Casecnan plant’s privatization hinges on DOF directive

The planned privatization of the 150-megawatt Casecnan hydropower plant will now depend largely on the directive that shall be given by the Department of Finance (DOF) to the Power Sector Assets and Liabilities Management Corporation.

That was culled from a report that PSALM has also submitted to the Department of Energy (DOE) detailing out the divestment plans for the country’s power assets.

The proposed appointment of an independent power producer administrator (IPPA) for the Casecnan hydropower plant is considered the ‘most complicated undertaking’ for PSALM because the ownership of the asset itself does not lean solely on the National Power Corporation.

The Electric Power Industry Reform Act (EPIRA) specifically mandates the privatization of the NPC assets, but for the Casecnan plant, the ownership extends to the stake that the National Irrigation Administration (NIA) must claim primarily at the end of the facility’s build-operate-transfer (BOT) contract with the operating vehicle of American firm California Energy International.

The energy conversation agreement (ECA) between NPC and CE-Casecnan Water and Energy Company Inc. will lapse on December 11, 2021.

The Casecnan plant’s ownership dilemma was being resolved by PSALM since the start of the Aquino administration, but apparently, no clear legal direction has been arrived at until now.

The DOF’s mandate on the plant’s privatization is considered crucial because the agency has likewise been on top of the other issues relating to the plant’s operations, primarily on real property taxes.

The management of PSALM often takes its direction from its board for the schedule of privatization of the power assets – and coincidentally, Finance Secretary Cesar V. Purisima is the chairman of PSALM board.

Aside from Casecnan, the other hydropower asset that may be deferred on the privatization block would be the 727-MW Agus complex in Mindanao due to unresolved concerns, including the opposition of host communities and the hurdles posed by the propounded Bangsamoro Basic Law.

There was also a proposal from the DOE to exclude the Caliraya-BotocanKalayaan (CBK) facility in the privatization line-up because of the pivotal function it exhibited in helping meet the Luzon grid system’s regulating reserve during the critical months of summer.

In PSALM’s plan though, the CBK asset is targeted for auction by second half of next year and the anticipated turnover date is by 2017.