Government to settle 3 more IPP contracts

Negotiations for two to three more independent power producer (IPP) contracts of the National Power Corp. (Napocor) will be completed in the next few weeks, Energy Secretary Vincent S. Perez said.

Perez said the settlement of these IPP contracts, now in the advance stages of negotiations, will result to additional savings for the National Government.

The resolution of these IPP contracts will bring to 21 the number of contracts already settled by the government, leaving seven contracts still under discussion with the respective IPP sponsors.

The Department of Energy and the Power Sector Assets and Liabilities Management Corp. (PSALM) have recently renegotiated the contract with CBK Power Co. Ltd., resulting to $96 million or approximately P5 billion in savings.

CBK Power, a joint venture partnership between IMPSA of Argentina and Edison Mission Energy of California, is currently rehabilitating, upgrading and expanding the Caliraya-Botocan-Kalayaan hydro-power complex in Laguna.

The agreement with CBK Power brings to 18 the number of IPP agreements that have been settled by both the PSALM and the DOE.

"Negotiations with several IPPs have been fairly successful, generating substantial savings of $832 million in net present value (NPV) to the government without undermining the viability of the firms to earn fair and reasonable returns," Perez said.

Other contracts that are being worked out by PSALM with 18 firms/consortia include: Calenergy; Aboitiz (Benguet, Bakun); Alsons/Tomen (Iligan City 1 & 2, Zamboanga, General Santos); Alstom (Limay Bataan A & B); Bauang Private Power Corp. (Bauang, La Union); Covanta (Cavite, EPZA, Bataan EPZA); Enron (Pinamucan, Subic Zambales); Kepco ( Malaya, Ilijan Gas); Marubeni Sithe ( San Roque); Mirant (Navotas I-III, IV, Pagbilao, Sual); Mitsui (Mindanao Barges); NIA (Casecnan); Ormat (Makban Binary); PNOC-EDC (Leyte A & B), Mt. Apo I and II; Salcon Power (Naga Complex); State Power (Mindanao Coal); Chevron-Texaco (San Pascual Co-generation); and BHEPI (Binga).

The review of the IPP contracts is intended to reduce the stranded contract costs that will be absorbed by PSALM which will eventually pass the cost to the consumers through a universal charge.

PSALM has a pending proposal to charge some 40 centavos per kilowatthour to recover stranded costs of the Napocor amounting to a total of P900 billion for a period of 25 years.