AFTER numerous failed attempts to attract a qualified buyer, the Power Sector Assets and Liabilities Management Corp. (Psalm) has finally managed to sell one of the bigger unproductive government assets under its control, the 650-megawatt (MW) Malaya thermal plant located in Pililla, Rizal.
Not only does the sale of the plant help to resolve some of the decades-old stranded debt of the National Power Corp. and add some funds to government coffers at a most opportune time, it also offers the prospect of more reliable and sustainable energy supply for Luzon in the near future.
Waiting for a proper buyer for the Malaya plant turned out to be an advantage for Psalm, which had established a P1.485-billion minimum bid price for the facility consisting of two generating units (300 MW and 350 MW, respectively). The winning bidder, Fort Pilar Energy Inc., will pay P3.123 billion for the plant.
The successful bid is still subject to post-qualification review and approval by Psalm to ensure that Fort Pilar Energy meets legal and financial requirements.
In a statement on Tuesday, Fort Pilar Energy’s chief executive officer Joseph Omar Castillo said the company plans to build “a modern energy facility” on the site of the Malaya plant “to strengthen the power situation in Luzon.”
What sort of “modern energy facility” Fort Pilar Energy has in mind was not disclosed, but the other activities of the company, which was only established in 2019, suggest that a significant upgrade from the modest output of the aging, unreliable Malaya plant can be expected.
At the same time it was announcing its winning bid for the Malaya thermal plant on Tuesday, Fort Pilar Energy also revealed that it has invested P5 billion in an energy storage project on the Zamboanga Peninsula in Mindanao to address chronic electricity supply and reliability concerns in the area. The energy storage facilities will have a combined capacity of 100 MW, the company said, and are expected to be fully operational by the end of 2022.
Fort Pilar Energy also said it is planning a number of so-called HELE, high efficiency-low emission multi-fuel generating facilities throughout Mindanao but did not give further details.
Fort Pilar Energy is not the only “upstart” energy company in the Philippines and may not even be the best one — its moment in the spotlight here should be taken as neither endorsement nor criticism — but what it does represent is a new generation in the energy sector: new industry players that are leaner, more ambitious, more in tune with environmental sustainability concerns, and more willing to embrace new technologies and their associated risks than the “established” energy companies.
We believe this is what has been sorely lacking in the Philippines’ energy sector for years, and that this lack is reflected on a large scale by the country’s chronic worries about sufficient and sufficiently reliable power supply and, in a smaller context, by the difficulties Psalm has had in carrying out its mandate to privatize the government’s old and inefficient power assets. To give credit where credit is due, the Department of Energy under the Duterte administration, in contrast to its predecessors, has provided a much better environment for innovation and encouraged exploration of more imaginative energy solutions, particularly in renewable energy and in the implementation of more customer-friendly market practices.
Of course, there is still a long way to go before the Philippine energy sector can be consistently described as reliable, sustainable and competitive. The sale of one old power plant and the prospect that it will be replaced by something better is not a solution, but only a step in the right direction. Nevertheless, as we face another hot season in which we have already been given the perennial warning about thin power supplies, any positive step is worth noting. We certainly hope there will be more.