National Government to bid re-insurance contract for Napocor

The National Government (NG) is bidding the re-insurance contract for the National Power Corp. (Napocor) and about 11 re-insurers are expected to participate in the bid.

After Sept. 11, 2001, terrorist attacks, the Napocor has not been able to get a long-term re-insurer and the state-owned company was left without cover for a few months following the attack on the World Trade Center.

Before the 9/11, Napocor’s re-insurance cost about $18 million. However, this price has skyrocketed since then and had only just begun to stabilize in the last several months.

Finance Undersecretary Inocencio Ferrer Jr. said Napocor was in the market for an industrial all-risks policy to cover its assets, but very few local companies were in the position to afford a policy of the magnitude that the power company required.

Ferrer said Napocor was able to get a short-term re-insurer but the policy lapsed on Nov. 20 this year. "We were able to get an extension but this will lapse on Dec. 20," he said.

Ferrer said the government had to make several policy shifts to ensure that the bidding and award of the contract would be transparent. In the past, he said the decision was made solely by Napocor’s primary insurer, the Government Service Insurance System (GSIS).

This time, Ferrer said a joint bidding committee has been created to oversee the public bidding. The committee is composed of the Department of Finance, Napocor and GSIS.

Ferrer said the bid committee has already conducted a "conceptual presentation to familiarize insurance companies with the specifics of Napocor’s re-insuring requirements.

The results of the conceptual presentation were used as the basis for the draft terms of reference (TOR) that would be presented when the auction is actually held next week.

According to Ferrer, the committee took the relevant and attractive proposals that emerged from the presentation and incorporated them in the TOR. In the bid, he said the committee would pick whichever policy would come closest to the TOR.

Ferrer said about 11 re-insurers participated in the presentation but added that less than that number was expected to actually participate in the bid.

"We want to get the most comprehensive and cost-effective policy we can possibly get for Napocor," Ferrer said.