In a disclosure to the Philippine Stock Exchange (PSE), Meralco said its independent review committee (IRC) has wrapped up renegotiations of its power contract with First Gas Power Corp., a company also under the Lopez group.
The successful negotiations will result to immediate savings of P10.6 billion or about three centavos per kwh for Meralco consumers.
The renegotiations of the power contract came after the government initiated its own review of the National Power Corp. (Napocor)’s IPP contracts.
The government reported that it has concluded almost 99 percent of the IPP negotiations resulting to more than $1 billion in savings for the state coffers.
IRC chairman and Land Bank of the Philippines president Margarito Teves, the government representative to the committee, said negotiations were finalized yesterday after a 17-month long series of meetings.
"First Gas grants many major concessions that directly benefit consumers in this renegotiated agreement, which offers added savings under every scenario," Teves said.
Teves explained that the concessions with immediate value include First Gas shouldering local business and community taxes, while conditional concessions include increasing discounts on electricity rates, paying higher penalties for non-performance, and until 2011, not charging Meralco for energy delivered beyond the contracted amount.
"The positive results of this process are a clear indication of Meralco’s commitments to its customers," IRC member and Union Fenosa’s managing director for Asia Emilio Vicens added. The Spanish firm Union Fenosa holds a substantial stake in Meralco.
Meralco sources power from Napocor and its three IPPs – Quezon Power, First Gas‚ and FGP Corp’s San Lorenzo and Sta. Rita plants. Sta. Rita and San Lorenzo both use natural gas from the $4.5 billion Malampaya deep water gas-to-power project.
Meralco consumers will begin to receive the full benefits of the Meralco-First Gas IPP review upon the Energy Regulatory Commission’s (ERC) approval of the renegotiated agreement. – Donnabelle L. Gatdula