Monday, November 26, 2007 Group seeks removal of Napocor's fuel procurement right
THE Philippine Association of Independent Power Producers (Pippa) is demanding that the National Power Corporation (Napocor) be stripped of its right to procure coal and oil under House Bill (HB) 1889.
In a position paper submitted to the House of Representatives, the group said allowing Napocor to retail fuel procurement while obligating Independent Power Producer (IPP) administrators to market the energy output under Napocor-IPP contracts "will be counter-productive and reduce privatization proceeds of the government.
Citing Section 47 of the Electric Power Industry Reform Act (Epira) of 2001, Pippa stressed that HB 1889 is amended so that privatization would become "capacity and energy available under its (Napocor) IPP contracts."
The proposed amendment also noted that the obligation that will be assumed by the IPP administrator upon privatization is limited to the obligation to sell the energy output under the IPP contract concerned.
"By implication, the procurement of fuel under the IPP contract would remain with Napocor. This situation would not be advisable," the group said.
Epira intends to fully privatize Napocor and "does not contemplate Napocor having a residual function or existence as a fuel procurement company."
"The winning bidder would assume a significant higher risk in selling the energy output when it (Napocor) has no control over the fuel used. Higher risk translates to lower privatization value," Pippa said.
On the other hand, Ernesto Pantangco, president of Pippa, said the Department of Energy (DOE) and the Joint Congressional Power Commission can decide in removing the fuel procurement function of Napocor.
Recalling the recent charges against Napocor officials, Pantangco said allowing Napocor to still administer the procurement of coal would still be a problem even as you privatized it since these could be one source of corruption.
Early this year, Napocor was asked to explain on its procurement following the high prices of electricity traded in the spot market during the summer months and the power outages that hit Metro Manila as a result of lack of fuel supply.
The Power Sector Assets and Liabilities Management (Psalm) is set to auction Napocor's IPP contracts to the IPP administrators early next year.
Psalm was authorized and mandated to take title to and possession of the Napocor-IPP contracts and to appoint, after public bidding, qualified independent entities who shall act as IPP administrators.
These IPP contracts include major power plants in Luzon with a total installed generating capacity of 6,242 megawatt (MW), the biggest of which is the 1,200MW Sual coal facility and the 1,200MW Kepco Ilijan natural gas facility.
The other power plants are Limay combined cycle (655MW), Pagbilao coal facility (735MW), Subic Power Corp. (116MW), Hedcor Bacun (29MW), Luzon Hydro Corp.
(75MW), CBK Botocan (21MW), CBK Kalayaan (739MW), Casecnan (150MW), San Roque (411MW), Malaya (650MW) and Bauang Private Power Corp. (226MW).
Financial advisors such as Robert Dykstra, Peter Bedson, John Breslin and David Baker of the Lacima Group; Michael Wagner of IPA Energy + Water Consulting; and Richard John Hemmings of Stonelegh Consulting were hired by Psalm to handle the privatization process. (MSN/Sunnex)
