Meralco Eyeing Overseas Business Moves

Manila Bulletin

By MYRNA M. VELASCO

July 31, 2012, 5:42pm

MANILA, Philippines — Power utility giant Manila Electric Company (Meralco) will start exploring investment opportunities that may go all the way into prospective investments into other distribution utilities in the region or even other parts globally.

Meralco chairman Manuel V. Pangilinan disclosed that the initial plan will be to look at opportunities that can open doors for the company to offer “technical advisory services” to power utilities within Asia.

He stressed that preliminary discussions are being done with several parties, but he did not specify which countries are these.

Asked if the planned offshore venture would go up to the extent of asset acquisition or investments in infrastructure, Pangilinan briefly replied that “it will be eventually.”

Yet he stressed that the initial strategy would be to show the “skills

 and competence” of Meralco personnel in running a power distribution “of which systems are comparable to us.”

Meralco president Oscar S. Reyes added that “we are seeing exciting opportunities within and even outside the Philippines,” emphasizing that “the key for us is our ability to integrate these opportunities to our core business.”

He expounded that the company’s plan “will (be) to venture into a project if we are able to robustly deliver highly cost-competitive power, and high service reliability assurance to our customers and acceptable returns to our shareholders.”

Domestically, Meralco is not only expanding its distribution network but is also re-diversifying its venture into power generation.

After its foray into the 600-megawatt Subic coal-fired plant, the company similarly bared capacity expansion of another 300 to 500 megawatts that will also be powered by coal.

The longer-term plan would be to put up a liquefied natural gas (LNG) facility that will help plug capacity gap into the longer term.

Reyes noted that they have been in discussion with various parties, but the defining factor will be the cost-impact that the project will eventually have on consumers.    source

ERC Enlisting Additional Power Retailers

Manila Bulletin

By MYRNA M. VELASCO

July 31, 2012, 5:15pm

MANILA, Philippines — The retail power segment is the next exciting phase in the restructured electricity sector, thus, the Energy Regulatory Commission (ERC) has been stepping up its accreditation of additional electricity suppliers.

The latest firm to be enlisted as retail electricity supplier (RES) is PRISM Energy Inc., technically an affiliate of Visayan Electric Company (VECO) because it is owned jointly by the Aboitiz and Garcia groups.

The ERC has noted that PRISM intends to capture “60 percent of the contestable customers of VECO” – or the customer bracket which will already be given the power to choose their electricity suppliers based on the 1.0-megawatt peak demand initial threshold set for open access ad retail competition in the power industry.

VECO serves the electricity needs of the Metro Cebu area, primarily the cities of Cebu, Mandaue, Talisay and Naga as well as the municipalities of Liloan, Consolacion, Minglanilla and San Fernando.

While open access will already allow customers to contract with or purchase supply from their preferred power providers, VECO will still be paid with charges on the use of its wires – it being a natural monopoly and something that cannot just be duplicated in a power system.

The company already identified at least 19 plants as its potential supply sources, albeit it reckoned that “it will capitalize on the experience of DUs (distribution utilities) and generation companies which are also subsidiaries of Aboitiz Power and Vivant. Both Aboitiz Power and the Garcia’s Vivant Power Corporation are engaged in power generation segment of the industry.

The competitive regime in the industry will require them though to be “extra innovative” both in their service offers and prices so they can corner continued customer patronage.

Another Aboitiz-led RES firm, AdventEnergy, was granted license renewal by the power industry regulator.  It will be the retail electricity supplier arm of the Aboitiz group that will cater to contestable customers operating inside special economic zones.

For both RES-licensed energy firms, ERC chairperson Zenaida G. Cruz-Ducut noted that they have met all financial as well as corresponding technical and other requirements to be enlisted for such business purpose.

She has reiterated that the ERC will continue to monitor all the activities of the RES to ensure that they are adhering to the terms and conditions of their licenses, primarily in having their “technical and financial fitness to ensure that (their) customers’ needs will be served in accordance to set standards.”    source

Belgian firm still keen on PH solar projects

World’s 5th-biggest developer eyes MindanaoBy: Amy R. Remo
Philippine Daily Inquirer

12:00 am | Tuesday, July 31st, 2012

A 313-kWp installation by Enfinity Vallediaccio, Puglia, Italy. Enfinity Philippines Renewable Resources Inc., the local arm of Belgian renewable energy developer Enfinity, has committed to push through with its planned solar power portfolio in the Philippines despite the low feed-in-tariff rate granted for solar power generation. PHOTO FROM ENFINITYCORP.COM

Enfinity Philippines Renewable Resources Inc., the local arm of Belgian renewable energy developer Enfinity, has committed to push through with its planned solar power portfolio in the Philippines despite the low feed-in-tariff rate granted for solar power generation.

In an e-mail, Enfinity Philippines president Dennis Ibarra said the parent firm has promised to run half of its worldwide business here in Philippines, including supply and investments, despite recent developments in the regulatory area.

Ibarra admitted that it would be difficult even for a large solar firm like Enfinity—globally the No. 5 solar developer with a 500-million euro revenue and projects with a combined capacity of 500 megawatts for 2012—to roll out its planned 500-MW solar power portfolio in the Philippines over the next three to five years.

A third of this portfolio will be affected by the feed-in-tariff rate for solar of P9.68 a kilowatt-hour, which was a far cry from the initial figure of P17.95 sought by proponents. According to other solar developers, it would be hard to put up their solar power projects with the lower-than-expected FIT rate for solar and the lack of economies of scale.

Meanwhile, two thirds of the company’s projects are expected to be carried out within the areas where the state-run National Power Corp.’s Small Power Utilities Group (SPUG) operates. These areas, usually in the far-flung, remote parts of the country, are those not connected to any of the main grids.

Ibarra, however, said that while Enfinity expected delays in implementation, the company was finding ways to push through with the solar power projects.

“We will meet with the new board shortly. Enfinity is committed to the Philippines and was notified of another 11 sites awarded to us last week with focus on Mindanao and SPUG. Enfinity will carefully redesign our facilities to match EPC [engineering, procurement and construction] costs and time supply buys,” Ibarra explained.

“We also need investment grade for the Philippines so the total cost can be lowered,” Ibarra disclosed.     source

Coop cuts power rate in SOCSARGEN

By Allen V. Estabillo | Friday| July 27, 2012

GENERAL SANTOS CITY(MindaNews/ 26 July) – The power rate here and in the nearby provinces of Sarangani and South Cotabato has slightly dropped this month as supplies in the critical Mindanao grid continued to stabilize in the last several weeks.

Joy Celeste Alora, South Cotabato II Electric Cooperative (Socoteco II) information officer, said Thursday they are implementing a 13-centavo cut in the basic rate for residential consumers for the month of July as the cooperative posted a significant decrease in its generation costs during the period.

From the previous rate of 7.37 per kilowatt-hour (kWh) last June, the basic charge for this month has dropped to 7.2311 per kWh, she said.

The new rate would be incorporated into the bills for August of power consumers in this city, the entire Sarangani province and the municipalities of Tupi and Polomolok in South Cotabato.

“This [power rate cut] is mainly due to the cooperative’s reduced utilization of power supplies from TMI (Therma Marine Inc.) and the stabilization of supplies coming from the NPC (National Power Corporation),” Alora said.

She was referring to the existing power sales contract between Socoteco II and TMI, which supplies an additional 35-megawatts to the area via its diesel-powered barges.

Alora said that from P99 million in June, Socoteco II’s obligations to TMI went down to P89 million this month.

She said the cooperative’s payments to TMI reached as high as P120 million at the peak of the power shortage Mindanao in April.

Power demand within the service area of Socoteco II, which is also serving an expanding industrial sector, presently peaks at 105 MW daily. The cooperative operates 44 power feeder stations in the area.

But its contracted supply from the NPC, which varies on a monthly basis, only reaches 72 to 74 MW or short by 31 to 33 MW based on the area’s peak power demand.

Alora that since last month, the power supplies generated by the NPC and transmitted by the National Grid Corporation of the Philippines (NGCP) have been stable and consistent, resulting to reduced mandatory power curtailments or rotating brownouts in the area.

Based on the NGCP’s power outlook advisory to electric cooperatives on Thursday morning, she said the Mindanao grid’s capacity stood at
1,092 MW. She cited a deficit of 180 MW, which are pro-rated to all local electric cooperatives in Mindanao.

“Based on experience, the impact of such amount of shortage will only be minimal for us here. There will be some brownouts but they will not take more than one hour and will not affect more than two feeder stations,” Alora added. (Allen V. Estabillo/MindaNews)     source

NGCP resumes expansion in Leyte

By Neil Jerome C. Morales (The Philippine Star) Updated July 26, 2012 12:00 AM

MANILA, Philippines - Transmission service provider National Grid Corp. of the Philippines (NGCP) is continuing with its expansion projects in Leyte.
The programmed upgrades will cater to increasing power demand and improve system reliability of the grid, the company said in a statement.
“Among its ongoing projects this year is the Visayas Substation Expansion I Project, which includes the installation of a new 100-megavolt ampere (MVA) transformer at Ormoc substation in Leyte,” NGCP said.
The transformer will be energized in December.
Three more projects are in the pipeline to ensure that the grid can handle higher electricity demand and maintain the system’s reliability.
Specifically, NGCP projects that are in the pre-construction stage are the Visayas Substation Reliability Project I, and the transmission line upgrades for Ormoc-Babatngon and Ormoc-Maasin.
“The rehabilitation is expected to increase line reliability and significantly lessen the probability of line outages, especially during extreme weather conditions,” NGCP said.
The Visayas substation project involves the installation of a new transformer at the Maasin substation in Southern Leyte.
The Ormoc-Babatngon 138-kilovolt (kv) transmission line project includes the construction of a second circuit transmission line and its associated high voltage equipment at the Ormoc and Babatngon substations.
Lastly, the Ormoc-Maasin 138-kv transmission line project covers the creation of a second circuit and the instalation of related equipment at the Ormoc and Maasin substations.
The NGCP said it is also conducting a rehabilitation of 69-kw transmission lines in the area.
Since last year, a total of 617 wooden transmission poles have been replaced with steel poles.
The transmission service provider sought for the public’s support in the prevention of pilferage, sabotage, grass fires and kite flying near transmission and distribution lines to ensure continuous electricity supply.
The NGCP allotted roughly P100 billion in capital spending for the creation of new transmission lines and substations, and the expansion of existing facilities nationwide in the next 10 years. It recovers its investments through fixed rates added to consumers’ electricity bills.     source

Almendras eyes Malampaya fund to pay P1-t energy debt

Manila Standard Today
By Alena Mae S. Flores | Posted on July 26, 2012 | 12:01am

The Energy Department will ask Congress to earmark the royalty proceeds from the Malampaya gas project to pay government’s staggering P1-trillion debt in the energy sector and avoid additional taxes and lessen the burden of power consumers.

“I’m looking at the option not to charge that [P1 trillion] to taxpayers or consumers. Last year, I turned over $1 billion [in] net proceeds from oil and gas exploration,” Energy Secretary Jose Rene Almendras told participants of an economic forum sponsored by Security Bank Corp.

The Malampaya consortium of Shell Philippines Exploration BV (45 percent), Chevron Malampaya LLC (45 percent) and PNOC Exploration Corp. (10 percent) remitted a check worth $1.134 billion to the national government in January representing proceeds from the gas field for 2011.

“We need to reconstitute some of the laws, so that the income from energy resource development can be used to pay off the debt. Otherwise, we need to pay for universal charge over the next 25 years. We must make the right decisions today, not Band-aid decisions that are politically popular decisions,” Almendras said.

He said he would forward the proposal to Congress but could not say when it would be passed.

He said the P1-trillion figure was a “recurring debt” that government had to refinance annually. “Which is really what’s happening, we’re borrowing to roll over debt,” he said.

Almendras said part of the Malampaya proceeds might also be used for resource development. The government has used the Malampaya proceeds to fund security for oil and gas exploration in Philippine waters and the Pantawid Pasada program.

The consolidated energy sector debt reached P932.21 billion two years ago, with Power Sector Assets and Liabilities Management Corp., the agency in charge to privatize power assets, cornering bulk of the obligations.     source

Power, factory, infrastructure ventures sought for growth

Business World Online

Posted on July 25, 2012 10:48:18 PM

THE PHILIPPINES needs to attract investments in infrastructure, manufacturing and energy in order to sustain strong growth in the face of a slowing global economy, speakers at a forum yesterday said.

 

Roberto F. De Ocampo, vice-chairman at the Makati Business Club, said such investments can be channelled to the government’s flagship public-private partnership (PPP)program.

“The PPP program will be just the right thing to get things moving,” Mr. De Ocampo said at Security Bank Corp.’s “Economic Forum 2012: Realizing Opportunities for Growth in the Philippine Economy” held at Makati Shangri-La hotel.

Mr. De Ocampo noted pursuing PPP projects, especially those for infrastructure, should help achieve “sustainable growth.” The Philippine economy grew by a stronger-than-expected 6.4% in the first quarter from a muted 4.9% the previous year.

Out of 21 projects lined up for PPP, the government has so far awarded just one -- Ayala Corporation’s P1.96-billion Daang Hari-Southern Luzon Expressway Road link -- and rolled out three others, namely: the P10.04-billion PPP for School Infrastructure Project, the P60-billion deal involving the extension to Cavite and management of Metro Manila’s Light Rail Transit Line 1 and the $377.6-million Ninoy Aquino International Airport Expressway Phase II deal. Besides these projects, the P43.319-billion Cavite-Laguna Expressway project has secured the approval of the Investment Coordination Committee-Cabinet Committee and awaits final approval by the National Economic and Development Authority Board led by President Benigno S. C. Aquino III himself.

“The business community remains hopeful the remaining projects in the pipeline will be rolled out... before this administration is finished,” Mr. De Ocampo said.

He acknowledged growth contributions of agribusiness and business process outsourcing, but cautioned that “service industries alone will not make it for us.”

“We... have to attract manufacturing businesses to come in,” he said.

The country’s BPO sector is projected to reap $25 billion in revenues by 2016 from the $9 billion revenues booked in 2011, according to industry estimates.

“The business community is quite optimistic about where the country is and where we think the country is going,” Mr. De Ocampo said. “Even though things are still slow, the slowness to some extent presents challenges which can be turned into opportunities.”

Speaking in the same forum, Energy Secretary Jose Rene D. Almendras said more energy investments are needed to support the growth of the economy.

“We need to find as much energy sources in the Philippines as we can. The ideal scenario is to prepare for the demands of three generations ahead,” Mr. Almendras said.

“There are resources in he Philippines and the idea is the more exploration we do, the more we will find these energy sources,” he added. “Our country is growing fast... consumption growth should not be higher than our energy reserves.”

Hans-Helmut Kotz, economist at the Goethe University Frankfurt, said the Philippines may be affected by the euro zone debt crisis as it remains integrated with the world economy, though the country “is more resilient” than some of its peers in the region.

“There are three channels the country may be affected: capital markets, banking relationships and trade,” Mr. Kotz said.

Capital markets will be affected by a slowdown in investments from countries affected directly by the debt crisis, banking problems may arise for those relying on funds from European banks, while trade impact will be manifested in reduces shipments.

However, Mr. Kotz noted “The Philippines is more resilient than other economies in the Asian region... it has substantial capacity to adjust.”

Both the International Monetary Fund and the World Bank last week raised their projections for 2012 Philippine economic growth to 4.8% and 4.6%, respectively from 4.2% announced earlier this year, citing the country’s strong macroeconomic fundamentals. -- K. A. Martin     source

Resource revenues can write off energy debts

business mirror

WEDNESDAY, 25 JULY 2012 21:01 PAUL ANTHONY A. ISLA / REPORTER

REVENUES from energy resource development projects are among the many options the Department of Energy (DOE) is considering to help write off the government’s trillion-peso debts to the energy sector.

Energy Secretary Jose Rene Almendras told the Security Bank’s Economic Forum on Wednesday that the energy sector has a trillion-peso debt, which adds pressure to the government’s overall liabilities.

“I’m looking at option not to charge that [energy-sector debt] to taxpayers or consumers,” he said.

The idea to tap proceeds from energy resource development, according to Almendras, stemmed from the $1 billion in net proceeds from the Malampaya gas project, which he turned over to the government last year.

He said there is a need to reconstitute some of the laws to align income from energy resource development in paying off the energy-related debts.

Almendras added that consumers will have to pay for these debts through the universal charge if these proceeds are not used to reduce the government’s energy-related liabilities.

“We must make the right decisions today and not ‘band-aid’ decisions that are politically popular decisions. Energy is long term and its solution is economics, never political. We must not allow that to happen,” he said.

Economist Nonoy Oplas said Almendras’s proposal is innovative and could help in reducing debts and interest payments. Any refinancing or reducing of interest payments, he added,  could result in savings that could be used for social services.

Oplas said the government could enter into debt-refinancing agreements to help reduce interest payments and use proceeds from the Malampaya or other energy resource development projects as a guaranty. 

He added, though,  that local government units could oppose the proposal, as it could affect their Internal Revenue Allotments from the proceeds.

Almendras was once quoted as saying that the energy sector has a total of P932.21 billion in consolidated financial obligations as of June 2010.

He said P757.17 billion of that amount accounts for the obligations of the Power Sector Assets and Liabilities Management Corp., P6.97 billion of National Power Corp. and P980 million of National Transmission Corp.    source

NGCP eyes more projects to boost transmission network in Leyte

business mirror

WEDNESDAY, 25 JULY 2012 19:23 PAUL ANTHONY A. ISLA / REPORTER

THE National Grid Corp. of the Philippines (NGCP), the country’s sole power-lines concessionaire, said on Wednesday that it continues to strengthen the power transmission network in Leyte.

The NGCP said the network expansion in Leyte aims to meet the increasing power demand and improve system reliability.

Among its ongoing projects this year is the Visayas Substation Expansion I Project. The NGCP said the expansion includes the installation of a new 100-megavolt ampere (MVA) transformer at Ormoc substation in Leyte.

The government agency said the transformer is set to be energized in December 2012.

It said among the projects in the area that are in their pre-construction stage is the Visayas Substation Reliability Project I, which involves the installation of a new transformer at Maasin substation in Southern Leyte.

The NGCP said the Ormoc-Babatngon 138-kiloVolt (kV) transmission line project involves the construction of a second circuit transmission line and its associated high-voltage equipment at the Ormoc and Babatngon substations.

Another project, the NGCP said, is the Ormoc-Maasin 138-kV transmission line project, which covers the stringing of a second circuit, and installation of related equipment at the Ormoc and Maasin substations.

The NGCP said it also implements the rehabilitation of its 69-kV transmission lines in the area.   

Since last year, the NGCP said a total of 617 wooden transmission poles have been replaced with steel poles. 

The rehabilitation, NGCP said, is expected to increase line reliability and significantly lessen the probability of line outages, especially during extreme weather conditions.

To ensure continuous power services, the NGCP also appeals for public support in the prevention of pilferage, sabotage, grass fires and kite flying near transmission and distribution lines.

The NGCP is a privately owned corporation in charge of operating, maintaining and developing the country’s power grid. It transmits high-voltage electricity through “power superhighways” that include the interconnected system of transmission lines and towers, substations and related assets.     source

Pantabangan power disconnected over P80-million in bills

Manila Standard Today
By Alena Mae S. Flores | Posted on July 25, 2012 | 12:01am

First Gen Hydro Power Corp., owner-operator of the 132 megawatt Pantabangan-Masiway hydro complex, said it is looking for ways to source electricity to public schools in Nueva Ecija after it cut off supply on Monday to the local power distribution firm.

First Gen Hydro said Pantabangan Municipal Electric Services had not paid its bills amounting to more than P80 million.

The company  said it is constrained to take such measure after PAMES again  failed to honor its obligations under the terms of a March 16, 2012 restructuring agreement to settle its accounts dating to 2008.

“We have continuously expressed willingness to assist PAMES in looking for alternative power supply. We are also looking at way to provide temporary power to some public schools in Pantabangan, in the meantime,” FG Hydro vice president Dennis Gonzales said.

First Gen Hydro said it has continuously been serving PAMES since December 2006 despite the expiry of the power supply agreement in December 2008 due to its concern for the welfare of Pantabangan residents and other PAMES consumers which is acknowldged by the municipal government.

After efforts to collect since 2007 remained unheeded, the company sent a disconnection notice to PAMES last Feb. 8 which was not served after Mayor Romeo Borja Sr. Appealed for an extension.

“We have also accommodated them previously by way of an offsetting agreement, their arrears versus our local taxes. But they reneged on that,” Gonzales said.

He said First Gen Hydro also entered into a restructuring agreement under  payment schedules which the provincial government proposed.

“But when they failed to perform their obligations under the restructuring agreement, we were constrained to act decisively,” the company said. “We are duty bound to ensure the continuing viability of our operations for the benefit not only our stakeholders but other paying customers.”

First Gen Hydro acquired the Pantabangan and Masiway plants from the government in 2006.     source

Coal Asia IPO priced at par value for 800M shares

Published 24 July 2012


Coal Asia Chairman Harald Tomintz confirmed that the company’s planned initial public officer (IPO) will afford the investing public the rare opportunity of buying in at the same price as the company’s

incorporators. The company plans to list 800 million shares at the Philippine Stock Exchange’s first board by the fourth quarter of 2012.

Tomintz was invited to join Coal Asia Holdings Inc. owing to his wealth of experience stemming from his past association with the Semirara Coal Corp., prior to its privatization in 1997.

The company continues to draw interest from potential strategic and financial investors from the power generation and cement industries, as well as investment funds with the objective of owning a stake in Coal Asia as a means to ensure continuous supply of coal and possibly hedge against another potential significant run-up in coal prices.

The company is evidently keen on ensuring the timely development of its high-grade bituminous coal mines as they are strategically located in Mindanao, where there is a rush to establish critically needed power capacity, giving Coal Asia a leg up on opportunities for long-term supply agreements for thermal coal in the region.

And while the company previously confirmed having bagged off-take contracts both here and abroad, Coal Asia also plans to supply steam-grade coal to cement plants, canneries, and manufacturing plants that have converted their diesel-powered plants into coal-powered plants to mitigate costs.

The P726.87 million net proceeds from the IPO is earmarked to bring its Davao Oriental mine into production by 2014 and its Zamboanga Sibugay mine by 2015. Of the proceeds from the IPO, P100 million will be spent for the completion of the exploration and feasibility study of the Davao Oriental
mine, P400 million for the development of the Davao mine, and the balance for continued exploration at the Zamboanga Sibugay mine and for working capital requirements.

Coal Asia holds the second largest coal reserves in the country with coal assets worth P12.5 billion based on an independent valuation report by the Multinational Investment Bancorporation. And mine developments are on track with commercial production of 600,000 metric tons of high grade coal per year scheduled for 2014.    source

PSALM to bid out Malaya thermal power plant OMSC next month

business mirror

TUESDAY, 24 JULY 2012 20:18 PAUL ANTHONY A. ISLA / REPORTER

STATE-RUN Power Sector Assets and Liabilities Management Corp. (PSALM) is set to bid out the operation and maintenance service contract (OMSC) for the 650-megawatt (MW) Malaya thermal power plant in Pililia, Rizal, next month.

In an invitation to bid posted on Tuesday, PSALM said the approved budget for the OMSC of the Malaya thermal power plant amounts to P555.8 million.

A pre-bid conference has been set on August 2, while the opening of bids has been set on August 17. Bids received in excess of the approved budget shall be automatically rejected at bid opening, PSALM said.

In October last year PSALM awarded a one-year OMSC contract for the power plant to a consortium led by SPC Light Co. and SPC Power Corp. The contract with the consortium, however, will expire in the next three months, paving the way for another round of bidding.

Conrad Tolentino, PSALM vice president for asset management and electricity trading, earlier told the BusinessMirror that the OMSC contract will be put in place until such time the thermal power plant has been privatized.

Tolentino said PSALM still awaits the Department of Energy’s go-signal to privatize the plant.

The Malaya thermal plant is operated by Kepco under a rehabilitate, operate, maintain and management agreement with the government through the National Power Corp. (Napocor).

The Malaya power plant consists of a 300-MW unit with a once-through, type boiler and a 350-MW unit fitted with a conventional boiler.

One of the parties to the SPC Power Consortium, SPC Power Corp., is the successor owner of the 55-MW Naga Land-Based Gas Turbine (LBGT) Plant after a negotiated bidding conducted by PSALM in October 2009.

Prior to the privatization of the Naga LBGT Plant, SPC Power Corp. (formerly Salcon Power Corp.) entered into a 15-year contract with the Napocor for the rehabilitation, operation, maintenance and management of the 203.8-MW Naga power plant complex from 1994 to 2009, and an OMSC with PSALM from July 2010 to March 2012.    source

Pantabangan in the dark due to unpaid bills

business mirror

TUESDAY, 24 JULY 2012 19:29 ZAFF SOLMERIN / CORRESPONDENT

RESIDENTS in Pantabangan town in Nueva Ecija, host to one of the biggest dams in the country, were denied electricity services since noon Monday by the First Gen Hydro Power Corp. (FGHPC) because of P80 million worth of unpaid bills since 2007. 

The balance includes interest accrued since that year.

The FGHPC cut off the power supply of the municipal government-owned Pantabangan Municipal Electric Services (Pames) because of the latter’s failure to make the scheduled payment of P7 million due on June 30, 2012, despite the reasonable extension granted upon the municipality’s request.

Dennis Gonzales, FGHPC vice president, said they have been negotiating with Pames since the latter first ran into arrears in 2007.

Gonzales said they continued to supply Pames despite their continuing non-payment, and the expiry of the power supply contract since December 2008.

Gonzales said they also accommodated Pames previously by offsetting their arrears against FGHPC’s local taxes, which Pames reneged on.

Gonzales said they entered into a debt-restructuring agreement in accordance with payment schedules which the municipal government itself proposed.

Pames, according to Gonzales, failed to perform their obligations under the restructuring agreement.

“We are duty bound to ensure the continuing viability of our operations for the benefit not only of our stakeholders, but our other paying customers. We have continuously expressed our willingness to assist Pames in looking for an alternative source of their power supply. We are also looking at ways to provide temporary power to some public schools in Pantabangan, in the meantime,” Gonzales said.

“We were constrained to take such measure after Pames, once again, failed to honor its obligations under the terms of a March 16, 2012 restructuring agreement to settle the more than P80 million it owes to the power generating firm,” the FGHPC official said.

The FGHPC owns and operates the Pantabangan-Masiway Hydroelectric Complex and supplies power to Pames.

“We have been trying to hold off on the decision to cut off power supply to Pames, but we cannot afford to delay this action anymore, as we also have a responsibility to keep our operations viable considering that FGHPC also supplies power to two other electric cooperatives, a government agency and an industrial customer.  We trust that the residents of Pantabangan will understand our decision.  We are, in the meantime, exploring various options as to how we can assist in providing temporary electrical supply to critical institutions, such as the public schools in Pantabangan,” the power firm said.

According to FGHPC, Pames also has an outstanding obligation to the Power Sector Assets and Liabilities Management Corp. (PSALM) of P26.3 million as of December 31, 2011.

On February 8, 2012, the FGHPC sent a disconnection notice to Pames but held off after Pantabangan Mayor Romeo Borja Sr. appealed to the power firm for an extension. This was followed by a debt-restructuring agreement.

The terms of the re-payment schedule the FGHPC deemed acceptable were as follows:  P7 million, as well as the total amount due for the billing period February 26-March 25, 2012, by March 31, 2012; P7 million on or before June 30, 2012; P14 million on or before December 31, 2012; P7 million on or before March 31, 2013; P14 million on or before December 31, 2013; and full payment of remaining balance of P31.2 million on or before March 31, 2014.  

(With Paul Anthony Isla)   source