State-owned Power Sector Assets and Liabilities Management Corp. (PSALM) said Friday it started preparations for the early retirement or repurposing of the 210-megawatt Mindanao coal-fired power plant in Villanueva, Misamis Oriental.
The facility is the only remaining government-owned coal plant.
“The Mindanao coal energy transition mechanism or plan is for the early retirement of the STEAG or Mindanao coal fired power plant. We have approval to proceed with the mechanism and we are ongoing technical discussions in tandem with our transaction advisor, ADB [Asian Development Bank], with STEAG and the local community,” PSALM president Dennis dela Serna said.
STEAG State Power Inc. operates the Mindanao coal plant, which was contracted under a build-operate-transfer concession until 2031, after which the asset would transfer to PSALM. The asset still has a remaining operational life of 15 to 20 years.
PSALM manages the assets and liabilities previously owned by National Power Corp.
The government is initially looking at retiring or repurposing the Mindanao coal plant by 2026 at a cost of $476 million.
The Department of Energy earlier said it planned to use the $500-million funding recently approved by the Climate Investment Funds (CIF) for the Mindanao coal-fired power plant.
The DOE was also looking at including the Mindanao coal plant in the ADB energy transition mechanism (ETM). Another option is “potential bundling with assets needed for the replacement of power with clean energy for promoting energy transition.”
The DOE said PSALM, the offtaker of CFPP’s power supply, has the option to pre-terminate the BOT as early as 2026, for an agreed termination pay-out.
Based on DOE’s timeline, the due diligence and project structuring is set to be completed in the first quarter of 2024, followed by preparation of the tender documents and launch of the tender process in the third quarter of 2024.
The commercial close is targeted for the second quarter of 2025, while loan negotiations and final investment consideration are slated for the third quarter 2025.
The ADB approval and financial close is expected by the fourth quarter 2025.
