Napocor soon to decide on ecozone rates

MANILA, Philippines - The National Power Corp. (Napocor) said it will soon decide on the request of Manila Electric Co. (Meralco), the Philippine Economic Zone Authority (PEZA) and the Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) to extend the special rate being offered to ecozone locators until Dec. 12, 2012, the country’s top energy official said.

Energy Secretary and Napocor vice chairman Jose Rene Almendras said they are currently studying the matter.

Napocor president Froilan Tampinco said they are also awaiting the decision of the Power Sector Assets and Liabilities Management Corp. (PSALM), the entity that handles the finances of Napocor, as this may impact on the company’s revenues.

“We will need to consult with PSALM on this matter to avoid possible complexities. But we hope to come out with a decision on their request before the deadline lapses on December,” he said.

He said they are currently discussing the request within Napocor management and then to the Napocor board, which is chaired by the Department of Finance (DOF).

Tampinco said they hope to present a recommendation to the board in its meeting next month.

Meralco, PEZA and SEIPI sought the extension of the Ecozone Rate Program (ERP) which they said would benefit the economy and the country as a whole.

ERP is an offshoot of a memorandum of agreement (MOA) between Meralco and Napocor which provides for the provision of generation rates for high load factor PEZA-accredited industries signed in Sept. 19, 2007 and will expire once the transition supply contract (TSC) between the two firms ends on Dec. 25, 2011.

Meralco senior executive vice president and chief operating officer Oscar Reyes said the extension of the ERP “will help promote and extend the laudable objectives of Republic Act 9136 to help achieve operational and economic efficiency and enhance competitiveness of Philippine products in the global market.”

Reyes noted that the ERP currently benefits 279 customers in industrial areas. These customers contribute 43 percent of total Philippine manufacturing exports, or around $19 billion, and provide more than 222,213 jobs. 

“We are hoping that the Ecozone Rate Program could be extended until the new open access date (whenever that will be declared by ERC), as this would provide a smoother transition to open access for customers under the program,” Meralco said.

The implementation of open access, which will allow big power users to choose where to source their electricity requirements, has been deferred to a still undetermined date pending resolution of some issues.

PEZA Director General Lilia de Lima, for her part, said the extension would ensure the ecozone locators a steady supply of power while awaiting the implementation of open access and retail competition.

SEIPI president Ernie Santiago, meanwhile, said “This is being made for the reason that the semiconductor and electronics industry had just started to recover from a two-year downturn brought about by the global financial crisis. As we started to enjoy and feel the benefits of our industry recovery, we are now faced with a serious disruption in supply chain brought about by the earthquake disaster that hit Japan last March 11. Any breathing space at this point in time, more specifically a continuation and not a disruption of the prevailing ecozone power rates, will be much appreciated.”

The electronics industry accounts for 2/3 or $31 billion of the total Philippine exports of merchandise goods in 2010; directly employs more than 500,000 engineers, technicians and operators, invests and average $1 billion every year; and provided the transfer of best global practices of high technology manufacturing to Filipino workers.