Ambuklao-Binga plant auction Wednesday

BY MARIA KRISTINA C. CONTI/BUSINESSWORLD THREE VETERAN bidders are expected in an auction Wednesday to vie for the contract for the 175-megawatt (MW) Ambuklao-Binga hydroelectric plant package. The Power Sector Assets and Liabilities Management Corp. (PSALM), which oversees the privatization of all National Power Corp. plants, said in a statement Tuesday that First Gen Hydro Power Corp., SN Aboitiz Power Hydro, Inc., and Calaca Power Partners Co. Ltd. are eligible to bid for the two power plants in Northern Luzon. Lopez-led First Gen, the lone homegrown company, won the 112-MW Pantabangan-Masiway hydroelectric power plant complex that PSALM auctioned off in September last year with a bid of $129 million. It has said it is interested in six more Napocor assets, including Ambuklao-Binga. Last week, it also acquired government’s controlling stake in Philippine National Oil Co.-Energy Development Corp., a company which controls 1,145 MW of geothermal power production, for P58.5 billion. With its five power plants and installed capacity of 1,839 MW, First Gen accounts for approximately 12% of the country’s capacity. It is the largest Filipino-owned and-controlled independent power generation company, and part of the Lopez group which holds interest in tollways, power distribution, property, utilities, media and communications, construction, and manufacturing. SN Aboitiz, is the joint venture between Aboitiz Power Corp. and SN Power Invest AS of Norway. In December last year, it submitted the highest bid for the 360-MW Magat hydroelectric power plant. SN Aboitiz and PSALM recently signed the Deed of Absolute Sale for the Isabela-based facility to complete its privatization. In that auction, it bested First Gen with a bid of $530 million. "We consider the acquisition of the Magat plant to be a bridgehead for further development in the Philippines," SN Chief Executive Oistein Andresen said last year. SN Power recently said it will invest $350 million in Chile for a 155-MW hydroelectric power plant. The European company is rapidly expanding into renewable energy, and has invested and committed approximately $700 million in equity in Asia and Latin-America since 2002. Calaca Power, operating under the name Masinloc Power Partners Co. Ltd., is a special vehicle of US energy giant AES Corp. The firm won the bidding for the 600-MW Masinloc coal-fired thermal power plant last July 26 for $930 million. AES President and Chief Executive Paul Hanrahan, in a statement on the company website, called Masinloc a "strategically important project" that will be "a platform for further expansion in [this] high-growth market." Last August, the company also won the bidding to build two open cycle gas turbine peaking power plants with total capacity of 1,102 MW in South Africa. AES recently announced it is expanding into China and Turkey as well. The company already operates in 28 countries. Based on two of the three groups’ bidding histories for hydroelectric power plants, First Gen has placed $1.15 million per MW, and SN Aboitiz, $1.47 million/MW. AES, which has yet to acquire a renewable energy asset in the country, bid a record $1.55/MW for a coal-fired power plant. The cost to build a new coal-fired power plant, according to industry estimates, is $1 million/MW. The required investment is higher for a hydroelectric plant, which needs an operating dam. Ambuklao and Binga facilities lie along the upper portion of Luzon’s Agno River. Binga in Itogon, Benguet, lies 19 kilometers downstream of the Ambuklao plant in Bokod town of the same province. Because the plants are about 50-years-old, they are running below par. One of the responsibilities of the winning bidder is to rehabilitate the Ambuklao hydro plant and upgrade it to at least 65 MW within seven years from date of turnover, PSALM added. Power supply contracts will not be attached to the sale of the Ambuklao-Binga complex, said PSALM, because the operator may find it difficult to meet the committed supply level. Hydro plants can only be operated seasonally, when there is sufficient water in the reservoirs.