Napocor endorses sale of Tiwi Mak-Ban facilities

The National Power Corp. (Napocor) has endorsed to the Committee on Privatization (COP) the sale of the power plants drawing energy from the Tiwi, Albay and Makiling-Banahaw (Mak-Ban) steamfields.

"We have endorsed the public sale of the power plants to the Committee on Privatization, and we have informed the affected parties in a formal letter," Napocor president Federico Puno told newsmen.

The affected parties are the Philippine Geothermal Inc. (PGI), and the Power and Renewable Energy Corp. (PowerCorp).

PowerCorp. is bidding for the steamfields and the respective power plants while PGI is the present service contract holder for the operation and exploitation of the Tiwi Mak-Ban power project. PowerCorp. is a joint venture between PGI and business tycoon Eusebio Tanco Jr.

Puno said Napocor has decided to enter into a settlement with PGI regarding the steamfields while opening the power plants for public auction. This comes after Napocor and PowerCorp. were unable to come to a settlement on the purchase of the Tiwi Mak-Ban power plants.

Napocor offered the Tiwi Mak-Ban power plant and steamfields for a combined amount of around $290 million instead of the latest valuation placed at $225 million. The valuation was undertaken by Navigant Consulting Inc., (then known as RMI Inc.), a private firm contracted by the two parties for a third opinion.

The latest offer price represents $200 million for the power plant and approximately $90 million for the steamfields.

The steamfields were subjected to arbitration under the arbitration clause in its 25-year service contract with Napocor. PGI field a request for arbitration with the International Court of Arbitration in Singapore.

In response, Napocor filed a petition for declaratory relief before the Regional Trial Court of Quezon City forcing an impasse on the issue.

The controversy-ridden Tiwi Mak-Ban power project is being jointly operated by the PGI, a subsidiary of the Union Oil Corp. of California, USA (Unocol), and Napocor.