Napocor readies bidding for $6.5-B reinsurance coverage

The National Power Corp. (Napocor) is preparing for the bidding of its $6.5-billion Industrial All-Risk (IAR) reinsurance policy, Department of Energy (DOE) sources said.

"The Napocor and the Government Service Insurance System (GSIS) are already preparing the reinsurance bidding for the main IAR for 2004 and 2005," the sources said.

The sources said this is pursuant to the law on procurement which also created the Joint Bidding Committee (JBC) handling the auction for Napocor reinsurance coverage. The committee, chaired by Finance Secretary Jose Isidro Camacho, has as members representatives from the GSIS and the Finance Department.

The JBC will meet today (Sept. 30) to discuss the schedule of the bidding. "The timeframe of the activities will be decided by the JBC," the sources said.

Last year, the state-owned power firm was able to get an insurance premium of $14.4 million. "Napocor is exerting all efforts to lower the insurance premium. It hopes to get a lower premium this year," the sources said.

Of the total premium, about 70 percent was covered by GSIS, 25 percent by Malayan Reinsurance Corp. and five percent by Napocor readies. National Reinsurance of the Philippines.

The sources said it was not certain if these reinsurance firms will still be joining the bidding or if the GSIS will still be able to get the same percentage of the reinsurance premium.

The IAR reinsurance of Napocor became controversial when the power firm questioned the authority of the GSIS to insure the assets of the company.

Napocor had argued that it should be given a say in the bidding procedures. To settle the issue, Malacañang created the JBC.

After the Sept. 11, 2001 terrorist attack in the US, Napocor has not been able to get a long-term reinsurer thus, was left without cover for a few months following the attack on the World Trade Center.

Before the 9/11 incident, Napocor’s insurance policy cost about $18 million and the bidding and award of the contract were made solely by the Napocor’s primary insurer, the GSIS.