‘Checklist approach’ agreed on NPC privatization
Sunday, January 29, 2006
Interested parties to be informed of developments
By MYRNA M. VELASCO
The Department of Energy (DoE) and prospective investors in the privatization of the National Power Corporation (NPC) have agreed on a ‘checklist approach’ so the interested parties can be properly informed of the developments or progress on how fast the government has been moving to address the issues put forward on specific asset divestment or policy reforms to be implemented.
Admitting that there remain myriad of concerns getting in the way for a more smooth sailing sale of the NPC assets, Energy Secretary Raphael P.M. Lotilla conveyed that such "checklist approach" would pave the way for better understanding of the outstanding issues.
In the same vein, he stressed that this will serve as a constant reminder for the Power Sector Assets and Liabilities Management Corporation (PSALM) and other concerned government agencies on what should serve as their priority in the NPC assets’ divestment.
"It’s basically a checklist that would say how have we been progressing both in NPC privatization and in the implementation of policy reforms for the industry," the energy chief said.
He further explained that this will detail out both the accomplishments, such as the initial consent given by creditors like the Asian Development Bank; and the areas where government is still failing in addressing concerns for the electricity sector’s restructuring.
As far as NPC’s privatization is concerned, PSALM president Nieves L. Osorio already told a public hearing called by the Joint Congressional Power Commission (JCPC) that the targeted 70-percent divestment of the generation assets to set off open access regime in the electricity sector, would have to be moved anew to 2007.
Up till now, it would be noted that PSALM has not gotten headway in disposing the NPC generation assets; with the sale of the 600-megawatt Masinloc coal-fired power plant still encountering snags.
The energy chief also noted that there are other remaining major issues encumbering the NPC privatization exercise, such as those relating to water rights to be secured with the National Irrigation Administration (primarily for hydropower plants); land titles; and foremost would be transition supply contracts.
"There are a lot of issues, but some can be surmounted…for now, we see that the major impediments are actually the lack of supply contracts for the assets to be sold," Lotilla stressed.
In the same way, there have been previous pronouncements from prospective investors in the power sector over restrictions imposed by the Philippine Constitution in their rights to be part of exploiting the country’s indigenous energy resources; such as hydro and geothermal power.
In particular, investors have pointed to "a Constitutional provision that may limit utilization of certain natural resources (such as water and geothermal resources) for power generation to at least 60 percent Filipino-owned companies as provided under Article XII Section 2 of the Constitution.
The minimum 60-percent Filipino ownership required to obtain water rights for hydropower generation under the implementing rules of the Water Code of the Philippines (Presidential Decree 1067, 1976) also raised questions about the extent of foreign participation that will be allowed in the privatization of certain NPC generation assets.
And though modest gains have already been achieved in establishing an independent regulatory system to ensure fair and open competition and encourage private investment, interested parties also voiced out concerns on "judicial intervention undermining decisions" of the Energy Regulatory Commission. (MMV)
posted by philpower @ 10:08 PM,
