Napocor’s $6.5-B reinsurance contract to be negotiated

The joint bidding committee (JBC) tasked to handle the reinsurance of the National Power Corp.’s assets will now work on a negotiated insurance contract following two failed biddings.

"We are proceeding on that basis," Finance Undersecretary Antonio Bernardo and chairman of the JBC said.

When the second bidding for Napocor’s reinsurance failed last Nov. 19, the question of whether JBC’s function should continue was raised. "The same members of the committee (will) stay," Bernardo said, noting that they have been given the go signal to explore other options such as a negotiated contract and the proposed creation of a captive company.

Both Energy Secretary Vincent S. Perez and Finance Secretary Jose Isidro Camacho recommended to President Arroyo that the government go by way of a negotiated contract for the industrial all risk insurance policy covering Napocor’s $6.5-billion assets.

At the same time, the two Cabinet members, in a memorandum to President Arroyo, recommended that the JBC continue to function and handle further negotiations for the Napocor reinsurance bid.

JBC was created by the virtue of Memorandum Order 30 which allows JBC to conduct the public bidding for the reinsurance of the properties of Napocor insured with the Government Service Insurance System (GSIS).

The memo order was issued to end the rift between the Napocor and GSIS on which government agency should handle the bidding of the state-run power generation firm.

The bidding committee is composed of the secretary of Department of Finance (as chairman); two GSIS representatives who shall be the general manager and senior vice president of the pension fund; two representatives from the Napocor who shall be the secretary of energy and the Napocor president (as voting members); and Napocor’s resident Commission on Audit (COA) auditor.

The second bidding failed since no insurance brokers were able to meet the 100-percent mandatory requirement under the terms of reference (TOR).

Bernardo said they are now in the process of evaluating the technical data submitted by the four bidders last Nov. 19 to use them as benchmark for the negotiated contract deal. "We are waiting for the result of the evaluation of our technical people. We will definitely come up with the reinsurance package for Napocor before the end of the year," Bernardo said.