Negotiations For Morupule B Sale Start
Staff Writer | Monday November 7, 2016 17:04
Since its launch in 2012, the plant has suffered constant technical hitches putting a heavy strain on government coffers through maintenance costs, power imports as well as diesel generators.
In a notice to staff, Schwarzfischer said the sale of the plant, which can take up to a year, is more lucrative as it would relieve the power utility of financial burden.
“Morupule B has proven to be costly to maintain and operate due to construction defects rendering the plant unreliable. Negotiations with buyers will start soon and implementation of a transaction of this nature can take between six to 12 months,” Schwarzfischer said.
In March this year, former minerals, energy and water resources minister, Kitso Mokaila said two to three companies had already expressed interest in the possibility of buying Morupule B. The power station was due for completion on October 15, 2012, but was eventually handed over to government on May 4, 2014, with a subsequent root cause analysis report fingering the Chinese for poor workmanship and quality of equipment.
The same report also blamed poor design of the plant as well as unavoidable factors, which included weather conditions and the time taken to import some parts.
BPC has been running at a loss for the past eight years and it is currently implementing a new strategy to turnaround its financial position with regards to reduction of operation costs and establishing IPPs. In its last published results, being 2015/16, the corporation posted a P1.9 billion operating loss, in a year that it also received a P2.3 billion tariff subsidy from government.
The sale of Morupule B to an IPP will leave the country with just a 120MW power, which is currently under refurbishment, being the only power plant that it directly owns. Two other power plants producing a total of 600MW through IPPs are planned for the next five years with the tender for the first 300MW having been already awarded to a South Korean-Japanese Joint venture.