Business World Online
Posted on August 30, 2011 10:12:30 PM
THE FOREIGN investor behind a coal-fired power plant in Zambales has reportedly complained that competing against state-owned firms with “artificially low” rates were scaring off firms from entering the industry, a diplomatic cable released by WikiLeaks last week showed.
AES Corp., which now operates the 660-megawatt Masinloc plant after buying it from the government in 2008, was concerned that regulators’ low price ceilings “have eliminated profit margins,” stated cables purported to have been sent out by the United States embassy in July that year.
Back then, National Power Corp. (Napocor) had not yet filed a petition for higher rates to reflect coal price hikes, AES officials were said to have claimed.
“It is impossible for AES and other independent power producers to recover their fixed costs and make debt repayments,” read the cable with the heading “Buyer’s Remorse?”
“AES warned of a chilling effect on energy sector investments that will create eventual electricity shortages,” it read further, noting that there is a mandated lag before power plant buyers are allowed to increase power prices.
Officials from AES and the US embassy could not be immediately reached for comment.
Currently, Napocor’s average effective rate in Luzon is blended with those of independent power producers (IPPA) to create the generation charge which is passed on by distribution utilities to consumers. Many government generating assets in Luzon have already been privatized since 2008.
Sought for comment, Energy Secretary Jose Rene D. Almendras denied that the government had been keeping prices low, noting that state players had been regularly filing for rate hikes. -- ENJD
Back then, National Power Corp. (Napocor) had not yet filed a petition for higher rates to reflect coal price hikes, AES officials were said to have claimed.
“It is impossible for AES and other independent power producers to recover their fixed costs and make debt repayments,” read the cable with the heading “Buyer’s Remorse?”
“AES warned of a chilling effect on energy sector investments that will create eventual electricity shortages,” it read further, noting that there is a mandated lag before power plant buyers are allowed to increase power prices.
Officials from AES and the US embassy could not be immediately reached for comment.
Currently, Napocor’s average effective rate in Luzon is blended with those of independent power producers (IPPA) to create the generation charge which is passed on by distribution utilities to consumers. Many government generating assets in Luzon have already been privatized since 2008.
Sought for comment, Energy Secretary Jose Rene D. Almendras denied that the government had been keeping prices low, noting that state players had been regularly filing for rate hikes. -- ENJD
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