PSALM prepares for next attempt to sell 4 power barges

Despite three failed attempts, state-run Power Sector Assets and Liabilities Management Corp. (PSALM) remained keen on selling the four diesel-fired power barges it inherited from National Power Corp.

PSALM has to sell the barges to raise funds that can be used to pay its debts.

In a text message, PSALM president and CEO Emmanuel R. Ledesma Jr. also said that the privatization of Power Barges 101, 102, 103 and 104 was mandated by the Electric Power Industry Reform Act (Epira), which states that PSALM must privatize all state-owned power assets.

“[PSALM has to sell the power barges] to comply with Epira. We have to find ways to pare down our debts and bring down the universal charge. Privatizing the barges will help in achieving these [targets],” Ledesma said. Ledesma stressed that keeping the power barges was “not an option,” unless instructed.

Under existing procedures, PSALM can dispose of the barges either by holding another bidding or negotiating with interested parties after two failed bidding and one failed negotiation. The next step will be up to PSALM board.

“The failure of the recent negotiations was earlier reported to members of the PSALM board. The PSALM board will convene soon to determine the next steps to be taken in the privatization of the power barges,” Ledesma said in his text message.

To recall, the first bidding for the barges, which was held in May this year, failed because only one offer was submitted. The lone bid came from Acta Power Corp., a joint venture between the Ayala Group’s AC Energy Holdings and Trans-Asia Oil and Energy Development Corp. (TA-Oil).

The second bidding was held earlier this month, but was also declared as a failure after receiving again only one offer, this time from Trans-Asia Oil. Immediately after the declaration of a failed bidding, PSALM started negotiations with Trans-Asia Oil for the sale of Power Barges 101-104. However, the negotiations also failed as Trans-Asia’s offer was way below the reserve price. Bids should either match or must be higher than the reserve price. The Phinma-led firm, which also declined to match the reserve price during the negotiations, had offered P43.83 million for Power Barges 101 and 102; P1 million for Power Barge 3 and P50.13 million for Power Barge 4 or a total of P95 million.

The failure to sell these barges may aggravate the expected critical power situation in Mindanao by summer of next year. The government is projecting a 200-megawatt power supply shortfall on the island next year.

The government has been banking on these power barges, which can each generate 32 MW, to provide the much-needed additional power supply in Mindanao by 2013.