of all IPP contracts to be auctioned off was placed at 6,252 megawatts.