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SURGEON'S WARNING: This site is NOT a PORN SITE, perv ! The site contains some of the opinion columns and news reports written by Herbie Gomez. This is not for the fainthearted. Parental guidance is advised. |
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Power deal has new tag for PPACAGAYAN DE ORO CITY--Regional Development Council (RDC) Chairman and Misamis Occidental Gov. Loreto Ocampos says the group waited for the Misamis Oriental provincial government's endorsement of a US-million coal-fired plant in Villanueva town before giving it the green light. State Power Development Corp. (SPDC), a Filipino-owned company and the partner of the Germany-based Steag AG, has also denied reports of a P530-million annual subsidy from Napocor--which critics warn taxpayers would eventually shoulder. "It's not true," said SPDC community development officer Ma. Teresa Alegrio. She claimed the US-million project would become operational under a build-operate-transfer (BOT) scheme. But the subsidy was spelt out in a June 17 project evaluation report of the northern Mindanao Regional Development Council's infrastructure development committee. "Based on the results of [the] financial analysis, (Napocor) shall subsidize (perhaps from its corporate fund or from the national goÂÂÂvernment or borrow from domestic or foreign fund sources), as suggested by the negative net revenues, the operation of the plant in order for the (Napocor) to meet its contractual obligations," reads a portion of the evaluation report. The subsidy, according to the RDC document, could be at least P530-million annually for 25 years. Melburgo Chiu, a Napocor vice president, said a subsidy would mean higher electric bills. "Common sense tells us that if we add another commitment, we'll have to pay for it," said Chiu in a phone interview. Chiu said Napocor could opt to extend its commitment--say, 50 years--to thinly spread the payments. An extension, he said, might have to be resorted to so as not to make the charges onerous. But Chiu said payment for the electricity generated by the planned coal-fired plant could be sourced from a fixed "universal levy." Just the same, like the controversial power purchased adjustment (PPA) charges, the "universal levy" would be reflected in the electric bills of power consumers. One of the endorsers of the controversial project, Vice Gov. Miguel de Jesus of Misamis Oriental, questioned the RDC technical experts' evaluation report. De Jesus said, "How can there be a subsidy when this is a BOT project?" "I asked them (RDC's technical evaluators) how they were able to come up with the figures and they could not answer," said de Jesus. "My guess is that they used a wrong formula based on presumptions." SPDC's Alegrio said the National Economic and Development Authority (Neda) office in Manila approved the project after it passed a separate evaluation made by the Investment Coordinating Council-Technical Board (ICC-TB). When this writer asked for a copy of the ICC-TB's evaluation report, Alegrio said she would need a clearance from Manila before she could release documents. She promised to provide this writer documents if she gets a go-ahead. Unlike other independent power producers (IPPs), Alegrio said the SPDC would only bill Napocor for used power. "We're really taking a risk here," said Alegrio even as she stressed that the deal SPDC struck with Napocor is not a "take or pay" contract. She said even the costs of importing coal from Indonesia would be shouldered by SPDC and its German partner, Steag Ag, and not passed on to power consumers. "We're negotiating for a 15-year contract [for a supply of coal] in Indonesia." SPDC and Steag Ag are banking on a significant increase in the demand for power in Mindanao by 2006 as projected by the Napocor and the Neda. Alegrio said her company is also eyeing to directly sell electricity to existing and future industrial firms. Environmental activists here charge that an all-expense-paid junket to Germany transformed local officials here from critics to cheer leaders. De Jesus, who says his conscience is "clear," said they became believers after seeing the expensive anti-pollution devices at six German power plants. He said the power plant proponent is merely taking flak that should be directed at irresponsible power producers. Officials also point out the dire need for new sources of energy, ciÂÂÂting a Napocor study indicating Mindanao's demand for power would shoot up by 2006. Ocampos said Napocor has justified the need for establishing the coal-fired plant. He said Napocor's Agus System, including the Maria Cristina plant in Iligan city, would not be able to meet the energy requirements by 2006 because of unpredictable weather. Napocor claims the water level of Lake Lanao, the primary source of hydroelectric power in the Mindanao grid, has receded to an alarming level. "The fast economic development within the area of Mindanao, specifically in Misamis Oriental, will be the cause of power shortage in the future," said Ocampos. "With this problem presented to us (in the RDC), we find this German-backed group capable in solving this problem (sic)." Misamis Oriental Rep. Oscar Moreno (1st District) said the House's energy committee would look into the SPDC-Napocor contract "very carefully." "We'll do this at the energy committee... and I hope that every House member from northern Mindanao (at least) will get himself involved in this process," wrote Moreno in an e-mail he sent as a reply to a query made by this paper. Moreno added: "There may be no 'take or pay' provisions in the contract executed or envisioned with Napocor but it would be incorrect and deceiving for the proponents to deny that they are convinced that they will make the desired yield of return from the project." After all the mess the country has been put into on account of arrangements with IPPs, Moreno said it would be foolish for a project proponent to ask for "take or pay" provisions. He said the yield isn't derived from the takeout provisions alone and that there are many ways of doing that. "For instance, Napocor may be made to commit that SPDC's power will have priority (over those produced by other power plants, even if cheaper) in Napocor's power purchases." This would mean, according to Moreno, higher costs to Napocor "which it will certainly pass on to the consumers and/or the taxpaÂÂÂyers." A subsidy may be in lieu of the takeout provision. This, according to Moreno, likely explains SPDC's assertion that the project has no "take or pay" contract. As in the case of Napocor's mounting liabilities under the existing "take or pay" contracts, Napocor's obligation with regard to the projected subsidy would be recoverable from the consumers and, to the extent of the differential, from the taxpayers, he said. Under the present set-up, Napocor's obligations are assumed totally by the government. "Whether via a 'take or pay' contract or through a 'subsidy' or by any other means of recourse against Napocor, the bottom line is the same--the project proponent would be relying on a legally demandable obligation of Napocor (and government) to cover [SPDC's] investment and yield risks," said Moreno. SPDC holds a contract with the Napocor, a deal that has been questioned by the government's inter-agency review committee because of "financial issues." |
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