Gov't seeking other options to extend sp'l power rates to ecozone firms

MANILA, Philippines - The government is looking to extend the special power rate being given to economic zone locators although not through an arrangement with the National Power Corp. (Napocor), the country’s top energy official said.

Energy Secretary Jose Rene Almendras said they are currently studying possible scenarios to extend the discount with Napocor but not necessarily entering into another contract with Manila Electric Co. (Meralco), the biggest customer of Napocor.

“The DOE wishes to inform the public that it is currently studying the possible scenarios that may be adapted in view of the termination of the Ecozone Rate Program as stated in the memorandum of agreement (MOA) and this includes the possibility of extending the special rate for ecozone locators or an extension under different terms and reference,” he said.

According to Almendras, they cannot do anything on the request of Meralco, Philippine Economic Zone Authority (PEZA) and Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) as the agreement was signed before President Aquino’s term.

“It should be stated the termination of the said agreement was already in place prior to the Aquino administration as the MOA between the Manila Electric Co. (Meralco) and the National Power Corp. (Napocor) was signed in 2007 indicating the termination date of the contract on Dec. 25, 2011,” he said.

He pointed out that “the situation in 2007 is different now due to significant privatization of PSALM assets which now requires us to carefully study the matter.”

The government’s decision, he said, also has to consider the fact that most of Napocor’s power generating plants, particularly in Luzon and Visayas, have already been privatized, limiting the capability to renew power supply contracts at time-of-use (ToU) rates or at discounted power rates. 

The energy chief said the economic managers are discussing the issue as this may impact on the overall economic performance of the country.

“There are lots of options that we are still studying. That is why we are in discussion with PSALM (Power Sector Assets and Liabilities Management Corp.), Napocor and PEZA, including the economic managers, to come up with a win-win solution to this matter,” he said.

Almendras hinted that they may tap government financial institutions (GFIs) to be able to continue the special discounts.

“To further clarify the issue on power discounted rates for the locators within the economic zones, the matter it is still subject for approval by the financial institutions of the government, thus, there have been continuous consultations with the economic cluster for the best possible solution on this matter,” he said.

Almendras pointed out that the decision on the special discount for ecozone this will impact on the revenues of the National Government.

“In all directions, whether economic rate is extended or not, the government is the one absorbing,” he stressed.

The energy chief declined to comment on the possibility of using proceeds from Malampaya royalties to shoulder the subsidies for the ecozones. There was a previous proposal from industry stakeholders to give out at least P1 discount to ecozones to be financed by the government’s royalties from the Malampaya gas project.

Earlier PSALM president and CEO Emmanuel Ledesma Jr. said Napocor could not extend the TOU contract with Meralco as it has no sufficient supply.

After the privatization of most Luzon plants previously owned by Napocor, PSALM ceased to become the sole supplier of electricity from which the ecozones may procure energy.

In their separate letters to Napocor, Meralco, PEZA and SEIPI said extending the Ecozone Rate Program (ERP) would benefit the economy and the country as a whole.

ERP is an offshoot of a MOA between Meralco and Napocor which provides for the provision of generation rates for high load factor PEZA-accredited industries signed.

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