50 hydro contracts up for grabs

First Gen Corp. of the Lopez group is mulling over plans to participate in the government’s proposed bidding of service contracts to explore and develop as many as 50 prospective run-of-river hydropower sites in Luzon and Visayas.

First Gen president Francis Giles Puno confirmed to reporters that the company would be “interested” in acquiring some of the hydro service contracts that the Department of Energy plans to offer in the third quarter this year.

But before First Gen can invest more in hydropower projects, it will need to consider the feed-in-tariff rates, which will allow the company to determine the economic viability of a project.

FIT rates will assure developers of fixed cash flows.

At present, First Gen has a hydropower portfolio of five plants, all under construction. Collectively, the plants can generate a total of 100 MW.

The two priority projects are the 30-megawatt Puyo run-of-river hydroelectric power plant in Agusan del Norte, and the 23-MW Bubunawan power facility in Bukidnon, which are estimated to cost a combined P10 billion.

Meanwhile, Aboitiz Power Corp. senior vice president Luis Miguel Aboitiz noted that the capacities the government would offer under the service contracts could prove to be “too small” for the company.

Energy Undersecretary Jose M. Layug Jr. noted that the hydropower service contracts to be offered would mostly be for projects whose capacities would range from 1 to 2 megawatts.

According to Layug, the government has decided to use the bidding model in granting renewable energy service contracts—as against the “first come, first served” scheme—to assure investors of a more level playing field.

“We want more transparency and fairer set of rules. Again, this is not to say that we were not fair in the past. I think the public tender model will be better,” Layug said.

But for those with pending applications for hydro service contracts, Layug said these companies would still be served and undergo the normal approval process.

The number of awarded contracts for hydropower has reached 133, with potential capacity of 1,772.54 MW.