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PSALM seeks OGCC ruling on grant of power
purchase contract for Sucat

Manila Bulletin, 11 January 2004 

The Power Sector Assets and Liabilities Management Corporation (PSALM) is seeking a ruling from the Office of the Government Corporate Counsel (OGCC) that will allow it to offer a power purchase agreement (PPA) with the buyer of the Sucat power facility which is proposed for conversation into a natural gas-fired plant.

The proposed PPA has been taken off from the supply contract initially intended for the scrapped 304-megawatt San Pascual power project.

Due to the agreement to cancel the project, the San Pascual Cogeneration Corporation (SPCC) was asked to waive all of its rights under the power supply contact.

Because of this PSALM, which is a successor-company to state-owned National Power Corporation (NPC), can offer the contract as a possible "sweetener" for the privatization of the Sucat facility.

PSALM officials noted that they are asking OGCC to declare the contract as an exemption from the mandate of the Electric Power Industry Reform Act (EPIRA) which disallows contracting new capacity by NPC or its successor-company.

It was explained that since the PPA intended for San Pascual has been there prior to the passage of EPIRA, it shall not be covered by the prohibition of additional capacity contacting.

On top of these, the company is also proposing that a certain volume of its banked gas which was not utilized for the 1,200-megawatt Ilijan plant will be re-aligned for the use of the Sucat plant once it is re-powered.

Given these sweeteners, it has been opined that the government would lure higher invest in Sucat, despite some other hurdles being cited, such as right-of-way.

The Sucat facility is in the priority list of spin off generation companies (gencos) already set for privatization.

But before such initiative can take off, energy officials admit that there are certain major concerns that need to be addressed, such as the re-alignment of the pipeline project which will transport gas supply to the Sucat facility. (MMV)