Renegotiated IPP contracts result in $1.42-B savings for gov’t, says PSALM

The government has saved about $1.42 billion from the renegotiations of the National Power Corp.’s (Napocor) contracts with its independent power producers (IPPs), the Power Sector Assets and Liabilities Management Corp. (PSALM) said yesterday.

"We have negotiated 20 IPPs. There are few remaining IPPs that we need to talk to but we have already completed 99 percent of the negotiation," PSALM president Edgardo del Fonso said.

Del Fonso said there are only four remaining IPPs for contract negotiations – Bauang Private Power Corp., Alstom, Mindanao Power Barges, and Covanta.

According to Energy Secretary Vincent Perez, they hope to finish the talks with the IPPs before the end of the year.

"We are almost complete. Everybody wants to start with a clean slate next year," the energy chief said.

Two months ago, PSALM said they have already concluded renegotiations with National Irrigation Administration (NIA)’s Casecnan conract, generating $255 million in present value savings; Chevron-Texaco’s San Pascual co-generation plant with almost $10 million assignment fees; Conal Holdings Corp./Alsons/Tomen (Iligan City 1 & 2), Zamboanga, General Santos power plants) with $4 million; and BHEPI (Binga power plant) with $9 million savings.

A few weeks ago, PSALM also renegotiated the power contract with Salcon Power Corp. resulting to a $57.44 million savings to the government.

PSALM, created under Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA), was tasked to handle all the assets and liabilities of Napocor, including all the (IPPs) contracts of the state-run power firm.

The renegotiation of the contracts is intended to help reduce electricity costs while preserving the sanctity of contracts.