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By Euan Paulo C. Añonuevo, Reporter
THE privatization of the Calaca coal-fired power
plant risks hitting another snag after the facility’s winning
bidder scored state-owned National Power Corp.’s (Napocor)
artificially low rates.
The 600-megawatt plant was auctioned off by
state-run Power Sector Assets and Liabilities Management Corp.
(Psalm) to French-Belgian firm Suez Energy International, through
its wholly owned unit Calaca Holdco Inc., for $786.53 million in
October last year.
The company, however, set as a precondition to
the closing of the transaction an increase in Napocor’s basic
rates, as reference for its transition supply contract (TSC). The
proposed increase is pending before the Energy Regulatory Commission
(ERC).
The government is using TSCs as contract
sweeteners, bundling them with a number of Napocor power plants such
as the Calaca. The contracts assure ready markets for the
facilities’ output pending the implementation of an open-access
scheme in the power sector. Open-access would allow end-users to
choose their electricity suppliers.
Suez already filed a letter to the ERC asking it
to consider Napocor’s petition for a P0.37 basic rate increase
after lenders deemed the latter’s present rates as unreflective of
the true cost of electricity.
Zenaida Ducut, newly appointed ERC head, said
the regulator will fast-track the public hearings on the P0.37
application, in light of the concerns raised by the winning Calaca
bidder, and in consideration of the continuing privatization of
government’s generation assets.
The ERC chief however expects the proposed rate
hike to draw a lot of opposition, especially now when the public is
clamoring for relief from the country’s high inflation.
The regulator expects the hearing to be
stretched “because we need to hear all the parties concerned,”
Francis Saturnino Juan, ERC executive director, said.
Sources said Psalm has asked Suez to close the
deal by August 4 this year. But the lenders Suez is banking on to
finance its acquisition of Calaca have yet to release the funds
pending the power rate hike approvals.
Officials in-charge of Calaca’s privatization
clarified however that the August 4 date “is a deadline for Psalm
to complete all of its deliverables in the transaction.”
The “burden to reflect true cost of
electricity” is now being evaluated on whether it should be
treated as “government deliverables” in the Calaca deal since
Psalm viewed the concerns of the buyer and its lenders “as
valid.”
The bidding for the Calaca plant failed twice in
2005 and 2006 before government finally auctioned it off to Suez.
A failure of the Calaca deal, similar to what
happened to the Masinloc earlier, would again put off the
government’s privatization program, and with it the promised
open-access scheme, which is heralded as key to bringing down local
electricity rates, which are the second highest in Asia next to
Japan.
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