246MW Angat hydro plant is up for sale by PSALM end-April 2010; there are five bidders, including a joint venture of Metro Pacific Investments Corporation (MPIC) and Ayala Corp, the Maynilad & Manila Water owners, respectively. Industry watchers though intimated that Ayala’s interest in the Angat facility may have more to do with its business alignment, since its Manila Water Company (MWC) is already a concessionaire of the Metropolitan Waterworks and Sewerage System (MWSS) in providing part of the water supply in Metro Manila. The Ayala group’s participation in the Angat plant divestment manifests a growing keenness of the local corporate giants in the power industry. Pangilinan’s group (MPIC) has already carved its niche in the sector via its acquisition in Manila Electric Company. Angat plant complex is located in Norzagaray, Bulacan, northeast of Metro Manila; the plants were commissioned 1967-1993. Angat multi-purpose dam ~97% of water to Metro Manila, and parts of nearby Bulacan. The Commission on Human Rights (CHR) has advised that sale of Angat Dam to the private sector will harm people's right to water.
PSALM slates investors’ forum to clarify issues on Angat plant sale
(February 10, 2010) With the El Niño phenomenon foretelling of a water crisis that may hit the country especially at the peak of summer months, the Power Sector Assets and Liabilities Management Corporation (PSALM) is scheduling an investors’ forum Friday to clarify issues compounding the privatization of the 246-megawatt Angat hydropower plant in Bulacan. “The issues have to be clarified with the investors and the public, so that the buyer of the plant would not be unduly blamed for water supply shortages, especially for domestic drinking water,” one of the prospective bidders said.
It has already been clarified by both PSALM and the National Power Corporation (NPC) that the protocol with respect to water use from the Angat reservoir will give due priority to domestic water use; then irrigation before utilizing the water from the dams for electricity generation.
The Angat dam privatization is the first asset divestment scheduled by PSALM this year. The company is pursuing the exercise despite the fact that it already successfully hurdled, and even went beyond, the 70 percent privatization threshold for the NPC generation assets.
PSALM apprised media of the five prospective bidders which submitted letters of interest. Apart from the traditional bidders in the NPC assets like the SN Aboitiz Power, First Gen and Trans-Asia, the joint venture of Metro Pacific Investments Corporation and Ayala Corporation came in to spice up the competition. The asset-seller has slated April 28 this year for the bid opening.
The Ayala-MPI group will be using Michigan Power Inc. (MPI), an Ayala group subsidiary, as corporate vehicle for the Angat acquisition bid. The equity allocation, they noted, will be firmed up later on as they are also working on engaging a technical partner to comply with the PSALM bid rules. The Ayala firm, which for several times downplayed reports on its interest in the industry, further indicated that “this initiative is in line with Ayala’s desire to participate in the power sector, especially in the realm of clean and renewable energy.”
Industry watchers though intimated that Ayala’s interest in the Angat facility may have more to do with its business alignment, since its Manila Water Company (MWC) is already a concessionaire of the Metropolitan Waterworks and Sewerage System (MWSS) in providing part of the water supply in Metro Manila. The Ayala group’s participation in the Angat plant divestment manifests a growing keenness of the local corporate giants in the power industry. Pangilinan’s group (MPIC) has already carved its niche in the sector via its acquisition in Manila Electric Company.
In the past two-and-a-half years, the privatization of the NPC assets appeared as “the only game in town,” hence, it attracted the big-tickets in the local corporate scene, including MPIC and San Miguel Corporation, as well as the Consunji, Razon and Coyiuto groups.
Role of Angat in water supply complicates privatization moves
(Feb 14, 2010) – Debates on the privatization of the 246-megawatt Angat hydropower facility turned as hot as the summer months, after the concessionaires providing water supply for Metro Manila collaboratively pushed for the removal of a provision setting ancillary services capacity nomination and fiercely questioned other policies set in the water protocol that shall govern the operation and maintenance (O&M) of the hydropower facility upon its divestment.
During a privatization forum at Shangri-La Hotel hosted by relevant government agencies, both Manila Water Company (MWC) and Maynilad Water Services Inc. (MWSI) took turns manifesting their concern that if the plant’s capacity will be committed or contracted for the power stability and reliability needs of the National Grid Corporation of the Philippines (NGCP), this may unduly compete with the use of water for domestic consumption which is the clear priority in the water protocol. The other priority uses would be for municipal water supply, then irrigation; while electricity generation will be last in the value chain.
Under Section 5.3 of the latest water protocol draft circulated on February 11, it was stipulated that “the buyer/operator may nominate the AHEPP (Angat Hydroelectric Power Plant) for ancillary services, subject to the provisions of the Water Code, the Rule Curve and the provisions of (the) Agreement.”
The water protocol will be integrated in the O&M agreement that must be entered into by seller Power Sector Assets and Liabilities Management Corporation (PSALM) with the buyer of the Angat facility. Of the 246-MW capacity, only 218 megawatts have been committed in the privatization exercise since the auxiliary units 5 and 6 (with aggregate 28 MW capacity) owned by the Metropolitan Waterworks and Sewerage System (MWSS) had been excluded.
MWSI president Rogelio Singson, in particular, raised query on the possibility that the plant’s nomination for ancillary services be taken out from the water protocol, especially since there is no specific stipulation on how that function shall be carried out, like “if that would be regardless of water level.”
MWC president Jose Rene Almendras noted that “while we are not objecting to the plant’s privatization, we are just here saying to protect the interest of drinking water for 15 million people in Metro Manila.” He added that from their end, they want to see the final version of the water protocol first and ascertain if specific issues have been properly addressed, since failing to do so, would also infer that investors are tugged “blindly bidding for something they don’t know it’s there.”
The other major point raised by the MWSS concessionaires would be on limiting the blackstart capacity (power recovery function from a blackout) of the Angat plant to just one hour of generation, when feasible. Proposals have also been put forward to the National Water Resources Board (NWRB) on the possibility of reducing water releases for National Power Corporation’s power generation use, given critical water elevation because of the El Niño phenomenon.