Palace defends FVR

As far as Malacañang is concerned, the administration of former President Fidel Ramos entered into contracts with independent power producers (IPPs) based on the situation prevailing during the power crisis in the early 1990s.

This, according to Press Secretary Ignacio Bunye, was the reaction of President Arroyo after she read the first part of the report of the Philippine Center for Investigative Journalism (PCIJ) on the controversial contracts the government entered into with IPPs in the 1990s.

The contracts have been blamed for the high cost of electricity in the country, which is still among the highest in Asia.

"The actions or decisions of former President Fidel Ramos must be judged in the light of circumstances prevailing during those difficult times," Bunye said, citing the stand of Mrs. Arroyo on the matter.

Although Palace reporters pressed Bunye to elaborate, the Palace spokesman said that was the only comment he was authorized to say after the publication of the PCIJ report claiming Ramos pushed for the approval of some of the most onerous contracts the government signed with the IPPs.

"I cannot go beyond what I am authorized to say," he said.

Bunye said he was not aware if the President ordered a special Cabinet review committee to look into the allegations of the PCIJ report.

Mrs. Arroyo earlier ordered a special Cabinet committee, headed by Energy Secretary Vicente Perez Jr., to review 35 contracts between the Napocor and the IPPs.

The committee later found that only five of the 35 contracts were "problem-free" and recommended the renegotiation of the 22 others which had both legal and financial issues.

The review was prompted by the public outcry over escalating power bills, largely due to the excess capacity of IPPs which took advantage of "take-or-pay" provisions which forced the National Power Corp. (Napocor) to pay for all the electricity the IPP produced even if it were not used.

Of the 22 questionable contracts, five were entered into with American IPPs, one of which was supposedly owned by a former West Point classmate of Ramos.

Perez told The STAR that was among the issues that were raised when US Secretary of State Colin Powell visited the country over the weekend.

Perez said the Cabinet committee was particularly examining the contracts with Mirant Mission Energy, Mirant and Cal Energy.

"They (the Powell panel) agreed they would help find ways to reduce their rates," Perez said.

During the meeting with Powell, Bunye said the President reassured the Americans that her administration would respect valid contracts and would not take unilateral actions to revoke them.

"We respect the sanctity of contracts but we would like to request concessions now that the risks are no longer there so you could be more lenient on terms," Bunye quoted the President as telling Powell and his team. – Marichu Villanueva