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By Euan Paulo C. Añonuevo, Reporter
STATE-OWNED National Power Corp. (Napocor) is
looking at securing half of its generating plants’ fuel
requirements through long-term contracts to help lower the
Philippines’ electricity rates, considered the second highest in
Asia next to Japan.
“It is true that long term contracts may
result in lower prices. Napocor is presently reviewing the policy to
procure more than the existing 50 percent of requirements through
long term contracts,” the company said in a statement.
Securing long term supply contracts will allow
Napocor to hedge against increasing prices of commodities worldwide,
especially coal and oil, whose prices have been shooting up since
the start of the year.
Napocor said that it would have to look into the
Government Procurement Law before it can pursue long-term fuel
deals.
The company said the world coal supply situation
worsened after China became a net coal importer, and Japan shifted
to coal following its decommissioning of some of its nuclear plants
in the wake of an earthquake.
Coal prices reached over $80 per metric ton last
year but have since doubled to $160 to $180 per metric ton, due to
tightness in global supply conditions, brought about by strong
demand from China, weather problems in Australia, among others.
For this year, Napocor said it has already
purchased its supply requirements. In March, the company inked more
than P10 billion in coal supply contracts to various foreign firms.
“But some failed biddings made it necessary to
resort to negotiated purchases, which under the law is allowed after
two failed biddings,” it said.
It added that the additional supply of coal was
required to address increased dispatch of coal-fired plants due to
sudden increases in demand. The prolonged summer heat also brought
about low water levels in the country’s hydro power plants.
Last year, Napocor’s spot coal purchases were
blamed for helping drive electricity prices up. Various groups have
already filed criminal and administrative complaints before the
Office of the Ombudsman against top company officials, alleging that
the fuel supply purchases were overpriced.
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