Picop seeks to resolve dispute with Napocor

Picop Resources Corp. wants to negotiate for a mutually acceptable supply arrangement with the National Power Corp. (Napocor) to enable the integrated pulp and paper milling company to continue operating with a stable power supply.

Picop corporate information officer V. Ubalde said they have presented to Napocor various options to address the situation which at one time saw Napocor threatening to disconnect Picop over the latter’s mounting unpaid electricity charges.

Ubalde said Picop has been questioning these bills several years now.

"The fact that Picop did not pay the latest power bills was only the manifestation of voltage fluctuation consequences that has accumulated equipment damage amounting to P152 million, offgrade products stuck in non-moving inventory amounting to P119 million and unfair increase in rates of P140 million since 2001 to June 2002," he said.

The Picop official pointed out that due to a fluctuation in the power supplied by Napocor, a voltage dip in April 1998 caused the shutdown of one of the bark boilers at its mill site in Bislig, Surigao del Sur, forcing the company to shut down one of its paper machines and half of the pulp mill.

Despite this, he said Napocor insisted on charging the full demand charge of about P6 million even with the inability of the equipment to run for 28 days.

As Picop initiated moves to install additional power capacities to make it self sufficient, Napocor made an offer of a five-year bulk power supply in Nov. 1998, assuring Picop the priority in power supply and low power rates.

But Ubalde said the dramatic increase in power rates Napocor has been charging since last year "wiped out the cost savings achieved through the four years of improvement program and actually reneged on the assurances that the power rates should stabilize at levels at par with industries from competitor nations."

"The rate policy of Napocor is unduly penalizing its earliest customers with the highest rates while providing cheaper power rates to those who did not contract with Napocor," he said.

Ubalde also noted that the claimed advantage of stability of power supply did not continue as Picop experienced higher incidence of voltage fluctuations in 2001 and 2002, causing substantial damage to their equipment.

"Picop hopes that Napocor will concede that there is mutual benefit to both Napocor and Picop to reestablish a satisfactory power cost level that will enable Picop to continue operations with power supplied by Napocor. After all these were the basis for going into a five-year contract that still has to complete its course in 2003," Ubalde added.