Napocor bids out off-grid unit’s fuel requirements

Manila Times.net
Written by : Euan Paulo C. Añonuevo
STATE-OWNED National Power Corp. is bidding out the remaining fuel requirements of its off-grid and missionary electrification unit.

In an invitation to bid, Napocor said it has allotted roughly P2.19 billion for the supply and delivery of oil-based fuel to power plants and barges operated by the company’s Small Power Utilities Group.

Napocor is bidding out SPUG’s diesel and fuel oil requirement of 40,162 and 46,401 kiloliters, respectively. The diesel oil has a proposed budget of P1.96 billion, while the fuel oil has an allocation of P234.89 million.

The auction is slated on September 9 at the company’s headquarters in Quezon City.

Napocor said the budget for the fuel supply would be sourced from its supplemental corporate budget for 2011, which the Department of Budget and Management and Congress has yet to approve.

As the missionary electrification arm of Napocor, SPUG operates 242 power plants with a combined capacity of almost 200 megawatts in far-flung islands that are not connected to any of the main grids in Luzon, Visayas and Mindanao.

Power rates in the SPUG areas are highly subsidized and result in significant losses for Napocor every year.

Earlier, Urbano Mendiola Jr., Napocor vice president for corporate services, said the company may be unable to settle its outstanding obligations to fuel suppliers after regulators slashed the rate hike they sought to subsidize SPUG’s operations.

“The approved UCME will not be enough to allow [Napocor] to settle its outstanding obligations to its fuel suppliers. As of end-July 2011, [Napocor] already owed fuel suppliers Pilipinas Shell Petroleum Corp., Filpride and Petron Corp. close to P900 million,” he said.

The UCME or the universal charge for missionary electrification is a recovery mechanism approved by regulators and included in the monthly electricity bills of consumers to defray the cost of missionary electrification in the remote areas and off-grid islands under SPUG.

Napocor earlier sought a P0.28 per kilowatt-hour adjustment to the UCME to recover the shortfall in revenues resulting from higher fuel costs and foreign exchange fluctuations, and a 12-percent return on rate base to cover the company’s working capital from 2003 to 2009.

The Energy Regulatory Commission, however, granted only a P0.07 per kilowatt-hour adjustment, which represents about 24 percent of the amount applied for.