Meralco ready to ink transition supply contract with Napocor
Wednesday, January 05, 2005
By MYRNA M. VELASCO
Giant utility firm Manila Electric Company (Meralco) has already indicated readiness to sign a transition supply contract (TSC) with stateowned National Power Corporation (NPC) or its successor-company, the Power Sector Assets and Liabilities Management Corporation, a requirement under the Electric Power Industry Reform Act.
“We have already given word that we are ready to sign a TSC. We have formally sent a communication stating our concerns on the provisions of the supply agreement, but they (NPC) have not yet responded to us,” an official of the utility firm noted.
It has been indicated that one of the most contentious issue threshed out on the proposed TSC is on the level of the offtake that Meralco would be procuring from NPC since it would also have to factor in its commitments with contracted independent power producers.
The reduction in Meralco’s supply procurement is considered a temporary loss of market for NPC; especially so because this would be more than 1,000 megawatts reduction from its current market.
Under its old supply agreement which lapsed December last year, Meralco was required to procure about 3,600 megawatts from NPC; but a settlement deal initially provided for a leeway on the off-take volume.
It has been indicated that under the TSC, the procurement level of the utility firm may be slashed to around 2,400 MWs or depending on its demand; net of supply from its contracted IPPs.
Given the anticipated open access and the onset of a competitive marketplace, the state-run power firm can already corner new buyers of the displaced output; which it might even be able to package through privatization; such as what it did with the Masinloc facility sale.
It would be noted that Energy Secretary Vincent S. Perez earlier called on Meralco to hasten its decision on signing up new power supply agreements; as it is already in the best position to do it with the current approval of its debt refinancing.
The utility firm completed last year the the refinancing of its commercial loans totaling $228 million with at least 30 domestic and foreign commercial banks. The agreement stretches out Meralco’s loans maturing in 2004-2006 to a term of 7 years up to 2011.
With the government, via NPC, already prohibited from cornering new power supply contracts, the burden of signing up new off-take arrangements now falls on the lap of the distribution utilities.
In line with this call, the energy chief also called on the utility firm to back the implementation of open access as this augurs well for the initial introduction of competition in the deregulated power market.
Meralco officials said they are supporting the move provided that all conditions precedent as provided under the law will be fully complied with prior to introduction of open access, so that market would also be equipped well with the new industry structure.
posted by philpower @ 1:29 PM,
