The ball is in Meralco’s court, says First Gas

First Gas Power Corp. (FGPC) yesterday said it is just waiting for the go signal of Manila Electric Co. (Meralco) to finalize the renegotiation of their power contract.

British Gas Philippines country manager and head of the FGPC negotiating team Anthony Barker and FGPC senior vice president Richard Tantoco issued this statement in reaction to allegations made by Land Bank president and Meralco independent review committee head Margarito Teves that FGPC has not been making progress in its talks with Meralco.

"We have given Meralco a working draft that was a result of our negotiations and even went as far as informing our lenders that we were at a point wherein the power offtake contract contracts would be modified. The ball is in their court. First Gas awaits a response from Meralco," the officials said.

Observers say it is unlikely that FGPC and Meralco will go without a deal since both firms have common owners – the Lopezes.

The FGPC group has also urged Teves to stop making statements that may hamper the review of the contract. Teves early this week said Meralco has concluded a renegotiated deal with Quezon Power Philippines Ltd., another IPP of Meralco.

"Our hope was that the few remaining issues would have been settled in the proper forum using the contract drafts that we provided to Meralco one month ago. Our greatest disappointment is that the review process is being pursued through the press," the FGPC team said.

The FGPC review team recalled that in July this year, FGPC arrived at an IPP review package for Meralco, having started in mid-2002. "The package will definitely benefit Meralco’s consumers. The package surpasses the renegotiated contracts that we have seen, including the concessions obtained by PSALM from Napocor’s IPPs. As it stands, the offer, which is already generous, will still have to meet the test of acceptance by our lenders," they said.

According to the officials, the draft renegotiated contract is deemed beneficial to both parties. "At the onset of discussions, First Gas maintains that its power offtake contract with Meralco was already more fair and reasonable vis-à-vis other IPPs. In addition, unlike QPPL and other IPPs of Napocor, First Gas did not ask for anything in return for the concessions offered," they added.

They said this package was not offered in a "take it or leave it" manner. The benefits arrived at were a result of a series of 10 negotiating rounds. "To say that we have not budged is patently untrue," they added.

They pointed out that "the offer makes generous concessions on a number of items, particularly the absorption of local business and community taxes, increases in discounts on electricity rates, increases in penalties for non-performance and sales of excess kilowatt-hours free of fixed charges for the Meralco consumers up to 2011."