Napocor eyes compromise with Keilco

The National Power Corp. (Napocor) expects to draw up within this month a compromise with Kepco-Ilijan Corp. (Keilco) on the controversial issue of liquidated damages.

Energy Secretary and Napocor chairman Vincent S. Perez told reporters that a resolution on the issue would be presented to the Napocor board within this week.

"There is a compensation of some sort to Napocor. There are indications from the negotiating parties that they have come up with a resolution. Results will be released to media by next week or in the next two weeks," he said.

But Perez said the nine-man board of Napocor will still have to approve the resolution. "There is still pending board approval but there is some resolution in sight on liquidated damages. There are indications I am hearing that the two negotiating parties have come up with some compromise so we are hoping that in the next board meeting of Napocor it will be taken up," he said.

The energy chief, however, declined to give more details on the proposed compromise compensation. "I don’t have the details but I guess they are coming up with a resolution already," he said.

He noted that the compromise would involve only Napocor and Keilco. "I don’t think the other contractors are involved in the compromise compensation. It’s between the Keilco and the Napocor," he said.

He also added that they are expecting that the commercial operations of the $800 million, 1,200 MW Ilijan power plant would commence in the next three weeks.

"I’m confident that by first week of June (it would be operating commercially)," he said.

The energy secretary likewise assured that there would be no transmission line constraint in dispatching the Ilijan natural gas-fired plant." (There is) no transmission problem," he said.

The claim for damages by Napocor was caused by the delay in the commercial operation of the Ilijan plant, which was supposed to happen last January.

The new schedule for the commercial operation of the Batangas-based gas-fired plant was moved to June this year due to "some technical problems."

Keilco, the operator of the plant, has been negotiating with Napocor for the supposed liquidated damages being asked by the state-owned power firm or about $400,000 penalty per day of delay.

The power plant is a project of Keilco, Napocor and other power firms which include Mitsubishi, Mirant (formerly Southern Energy of the US) and Kyushu Electric. The United Engineers International Inc., Raytheon-Ebasco Overses Ltd. and Mitsubishi Heavy Industries were hired by Keilco to build the power plant.

The Ilijan natural gas project is one of the downstream power plants that would be fueled by the $4.5-billion Malampaya Deep Water to Gas Power project.

Aside from Ilijan, the Malampaya gas, which could fire some 3,000 MW power plant, is also being sold to Sta. Rita (1,000 MW) and San Lorenzo (500 MW which are owned by the Lopezes.

The Sta. Rita power plant started commercial operation last October last year while San Lorenzo went on stream last month.