Napocor looking at P350-B claim if no-pass through provision passes
Thursday, April 14, 2005
Debt-saddled National Power Corp. (Napocor) may be forced to fork out some P350 billion if its independent power producers (IPPs) decide to call on a buy-out provision in their contracts as a result of a proposed no-pass through condition in proposed VAT bill.
Industry sources said IPPs may demand that Napocor pay them in full if they are not allowed to pass the tax on to consumers.
"It (the no-pass through provision) would result in a significant impairment of contract provisions. Any significant change in the contracts concerning government policies may force IPPs to call on the buy-out provision. This would have severe implications on Napocor’s finances," they said.
The Department of Finance has reported that the outstanding debt of the government’s 14 monitored nonfinancial government corporations has hit P1.7 trillion, the bulk of which was accounted for by Napocor and National Transmission Corp. as well as Power Sector Assets and Liabilities Management Corp.
The sources said Napocor IPPs may demand some P350 billion at least as payment for their investments and revenues they would have earned for the contract period. The figure does not include future earnings, they stressed.
A contract can run for 15-25 years for coal-fired and hydroelectric facilities and 15 years for diesel-fired power plants. Napocor has at least 35 IPPs.
As a rule of thumb, $1 million is needed per megawatt to put up power plants. IPPs account for at least 52% of the grid’s capacity and multiplying this to about 12,000 megawatts of installed capacity would result in roughly $6.5 billion or P350 billion. -- BSD
posted by philpower @ 3:50 PM,
