The Philippine Star 11/29/2006
State-owned National Power Corp. (Napocor) has reverted to a net loss of P8.32 billion in the first six months of 2006 due to huge foreign exchange and interest expenses, official documents said.
The amount, it was learned, did not yet include the financial losses as a result of its trades at the country’s wholesale electricity spot market (WESM).
The loss was a reversal from the P15.46 billion income registered in the same period in 2005.
Based on the documents, Napocor’s interest expense payments for the first half of the year jumped by P2.13 billion. "The increase in interest expenses was due to higher volume of loans," the report said.
Napocor, through the Power Sector Assets and Liabilities Management Corp. (PSALM), has been borrowing money to partly fund its huge principal and interest payments.
Since last year, PSALM, which handles the finances of Napocor as mandated under the Electric Power Industry Reform Act (EPIRA), has borrowed $700 million to refinance the power firm’s maturing obligations.
For the six-month period, forex losses went up to P9.86 billion due to the depreciation of the peso against the dollar and other foreign currencies as against a P13.982 billion gain in the same period in 2005.
In 2005, Napocor posted P62.756 billion net earnings due to forex gains of P64.756 billion.
Other factors that contributed to Napocor’s favorable income performance last year included the rate adjustment approved by the Energy Regulation Commission and its P200-billion outstanding debts absorbed by the National Government.
In the early part of its trading at the WESM, Napocor had been claiming to have incurred losses of more than P1 billion.
If this trend continues, it is estimated that Napocor may end the year 2006 with a net loss of P48.87 billion for 2006.
Noli Kabayan De Castro
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The Philippine Star 11/28/2006
Lopez-owned First Gen Corp. (FGC) is urging the government to consider scrapping the royalties on natural gas to bring down the power rates of Manila Electric Co. (Meralco) by at least P1 per kilowatthour (kwh).
"We are proposing that royalties be taken out as long as the natural gas is used domestically. This will result to at least P1 per kwh reduction on Meralco rates," First Gen president Federico Lopez said at the sidelines of the Foreign Correspondents Association of the Philippines (FOCAP) forum.
But while Lopez said this is one of the best ways for government to reduce electricity costs, this move may entail some amendments to old laws and may result to huge revenue losses to the government.
"This will require amending PD 87, however doing so could make the government lose revenues, but again they have a lot of revenues already from VAT (value-added tax)," he said.
Presidential Decree 87, issued during the time of President Marcos, was drawn to promote the discovery and production of indigenous petroleum.
Lopez said there is an existing provision in the Electric Power Industry Reform Act (EPIRA) which is supposed to address this concern but the government appears to be reluctant to push for it.
"I think they overlooked the royalty, as it was lifted from PD 87. Repealing it will take time, and this is why they pushed for equalization, which is not being implemented," he said.
Under the EPIRA, there is a provision that aims to equalize the taxes imposed on indigenous sources of energy. "Equalization is revenue-neutral, but equalization will not bring the general power rate down and will just level the playing field," Lopez said.
Government earns some $637 million from royalties being paid by the Malampaya consortium which supplies the natural gas requirements of First Gas Corp. (FGC), a First Gen subsidiary. FGC owns and runs the 1,500-megawatt (MW) Sta. Rita and San Lorenzo gas-fired power plants. The government has been raising about P11 billion or $200 million in tax revenues from the Malampaya project in Palawan.
"They could lose roughly $600 million a year from the Camago-Malampaya. But you can leave the VAT, and just remove the royalties," Lopez said.
In a presentation before the same FOCAP forum, Oscar Lopez, chairman of Benpres Holdings Corp., the investment arm of the Lopez Group, noted that in First Gas‚ the selling price of P4.76 per kwh to Meralco, fully P3.25 per kwh or almost 70 percent is the cost of gas, with approximately P1.79 per kwh going to government in the form of royalties. Aside from FGC, Korea Electric Power Corp. with the National Power Corp. (Napocor) runs a 1,200-MW Ilijan natural gas power plant.
The Benpres official noted that consumers also pay 56 centavos per kwh in the form of 12 percent VAT for power using Camago-Malampaya gas on top of the royalties.
The older Lopez also noted that though there was an improvement on the use of indigenous fuels in the generation mix to 70 percent, "we still haven’t narrowed the gap in our electricity prices vis-à-vis our neighbors and our indigenous fuels in fact appear costly."
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The Philippine Star 11/28/2006
The Lopez Group intends to revisit plans of disposing its stake at Manila Electric Co. (Meralco) amid continuing controversies being faced by the power utility firm, a top company official said yesterday.
Oscar Lopez, chairman of the Lopez Group, told reporters during a forum sponsored by the Foreign Correspondents Association of the Philippines (FOCAP), said the sale option is still being explored by the company.
"If the price is right, we will (divest our shares). If there is a good offer, we will (sell)," he said
Meralco is 23 percent owned by a venture of Spain’s Union Fenosa and the Lopez family’s First Philippine Holdings Corp.
Union Fenosa holds roughly nine percent; government owns about 25 percent; while the rest is owned by the public and other investors.
Lopez noted that the power distribution firm’s operations have been severely affected by judicial issues such as decisions by the Supreme Court. "We continue to have a problem in courts."
The High Tribunal’s rulings have taken a huge toll on the country’s largest private power distributor’s finances. The Supreme Court two years ago ordered Meralco to refund some P30-billion worth of alleged "excess charges." The company is still paying the refund and is expected to complete the process in three years’ time.
The SC had also nullified the second generation rate adjustment mechanism (GRAM) application of Meralco which will also result to the refund of over P800 million to its consumers.
In 2005, Union Fenosa had expressed "strong disappointment" and was "getting restless" in its investment in Meralco and wanted to "sell out."
Aside from Meralco, Lopez said they continue to look for a buyer for its telecom subsidiary Bayan Telecommunications Inc. (BayanTel).
While the SC rulings had severely affected Meralco’s financial position, BayanTel suffered huge losses due to its dollar dominated loans. The company was forced to seek court action for corporate rehabilitation in 2003.
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The Philippine Star 11/17/2006
In a disclosure to the Philippine Stock Exchange, First Gen vice chairman and CEO Peter Garrucho Jr. said the improvement in earnings could be attributed to lower professional fees with the conclusion of the Santa Rita plant’s dispute with its contractor Siemens.
Garrucho said the favorable settlement of the dispute with the Malampaya consortium, lower administrative expenses, and lower net interest expense also helped in posting improved earnings for the said period.
According to the First Gen official, the positive outcome of Santa Rita’s arbitration case with Siemens and the dispute with the gas sellers generated millions in savings from professional fees alone.
He noted that First Gen’s administrative expenses went down by $8 million from the same period last year.
Net interest expense was also lower by $4 million due to higher interest income earned from its robust cash position.
"We are pleased that Sta. Rita and San Lorenzo have finally settled their long-standing disputes resulting in substantial benefits to the company. With these developments, our gas plants will provide strong platforms for First Gen’s growth aspirations," Garrucho said.
First Gen’s consolidated revenues rose to $725 million, up by 19 percent. The increase was primarily due to improved dispatch and higher fuel prices.
Dispatch was significantly higher for San Lorenzo at an average of 80 percent as of September 2006 compared to 77 percent in September 2005.
Garrucho said this was a result of the operation of the wholesale electricity spot market (WESM), which commenced in June this year.
Sta. Rita registered almost the same dispatch in comparison with the same period last year due to scheduled plant outages.
First Gen operates principally through its power plants Sta. Rita and San Lorenzo in Batangas, Bauang in La Union and Agusan in Bukidnon.
Last Sept. 6, 2006, it successfully bid for the 112 megawatt Pantabangan/Masiway hydroelectric power complex which will be turned over by Power Sector Assets and Liabilities Management Corp.
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The Philippine Star 11/17/2006
The major multilateral creditors of the National Power Corp. (Napocor) have approved the transfer of the 112-megawatt Pantabangan-Masiway hydroelectric power plant to its new owner, First Gen Hydro Power Corp. (FGHPC), a ranking energy official said.
Power Sector Assets and Liabilities Management Corp. (PSALM) president Nieves Osorio said the consent of the creditors is a crucial component in completing the sale process.
Osorio said the Asian Development Bank, the World Bank and the Japan Bank for International Cooperation gave their individual consents to the sale and transfer of the power facility, which was bid out last Sept. 8 and won by FGHPC with an offer of $129 million.
PSALM is a government entity tasked to oversee the privatization of Napocor’s assets.
According to Osorio, FGHPC has also delivered its certificate of closing and documentary deliverables and has posted a performance bond of $2.58 million, which is equivalent to two percent of the purchase price.
The completion of the closing deliverables by both parties paves the way for the turnover of the Nueva Ecija-based power facility.
"The turnover of the Pantabangan-Masiway hydroelectric power plant complex to FGHPC marks another milestone in the ongoing privatization efforts of the government to fasttrack the restructuring and privatization of the country’s electric power industry," Osorio said.
The operational turnover of the 100-MW Pantabangan and 12-MW Masiway hydro power plants will be held at the Pantabangan plant site in Pantabangan, Nueva Ecija.
Under the asset purchase agreement (APA) executed between PSALM and FGHPC, PSALM as the "seller" is required to submit to FGHPC, the "buyer," the certificate of closing and deliverables to complete the transaction.
PSALM has complied with all the conditions stipulated in the APA, the primary requisite for closing the contract. Specifically, the consents and proceedings allowing the transfer of the purchased assets, as specified in the APA, from the Napocor to PSALM and from PSALM to FGHPC have been secured and completed.
PSALM has likewise delivered to FGHPC its closing deliverables. These include the certificate of closing, the certificate of the seller’s representations and warranties as of the closing date, and a transmittal of deliverables acknowledged before a person authorized to administer oaths.
"Let us give credit to the Napocor plant personnel whose diligence in operating and maintaining the Pantabangan-Masiway facility allowed the government to seek the optimum value of the power plant," Osorio said.
"We would also like to thank the National Irrigation Administration for its cooperation and support in forging the pperation and maintenance agreement for the non-power component to ensure the continued safe and reliable operation of the dam, reservoir and other structures," she added.
Osorio also lauded the Department of Environment and Natural Resources and the Protected Area Management Board (PAMB) for allowing PSALM to continue administering the Masiway land through a Memorandum of Agreement signed between PSALM and the PAMB for purposes of power generation.
PSALM, under the terms of the APA, can now require FGHPC to deliver at least 40 percent of the purchase price as upfront payment payable on or before the closing date. The balance of 60 percent may be paid in 14 equal semi-annual payments with an interest of 12 percent per annum compounded semi-annually. FGHPC will also be required to post a deferred payment security deposit.
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The Philippine Star 11/17/2006
The management and employees of Mirant Philippines Corp. will face off for a conciliatory meeting at the Department of Labor and Employment (DOLE) on Friday.
In a press statement, Mirant employees said a prior meeting was called by DOLE director Reynaldo Ubaldo last Monday to resolve the issues between them and the company’s management before Mirant’s assets in the country are eventually sold.
Mirant Philippines is set to be auctioned off to at least four bidders by Nov. 17 this year.
Some 1,200 employees of Mirant Philippines had sought Labor Secretary Arturo Brion’s help in mediating to avert a possible labor dispute that may disrupt plant operations.
Due to management’s failure to send a representative last Monday, the DOLE, through a notification letter signed by Undersecretary Luzviminda Padilla, reset the meeting between management and the employees to Nov. 17.
In a statement, Mirant’s management said it begged off from the proposed meeting last Monday, citing conflict in schedule and pointed out that it would attend instead its pre-set meeting with the National Conciliation and Mediation Board on Friday.
It stressed that the NCMB mediation process is voluntary. "That fact that we are actively participating in it shows our desire to help those employees involved understand our position. We are cooperating because we believe we must clarify certain matters and set them to rest once and for all," the statement said.
Mirant employees reiterated their position that all 1,200 workers be paid out separation packages, upon sale of the Philippine assets, in accordance with company policy.
According to the employees, this is to protect their years of service to the company and give the new owners the option start from a clean slate with employees who they intend to rehire. Those who will not be rehired will, at least, have their years of service protected by severance payments.
"Employees will only pull the case out of DOLE and agree to an amicable settlement if management agrees to pay separation packages to all employees upon the sale. That is the bottom line," a company source said.
The source added that employees are willing to sign a transition agreement if paid a severance package to ensure a smooth turn-over and non disruption of plant operations.
The sale of Mirant Philippines is expected to fetch close to $3 billion for its parent company, Atlanta-based Mirant Corp.
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The Philippine Star 11/16/2006
Prominent businessmen Ramon Ang of San Miguel Corp., Henry Sy Sr. of the SM Group and Joselito Campos of Unilab are teaming up for the bidding of the National Transmission Corp. (TransCo), the Power Sector Assets and Liabilities Management Corp. (PSALM) said yesterday.
In a letter to the Joint Congressional Power Commission (JCPC), PSALM said the group forms part of a consortium that was among those pre-qualified to join the TransCo bidding on Dec. 20.
PSALM said the businessmen will control the consortium through Triratna Holdings Corp. with a 60-percent stake. Its partners are Tenaga Nasional Berhad (five percent) and Newbridge Asia IV L.P. (35 percent).
Tenaga Nasional is a state-owned Malaysian power company which is one of the first entities that have signified interest in TransCo some years back, while Newbridge is a US-based investment group.
A second consortium eyeing TransCo, is composed of Citadel Holdings Inc. (60 percent) and Terna SPA (40 percent). The group is represented by Rogelio Singson.
Citadel is the investment vehicle of Delgado family, engaged in exports, logistics and transportation while Terna SPA is one of the biggest power companies in Italy involved in the production and transmission of electricity for domestic and industrial use.
The last pre-qualified group consists of Monte Oro Grid Resources Corp. (60 percent) and State Grid Corp. of China (40 percent). Monte Oro is represented by Walter B. Brown. State Grid is the largest transmission firm in China while Brown is the chairman Philex Mining Corp.
PSALM named the three bidders for the country’s sole transmission arm after completing the evaluation of their respective prequalification proposals submitted last Sept. 28.
The prequalification group composed of PSALM and TransCo technical teams conducted the evaluation based on stringent technical and financial criteria that each group adequately met.
"Our financial criteria ensure that the technical partner, the prequalifying Filipino investor and foreign investor are all financially healthy," PSALM president Nieves L. Osorio said.
The three bidders for the TransCo concession must have a member or affiliate with experience in operating and maintaining electricity transmission systems comparable to that of the Philippines, with at least 6,000 circuit kilometers, a minimum 6,000 megawatts peak demand and a voltage level of 115 kilovolts (kv) to 230 kv.
At the same time, the member of the prospective bidder who meets the technical prequalification criteria must have a net asset value or market capitalization of at least $500 million.
The Filipino investor must have a net asset value or market capitalization of at least $300 million, or must be able to present a bank opinion that the Filipino group can fund equity investment of not less than $300 million.
The foreign investor must have a net asset value of at least $175 million, or present a bank opinion that it can fund equity investment of not less than $175 million.
The prequalification process is the second stage of the entire bidding procedure for the TransCo concession. In this phase, the prospective bidders submit their proposals to PSALM for review and validation.
Osorio said this is to ensure that only serious bidders with proven domestic or international experience and expertise as a leading transmission system operator will be qualified to participate in the formal bidding.
The TransCo privatization process officially started on May 28 with the publication of the invitation to express interest, prequalify and bid. The pre-bid conference will be held on Nov.20 to give prospective bidders the opportunity to clarify issues and concerns.
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The Philippine Star 11/06/2006
Plastics king William Gatchalian is accusing the local unit of Atlanta-based Mirant Corp. of deliberately refusing to provide power to the recommissioned plant of Bataan Polyethy-lene Corp. (BPC), hindering the resumption of the plant’s operations.
In an interview, Gatchalian — a major shareholder in BPC — said the BPC has been recommissioned at a cost of $20 million and is ready to operate.
Unfortunately, he said the plant cannot resume operation because Mirant refuses to provide the plant with power, allegedly since the project will be controlled by Iranian investors.
Iran’s National Power Co. International is acquiring 60 percent of BPC, while Gatchalian, through his Metro Alliance Group, will hold 40 percent.
Gatchalian complained the problem has turned political, spawned by the long-standing conflict between the US and Iran. Mirant, being a US firm, allegedly refuses to deal with any firm that has Iranian investments.
However, Gatchalian pointed out, the buy-in by NPC International has not been concluded specifically because of the power problem.
The Iranian payment is already deposited in a Philippine bank, awaiting resolution of the power problem.
Gatchalian said while BPC can acquire power directly from the state-run National Power Corp., it would be costly since it must put up its own sub-station which would cost between $4 million to $10 million.
BPC is hoping to resolve the power problem so that it can resume operation by the first quarter of 2007 with an initial production capacity of 270,000 metric tons per year. BPC’s maximum production capacity is at 400,000 MT a year all for domestic consumption.
The Metro Alliance Group acquired in 2005 the shares of British Petroleum (38.5 percent), Malaysia’s Petronas (38.5 percent) and Japan’s Sumitomo Corp.(six percent) in BPC. Gatchalian is the majority shareholder of Metro Alliance.
BPC started operating in 2000 with a capacity of 200,000 MT.
Unfortunately, because of the global glut in petrochemical resin production, the local petrochemical players have been under a constant struggle to remain afloat.
The local petrochemical industry has been beleaguered that it had asked the government to delay a planned tariff reduction under the ASEAN Free Trade Area - Common Effective Preferential Tariff (AFTA-CEPT).
Plans to put up a naphtha cracker that would fully integrate the local petrochemical industry have remained on paper following the difficulties faced by the local petrochemical players and foreign proponents.
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The Philippine Star 11/06/2006
The government is considering a reduction in the capacity of wind turbine generators to be put up in Ilocos Norte as it cannot afford the construction of the originally planned wind farm and transmission line.
During a meeting of the National Economic and Development Authority (NEDA) Investment Coordinating Committee (ICC), it said the plan to construct an alternative power plant was conceptualized over six years ago but was shelved because the project was too expensive.
In November 2004, the Philippine National Oil Co. - Energy Development Corp. (PNOC-EDC) bid out the project under two contracts but both exceeded the ICC-approved cost and available funding.
As a result, the government made changes on the proposed project such as reducing the power the generators can produce.
For example, the wind power project in Burgos, Ilocos Norte will only have a 30-megawatt (MW) nominal wind capacity instead of the planned 40 MW.
Also, the original project was supposed to have 42 kilometers of 230 kilovolts (kv) transmission lines that will interconnect the wind farm to the nearest power substation in Laoag City. But under the revised plan, it was reduced to a 115-kv single circuit.
Because of the delay, the project completion and commercial operation are now expected in January 2009.
The government needs to expedite the project because the expected electricity demand in 2007 will exceed supply. Should the project be completed on time, it would stabilize energy costs through reduction of use of imported energy.
Also, it would enhance the environment through the reduction of greenhouse gas by displacing a similar capacity thermal plant.
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The Philippine Star 10/31/2006
The sale of the shares of Philippine National Oil Co.-Energy Development Corp. (PNOC-EDC) next week is expected to generate up to P19.2 billion in proceeds for the government.
According to documents obtained by The STAR, the initial public offering (IPO) of PNOC-EDC, the country’s biggest geothermal power producer, will fetch between P8.9 billion to P19.2 billion.
The offer price for the 30 percent to 40 percent block of common shares has been set at a range of from P2.10 to P3.20 per share.
PNOC-EDC said the money will be used to finance the development of new steam fields, the acquisition of a new drilling rig and to meet working capital requirements.
The IPO consists of a domestic offer and an international offer. The domestic offer shall consist of shares amounting to the lesser of 20 percent of the combined offer and will have an offer value of P2 billion. The international offer meanwhile, will consist of the balance.
After the international and domestic offers, including the over-allotment option, PNOC-EDC will have a total of 14.118 billion to 15 billion common shares issued and outstanding.
The IPO has an over-allotment option which is an option for the international underwriter to buy up to 15 percent of the offer shares exercisable in full or in part within 30 days from listing date to effect price stabilization.
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The Philippine Star 10/31/2006
The 14-megawatt (MW) biomass co-generation power plant being put up by Central Azucarera de San Antonio (CASA) in Passi City, Iloilo at a cost of P1.6 billion will be operational by the first quarter of 2007.
The power facility will not only service the power requirements of the sugar mill but also help supply electricity to Passi City and the towns of Dueñas and San Enrique in Iloilo.
The co-generation facility will be powered by a 200-metric ton per hour suspension-fired bagasse boiler. It will use sugar cane bagasse, a refuse from sugar milling operations, to fuel the power plant.
While CASA said that about nine MW of the capacity will be used for operations and five MW will be allocated initially for commercial dispatch to local distribution utilities, it also foresees another 12-MW expansion for commercial dispatch in the midterm.
CASA’s co-generation plant is equipped with dual wet scrubbers to ensure compliance with air quality standards prescribed by the Department of Environment and Natural Resources (DENR).
Energy Secretary Raphael P. M. Lotilla, in a statement, hailed the sugar central’s decision to invest in its own co-generation plant fueled from the refuse of its own sugar milling operations.
"This not only increases renewable energy use in the country but also indicates a trend where large electricity users take steps to improve the cost efficiency of their operations and at the same time provide for their own power requirements," Lotilla added.
The country generates substantial fuel potential from biomass resources, such as bagasse or sugarcane residue, fuel wood, rice hull, coconut residue and animal waste, coming from extensive agriculture, livestock and forestry industries.
For instance, the Western Visayas, Eastern Visayas and Southern Tagalog regions where the traditional sugar centrals are located generate abundant supply of sugarcane bagasse. Research and field trials on biomass-based energy solutions show that integrating the collection and supply of sugarcane for sugar production and cane residue as fuel for energy production is an ideal method of utilizing cheap and widely available fuel resources for bagasse co-generation projects in the Philippines.
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The Philippine Star 10/31/2006
Sen. Joker Arroyo reprimanded the Power Sector Assets and Liabilities Management Corp. (PSALM) yesterday for refusing to disclose information about the three qualified bidders for the National Transmission Corp. (TransCo).
Arroyo, chairman of the Senate committee on public services and a member of the Joint Congressional Power Commission, said he asked PSALM for the ownership structure of each of the three qualified bidders as part of the responsibilities of Congress.
But PSALM, as expected, told Arroyo that the confidentiality agreement between them and the bidders prohibits it from declaring the identities of those who make up the companies awarded the right to bid.
"TransCo is owned by the government 100 percent, ergo, it is owned 100 percent by the public. Bidding it out must be transparent 100 percent because it is taxpayers’ money involved," Arroyo said in a statement.
PSALM president Nieves Osorio recently announced that three investor groups have passed the financial and technical criteria for the Dec. 20 bidding for 25-year contract to run TransCo.
This would be the fourth attempt by the government to privatize its power transmission network since 2003.
"True, there is such a thing as confidentiality provisions in bidding contracts. They are fairly common when it involves transactions between one private company and another private company. But not when it involves public funds," Arroyo said.
"PSALM went beyond its powers by binding itself to a confidentiality agreement that forbids Congress from even asking the identities of the people behind the corporate bidders," he added.
Arroyo reminded PSALM about the $525-million sale of the Masinloc power facility to the YNN Pacific-Ranhill Berhad consortium, which he said "failed miserably."
He recalled that Masinloc was awarded to the company with a paid-in capital of only P800,000 whose office was located at a warehouse without any desk.
"TransCo is worth four times that. P100 billion. And Congress cannot have a peep as to who are the bidders? Who can peep and who can know? Only a select few," Arroyo said.
Arroyo emphasized that the privatization of Transco will be the biggest transaction ever in Philippine history so all the more reason that Congress should be informed about its details.
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The Philippine Star 10/23/2006
Employees of Mirant Philippines are crying discrimination on their compensation packages as they claim their US counterparts are getting $34-million in bonuses from the sale of the firm’s Philippine assets.
In a letter to the Department of Labor and Employment (DOLE) dated Oct. 20, same 1,200 employees of Mirant Phils. sought the department’s intervention regarding the sale of the local Mirant unit, the largest private producer of electricity in the country.
Through three separate petitions, the employees warned of "a potential labor dispute which may result in massive labor unrest of employees, and eventually cause a disruption of the electricity supply in Luzon."
The Mirant employees, represented by Joyce Bellas, Maria Anna Delos Reyes and Andres Boron, said that the present management has failed to provide workers with a definite program to protect their interest after the company’s sale is consummated.
"The employees persistently demanded this protection from the management but management consistently ignored, despite oral and written demands to specifically and definitely address these concerns," the group said in the letter.
Last July, the Atlanta-based parent firm Mirant Corp., announced plans to sell its Philippine assets through an international auction. The sale is expected to fetch $3 billion for the parent company.
As this developed, Mirant Phils. employees asked for the formalization of a severance policy that will guarantee an employee, who will be affected or terminated as a result of the sale, 2.5 months severance pay for every year of service, as consistent with company practice.
"To date, management has failed to enact such a policy despite the fact that the sale date is set to be finalized in November," they said in the letter.
Mirant Phils. has, for the past five years, contributed a yearly net income of at least P11 billion to the US-based parent company.
In the letter, employees also slammed the racial discrimination against Filipino employees.
"It is very apparent that Filipino employees are being treated unfairly. In the US SEC filing on Oct. 5, Mirant Corp. in Atlanta announced the grant of $34 million to 125 US employees for the successful sale of the Philippine assets. Filipino employees who worked hard not only for the sale but also for making Mirant Philippines a very profitable company get nothing," they said.
The only Filipino employee included in the $34-million sale bonus is Mirant Phils. chairman and president Jose P. Leviste Jr. To separate all 1,200 employees of Mirant Phils. would cost around only $24 million.
Mirant owns and operates the 1,200- megawatt (MW) power generating plant in Sual, Pangasinan, and the 735-MW facility in Pagbilao, Quezon. Both plants account for around 25 percent of the power supply in Luzon.
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The Philippine Star 10/23/2006
National Power Corp. (Napocor) is highly optimistic it will continue to register profits this year, helped by the strengthening of the peso.
Napocor president Cyril C. del Callar said after a recent company planning session that they intend to sustain the financial gains last year into this year and the suceeding years.
"Napocor is becoming a profit center, not cost-centric," Del Callar said. However, he refused to cite exact amounts until the final figures are released.
But he printed out demand for power was very strong in the third quarter as manufacturers went full blast to meet December demand, both for exports and domestic Christmas buying. Traditionally, the fourth quarter is consumer spending for the Christmas season, with a big bulk coming from the province.
Napocor has total outstanding loans of $7 billion (roughly P372 billion), from its creditors including the Asian Development Bank (ADB), the World Bank, the Japan Bank for International Cooperation (JBIC) and other commercial creditors.
Majority of the debts has been assumed by the state-run Power Sector Assets and Liabilities Management Corp. (PSALM).
Del Callar said they expect more foreign exchange gains with the strengthening of the peso. Government expects Napocor to register losses or become loss-neutral based on the exchange rate assumption of P52 to the dollar.
The peso closed at 50.10 last Friday, although it had challenged the 49 level several times last week.
As a rule of thumb, every peso gain against the dollar is equivalent to about P15 billion in forex gain or loss. "So we could just imagine the gains if the peso continues to appreciate."
Also expected to contribute to better earnings this year is the use of biodiesel and other biofuels.
Napocor has started testing the use biofuels on all its power plants.
"I have ordered testing of all kinds of alternative sources of fuel for our power plants. It looks good based on the tests of jathropa done by Department of Science and Technology (DOST)," the Napocor official added.
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The Philippine Star 10/21/2006
The Bangko Sentral ng Pilipinas (BSP) has approved in principle the $450-million power sector program loan from the Asian Development Bank (ADB) that would bankroll the further deregulation and privatization of power generation in the country.
The BSP said yesterday that the Monetary Board (MB) has approved the loan, paving the way for the National Government (NG) to finalize negotiations with the ADB.
The MB also gave its final approval on two loans from the World Bank amounting to $310 million for the education and health sectors, the first program loans from the bank in almost seven years.
BSP Governor Amando M. Tetangco Jr. told reporters that the ADB loan was a loan of the republic with the Department of Finance (DOF) as the executing agency and the Department of Energy as the implementing agency.
"This is a policy-based loan for the Power Sector Development Program," Tetangco said. "The goal is to develop a financially sustainable, efficient and secure power supply to minimize the risk of power shortages."
Perhaps more than any other multilateral funding agencies, the ADB has expressed serious concern over the country’s looming power supply crisis that threatened to reverse economic growth in recent years.
Tetangco said the objective was to arrest the drain in government finances caused by power sector, thus freeing the funds for social services.
"The program is basically designed to strengthen the financial viability of the sector," Tetangco said.
Since it would be a program loan, Tetangco said the ADB facility would have attached policy conditions intended to strengthen the regulatory framework in the energy sector and further enhance market restructuring through competition.
"The intention is to encourage private participation in power generation," he said.
Initially, Tetangco said the terms of the loan would include a 15-year maturity inclusive of a three-year grace period. Interest rate on the loan was tentatively set at 6-month US LIBOR (London Interbank Overnight Rate) plus 60 basis points.
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