Lawmaker wants Napocor scraped

PHILIPPINE NEWS SERVICE — Camarines Sur Rep. Arnulfo Fuentebella yesterday pushed for the abolition of National Power Corp.’s control of the coal and oil purchases for the independent power producers.

A member of the Joint Congressional Oversight Committee on Power, Fuentebella said it would be prudent to transfer Napocor’s procurement function to the independent power producer administrators so that Napocor could attend to the fuel supply problems besetting some of its power plants.

Fuentebella joined the call of the Philippine Independent Power Producers Association to strip Napocor of its fuel procurement function. Independent power producers are power generators which sell their output to distributors like power co-operatives.

Pippa, in a position paper submitted to the House, sought the amendment of Section 47 of the Electric Power Industry Reform Act, which empowers Napocor to retail fuel procurement while obligating IPP administrators to market the energy output under the NPC-IPP contracts.

“This provision is counter-productive and only reduces the privatization proceeds of the government,” Pippa said.

Pippa said the proposed House Bill 1889 that seeks to amend the Epira Law must be revised so that privatization would become “capacity and energy available under its IPP contracts.”

The proposed amendment also noted that the obligation that will be assumed by the IPP administrator upon privatization is limited to the obligation to sell the energy output under the IPP contract concerned.

“By implication, the procurement of fuel under the IPP contract would remain with Napocor. This situation would not be advisable,” the group said. “Epira intends to fully privatize Napocor and does not contemplate Napocor having a residual function or existence as a fuel procurement company.”

“The bidders to the Pippa administration privatization would consider carving out the fuel procurement function in favor of Napocor as a diminution in the value of the IPP contract. The winning bidder would assume a significantly higher risk in selling the energy output when it has no control over the fuel used. Higher risk translates to lower privatization value,” Pippa pointed out.

Ernesto Pantangco, Pippa president, urged the Department of Energy and the Joint Congressional Power Commission to remove Napocor’s fuel procurement function.

Recalling the recent charges against Napocor officials for alleged overpricing in the acquisition of coal fuel, Pantangco said allowing Napocor to administer the procurement of coal would still be a problem. “Even as you privatize Napocor, its right to procure oil could still be one source of corruption.”

Early next year, the Power Sector Assets and Liabilities Management Corp. will auction off Napocor’s IPP contracts to the IPP administrators.

PSALM was authorized to take title to and possession of the Napocor IPP contracts and to appoint, after public bidding, qualified independent entities who shall act as IPP administrators.