No overpayment in CBK contract, says Napocor

The National Power Corp. (Napocor) belied yesterday reports of having overpaid CBK Power Co., Ltd. in capacity recovery fees (CRF), for rehabilitation works done on the Caliraya-Botocan-Kalayaan power complex in Laguna.

The allegation on the overpayment was done during a Senate hearing on the issue conducted by Sen. Serge Osmeña.

Napocor corporate secretary Alberto L. Pangcog, who was Napocor’s general counsel at the time CBK contract was negotiated and signed, said the Senate seems to be a little confused on the issue.

"First of all, we cannot allow that to happen because we are talking of precious taxpayers money here, something that our country should use and utilize very wisely, especially in the light of our current economic condition," he said.

"Secondly, what Sen. Osmeña refers to, as overpayment is actually not true because what is considered in the contract is the total project cost or what is termed as full project cost in other disciplines. This is contained in Sec. 12.15.2 (b) of the Implementing Rules and Regulations of the Build-Operate-Transfer (BOT) Law. This was also reiterated by Meritec, the independent body talked to review the contract," he said.

In a privilege speech, Osmeña accused top Napocor officials of allowing the overpayment of $50 million to CBK when the contractor only spent $9 million in effecting the rehabilitation works on unit 1 of Kalayaan 1’s power generation facility.

In its report, Meritec confirmed that what was paid as CRF for the rehabilitation of units 1 & 2 represents advanced payments under the project, and is allowed by the contract. The report further states that "there will be no over recovery of the total amount of capital recovered by the BROT contractor over the life of the project."

"Thus, it is not accurate to match the estimated cost of $9 million spent by the contractors, identified in the Meritec report as pertaining to Kalayaan 1 plant, against the $50 million spent by Napocor in capital recovery fees," he stressed.

"We would also like to clarify the allegation of Sen. Osmeña that there is no existing mother contract at the time the supplemental contract was entered into by Napocor. The fact is the BROT agreement is a valid binding perfected contract when the supplemental contract was executed. It should be noted that the supplemental agreement also went through the regular government approvals, like the Napocor board, DOF, DOJ and NEDA," explained Pangcog.