MANILA - Pressed by court to compensate terminated National Power Corp (Napocor) employees, the government is calling in the chips issued by those that had acquired some of the assets of the state-owned company.
"We will ask NGCP, through a letter, if they can prepay the remaining payment under the privatization," Emmanuel Ledesma Jr., president of Power Sector Assets and Liabilities Management Corp (Psalm), today told reporters.
Privately-owned National Grid Corp of the Philippines (NGCP) still owes the government $1.2 billion in concession fees for the remaining life of the 25-year contract period.
NGCP in 2008 had topped the bidding for the government's power-transmission assets as well as the right to operate the nationwide grid, for which the company already paid $1.5 billion of the $3.95 billion concession fee. Under the concession agreement, NGCP is supposed to pay the concession fee in tranches over the life of the contract.
State-run Psalm is the agency tasked with overseeing Napocor's assets and managing its finances, and so is the subject of a notice of garnishment issued by a Quezon City court to implement an earlier Supreme Court ruling on the termination of Napocor employees.
The Supreme Court had ruled in favor of the former Napocor employees who were let go as part of the breakup of the state-owned company, awarding them P60 billion in damages. The government warned that the court order would exacerbate a looming power crisis.
The breakup of Napocor was mandated by the Electric Power Industry Reform Act of 2001 (EPIRA), which parceled out the power generation and transmission functions -- and assets -- of the state-owned company.
The transmission function went to another government-owned or controlled corporation (GOCC), the National Transmission Corp (Transco), which in turn privatized the grid operations to NGCP.
At least 70 percent of Napocor's power generation capacity was sold off to the private sector. Only the missionary or off-grid areas were left for Napocor to manage under its Small Power Utilities Group (SPUG).
In this regard, PSALM is also looking at pursuing negotiations with Aboitiz Power Corp and San Miguel Corp for the possible prepayment of the estimated $3 billion they owe the government after acquiring so-called independent power producer administrator (IPPA) contracts.
Holders of IPPA contracts have the right to manage the output of power plants, some of them owned by Napocor but the majority privately-owned and under contract with government.
"We're in talks with Aboitiz and San Miguel [since last year] for possible payment. San Miguel is roughly about $2 billion while Aboitiz is around $1 billion. We're exploring talks," Ledesma said.
To date, PSALM generated around $3.3 billion from the privatization of the IPPA contracts, but only around $495 million has been collected.
San Miguel won the bidding to manage the IPPA contract of the 1,000-megawatt (MW) Sual coal fired power plant, 345-MW San Roque hydro power plant and the 1,200-MW Ilijan power plant.
AboitizPower, on the other hand, manages the contract of the 700-MW Pagbilao coal plant.
Under EPIRA, proceeds of the sale of those assets should be used to settle Napocor's debts. At end-2013, Psalm had assumed $13 billion in debt.
Psalm also has pending petitions before the Energy Regulatory Commission (ERC) for increases in the universal charge (UC), which is a component of consumer electricity bills used to settle whatever Napocor debt wasn't covered by the proceeds from the sale of its assets.
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