Manila Times, Friday, December 31, 2004
THE Power Sector Assets and Liabilities Management Corp. (PSALM) said on Thursday that it has gained the consent of creditors World Bank and the Japan Bank for International Cooperation (JBIC) for the sale of the first set of generation assets of the National Power Corp. (Napocor).
“The two creditors have given us their letters of consent and we expect the Asian Development Bank’s consent to follow soon,” Raphael Lotilla, PSALM president and chief executive, said.
He said the World Bank’s letter confirmed that its specific consent is unnecessary for the sale of five Napocor generation assets valued at about $5.11 million as the sale is not expected to materially affect the state-run power firm’s ability to do business.
The World Bank and JBIC’s consent to the award and sale to winning bidders covers the following hydroelectric power plants: the 3.5-megawatt (MW) Talomo facility located in Barrio Mintal, Talomo, Davao City; the 1.6-MW Agusan plant in Manolo Fortich, Bukidnon; the 1.8-MW Barit facility in Buhi, Camarines Sur; the 0.4-MW Cawayan plant in Sorsogon City, Sorsogon; and the 1.2-MW Loboc facility in Bohol.
Buyers of the power facilities include Hydroelectric Development Corp., First Generation Holdings Inc., the lawyer Ramon Constancio, Sorsogon II Electric Cooperative Inc. and Sta. Clara International.
Lotilla said the buyers reflect a well-diversified set with no single group predominating.
“We hope that this trend continues to maximize proceeds for the government that will help reduce Napocor’s debt burden and the tariff rates paid by the Filipino people,” he said.
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Manila Times, Dec. 29, 2004
THE Power Sector Assets and Liabilities Management Corp. has moved the deadline for the privatization of the National Transmission Corp. (Transco) to first quarter next year, Raphael P.M. Lotilla, PSALM president and chief executive officer, said Tuesday.
“The initial target of completing Transco’s privatization before end-December happens to be our ‘fighting target,’” he said. “We knew all along that the first quarter of next year will be a realistic target.”
Lotilla said PSALM is still “looking at the same number of investor groups” to participate in the sale of Transco assets.
He said PSALM has already sent “informal” word, urging investor groups to remain “engaged” in the privatization plan.
“All indications show that there is still a high level of interest in Transco,” Lotilla said.
PSALM plans to send out formal announcements to these investors next month.
The Department of Justice earlier ruled that PSALM has the option to award all or only part of the responsibility of improving, expanding, operating and maintaining Transco to qualified groups.
The department’s opinion confirmed the legality of PSALM’s position that, after two failed bids, the Transco concession contract can be awarded through alternative modes including limited source bidding or negotiation.
Limited source bidding, as applied to Transco’s privatization, is an alternative method of procurement that involves direct invitation to bid addressed to a set of preselected transmission operators with known experience and proven capability relative to the requirements of the concession contract.
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Manila Times, Friday, January 14, 2005
THE implementation of Manila Electric Co.’s Phase 4A refund will be delayed, Meralco said on Thursday.
The delay cannot be avoided because Meralco needs to note the tax identification numbers (TIN) of customers covered by the refund phase, a Meralco official said.
Phase 4A of the refund covers a gross refund of P2.276 billion to be reimbursed to 103,425 small commercial and industrial customers, government hospitals, metered streetlights and flat streetlight customers with a contracted demand of less than 40 kilowatts.
“We will have to ask for and secure these customers’ TIN. We do not hold such information in our database,” Elpi O. Cuna, Meralco’s vice president for corporate communications, said in a telephone interview.
Meralco recently received the Energy Regulatory Commission’s order on its Phase 4A refund implementation. The Bureau of Internal Revenue intends to tax Phase 4A customers and to designate Meralco as its withholding agent.
Meralco will try to start the refund in February, said Leo V. Mabale, Meralco’s senior vice president and refund management task force head.
Mabale said that the ERC order states that the refund be credited to future billings over 18 months starting January 2005.
“Although we recognize and adhere to the ERC’s order, we need to inform the commission on the difficulties of starting the implementation this month. We received the order only on January 6 and we cannot implement it midway in the January billing cycle,” he said.
Mabale said that Meralco hopes to clarify with the BIR and the ERC all of these matters including the tax rules and mechanics at the soonest possible time so it can carry out the refund by February.
As of end-December, Mabale said that Meralco has completed the processing of refunds for active and terminated residential and general-service customers.
The third phase covers 5.1 million customers, representing 98 percent of customer base entitled to a refund. The amount processed for refund stood at P11.6 billion, or 38 percent of the total refundable amount.
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Manila Times, Wednesday, January 12, 2005
STATE-RUN Philippine National Oil. Co.-Energy Development Corp. (PNOC-EDC) said it expects to complete the bidding process and have a financial adviser before end-February.
In a briefing, Paul A. Aquino, PNOC-EDC president and chief executive, said the deadline for the submission of letters of intent and eligibility by financial institutions is on Friday.
The PNOC-EDC executive said more than 10 financial institutions have signified interest to participate in the bidding for PNOC-EDC’s financial advisor/global coordinator.
Aquino said that ABN Amro, ING Barrings, CLSA, Development Bank of the Philippines and Morgan Stanley, among others, have already expressed interest in the bidding.
He said the privatization committee will come up with a shortlist by Monday.
On Tuesday the bid and awards committee as well as the PNOC-EDC board will approve the list, with final approval by the board on Wednesday.
Aquino said the pre-bid conference is schedule on January 24, while the presentation of proposals is set on February 15.
Last month Aquino said the winning bidder will help PNOC-EDC determine its initial market price, as it plans to bid out nine billion shares by the second quarter.
Based on the internal studies using PNOC-EDC’s net present value of its present contract, its initial market price is seen at P3.50 a share for a 19-percent discount, or P6.60 a share for 11-percent discount.
Aquino said PNOC has 10 billion shares in PNOC-EDC.
Of some nine billion shares, PNOC-EDC targets to sell six billion through private placement and the balance bid out through an initial public offering.
--Paul Anthony A. Isla
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Manila Times, Wednesday, January 12, 2005
THE new power-distribution guidelines approved by the government last month are expected to lower electricity rates for consumers, the Energy Regulatory Commission said on Tuesday.
Energy chair Rodolfo B. Albano Jr. said the guidelines will be based on the Distribution Wheeling Rates Guidelines (DWRG), which the ERC adopted recently.
The DWRG, an alternative rate setting method for power-distribution firms using international standards, uses performance-based rate making, in contrast to the traditional return on rate base, which has been used in the Philippines for over 80 years.
“The return-on-rate-base methodology allows a distribution utility to set rates or charges for regulated activities to recover costs,” Albano said.
“The DWRG, on the other hand, is a performance-based rate-setting approach which employs incentives to induce cost-cutting that is expected to result in lower electricity rates in the long term.”
Besides consumers, the new guidelines will also benefit investors in the power sector, Albano said, adding that the DWRG provides incentives to distribution firms to improve services and efficiency.
The price of electricity under DWRG is controlled through an average price cap mechanism under which a limit is placed on the average revenue that a power firm is allowed to earn in any period, Albano said.
The maximum average price that a firm is permitted to charge incorporates all the relevant price measures such as the change in weighted index, the correction factor for over- or under-recovery of revenues in the previous year, the tax adjustment to adjust for over- or under-recovery of corporate income tax in the previous year, among others.
Albano said the ERC has drawn up an entry scheme to ensure the smooth implementation of the new rules particularly for power-distribution firms.
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Manila Times, Jan. 11, 2005
THE government, through the Philippine National Oil Co.-Exploration Corp. (PNOC-EC), signed on Monday a service contract with Petronas Carigali Overseas Sdn. Bhd (PCOSB) for a petroleum-exploration block in offshore Mindoro.
The Department of Energy said this is the third petroleum service contract signed in recent weeks after the Supreme Court declared last month the Mining Act as constitutional.
Service Contract 47 was cosigned by Tan Sri Dato Sri Mohd Hassan bin Marican, Petronas president and chief executive, Energy Secretary Vincent S. Perez Jr. and Eduardo V. Manalac, PNOC president and chief executive.
“This new agreement has long been in waiting,” Perez said. “Now that the road has been paved clear, we look forward to the drilling of one of the most attractive exploration areas in the country.”
Under the contract, PCOSB and PNOC-EC will commit to drill one exploratory well in the area with an option to either drill another exploratory well or acquire new seismic data.
The contract will also include geological and geophysical studies and a possible seismic survey.
PCOSB said it is prepared to invest some $12.5 million for the project.
The work program under the service contract will be completed during the first two years, after which the contractors can decide whether to proceed with the subsequent phases of the exploration period.
PCOSB is the operator with 80 percent participating interest, while PNOC-EC has 20 percent.
Manalac said the government would still have a 60-percent share on the resources to be developed.
Service Contract 47, which is the former Geophysical Survey and Exploration Contract 100 (GSEC 100), is one of the most attractive exploration acreage in terms of hydrocarbon potential since it is located in the same geologic region as Northwest Palawan host to the country’s oil and gas fields.
With a size of 14,667 square kilometers, the block covers the offshore area south of Mindoro Island and west of Panay Island.
Service Contract 47 offers an array of shallow to deepwater prospects with low to moderate risk. As operator of the former GSEC 100 license, PNOC-EC has already identified two prospects, the Tablas Prospect situated between the island of Tablas and Mindoro, and the Cherry Prospect located some 12 kilometers southeast of Maniguin-2, which so far, is the most significant oil discovery outside of Northwest Palawan.
The signing of the Offshore Mindoro Service Contract follows a 1995 exploration by Petronas in the Cotabato Basin in Mindanao.
The energy department had awarded Service Contract 45 to China’s South Sea Petroleum Holdings Ltd to explore oil and gas in the Agusan-Davao Basin, and Service Contract 46 to Japan Petroleum Exploration Co. Ltd for oil and gas exploration over the Tanon Straits in Negros Occidental.
Two other petroleum service contracts were awarded last year. These involved Singapore-based firm Gas to Grid Pte. Ltd in the Central Cebu area, and British firm Premier Oil Philippines B.V. over the Ragay Gulf in the Bicol region and parts of Bondoc Peninsula in Quezon.
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Manila Times, Jan. 6, 2005
CONSUMERS should not expect an oil price rollback despite a downtrend in global oil prices late last year because of a 2-percent increase in the import duty on all petroleum products starting this month.
Energy Secretary Vincent S. Perez said on Wednesday that local oil prices will remain at current levels.
Monitoring by the Department of Energy showed that Dubai crude averaged at $34.20 a barrel last month from $34.87 in November.
The Mean of Platts Singapore (MOPS)-based unleaded gasoline went down to $44.81 in December from $52.45 in November, while MOPS-based diesel dropped to $51.33 last month from $56.82 a barrel during the same period.
“Our computations show that an increase in import tariff, which is equivalent to an average P0.36 to P0.38 a liter, will hardly be felt by consumers as we saw world oil prices falling sharply last month,” Perez said.
He said if prices continue at present levels, it is even possible to see another round of price rollback “within the month,” most probably gasoline prices.
Effective this month, imported crude and all refined petroleum products, except liquefied petroleum gas, will be levied a 5-percent import duty, from the earlier levy of 3 percent.
Perez said the government is expected to raise additional revenues of about P5.5 billion annually from the tariff increase.
The adjustment in import duty is intended as an interim revenue measure until Congress passes the draft bill on new taxes for petroleum products. The proposed tax measures form part of the government’s fiscal road map to arrest the country’s budget deficit.
Perez also said existing oil inventories built up in major international oil markets will likely remain at current price levels in the first few months of the year.
“We saw oil prices reaching record levels, prompting the energy department to call on the public to conserve fuel. We are very pleased that the public heeded it,” he said.
Perez hopes that oil prices will continue this downward trend in the coming months.
The department’s monitoring of energy analysts’ forecasts worldwide show international oil prices to remain at above $30 a barrel for Dubai crude, Asia’s benchmark, in the first five months of the month.
New York-based PIRA Energy Group said Dubai crude in January will average up to $36 to $33 in May.
Given high inventories, combined with the reported slowdown in economic growth compared with the previous years in countries such as China and Japan, analysts said the sharp increase in prices seen last year is unlikely.
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Manila Times, Thursday, January 06, 2005
THE government on Wednesday began the sale of National Power Corp.’s (Napocor) decommissioned plants with the publication of the invitation to bid for the 200-megawatt (MW) Manila Thermal Power Plant, according to the Power Sector Assets and Liabilities Management Corp. (PSALM).
The 200-MW Manila Thermal Power Plant is located at Isla de Provisor in Paco, Manila.
The invitation said that interested parties are required to submit letters of intent to the PSALM not later than January 14, adding that as prerequisite parties shall execute a Confidentiality Agreement and an Undertaking in the forms provided by the PSALM and pay a nonrefundable fee of $500 on or before January 17.
The PSALM added that interested parties can conduct due diligence from January 10 to February 14, while its pre-bid conference is set on January 19 and the deadline for receipt of bids by the PSALM is at 12 p.m. of February 18.
“Capitalizing on the momentum from last year’s successful bidding for five hydroelectric plants and the 600-MW Masinloc coal-fired plant, we are starting this year with the auction of decommissioned plants, starting with Manila Thermal, Raphael P.M. Lotilla, PSALM president and chief executive, said.
Lotilla said Manila Thermal’s components have been kept in such good condition by Napocor personnel that they can also be used as replacement parts for operational plants.
“But we are also taking advantage of the good market for scrap metal to obtain optimal value for the government,” he said.
Meanwhile, Froilan A. Tampinco, PSALM’s vice president for asset valuation and disposal, said that all the major plant systems of Manila Thermal are intact, and major equipment such as the generating unit are under preservation.
“The sale of Manila Thermal will follow the same format of open and competitive bidding used from last year’s successful sales,” Tampinco said. “PSALM will maintain a level playing field by keeping all bidders equally informed about the asset and the bid procedures.”
The PSALM is also set to bid out the 54-MW Cebu II plant in March, the 22.3-MW General Santos plant in April, and the 104-MW Aplaya plant in May this year. All the plants are decommissioned.
In 2004 the PSALM has bid out the 3.5-MW Talomo Hydroelectric Plant (HEP) for $1.37 million, the 1.6-MW Agusan HEP for $1.528 million, the 1.8-MW Barit HEP for $480,000, the 0.4-MW Cawayan HEP for $410,410, the 1.2-MW Loboc HEP for $1.420 million, and the 600-MW Masinloc Coal-Fired Power Plant for $561 million or total bid offers of $566 million.
--Paul Anthony A. Isla
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Manila Times. Jan. 6, 2005
THE Department of Energy on Wednesday padlocked three dispensing pumps at a gasoline station on Shaw Boulevard for having low octane rating and adulterated unleaded gasoline.
A spot inspection conducted by the energy department showed that a Uno Fuel gas station was dispensing unleaded fuel with a Research Octane Number (RON) rating of 86.4, which is below the prescribed RON of 93 for unleaded gasoline.
DOE tests also showed that the unleaded fuel sold was “adulterated.”
Energy Secretary Vincent S. Perez led the inspection and padlocked three dispensing pumps of the Uno Fuel.
“Uno Fuel will be penalized a total of P20,000 selling adulterated and low octane rated unleaded fuel,” Perez said. “Fortunately, we found out that the station’s diesel and unleaded fuel dispensing pumps had passed the department’s retail standards test.”
Meanwhile, Zenaida Y. Monsada, director for the energy department’s oil industry administration bureau, told The Manila Times that her office has yet to confirm if the diesel being sold at the station was also tampered.
Monsada said that they will need to bring the diesel fuel samples at the energy department’s testing laboratory.
“We don’t know if other stations are also selling below our retail standards. It is possible that others may have or are selling petroleum products below the DOE’s retail standards. However, this is something we still would have to check more often,” Monsada said.
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Manila Times, Monday, January 03, 2005
STATE-RUN National Transmission Corp. (Transco) is set to close a deal involving the sale of sub-transmission assets to Aboitiz Equity Ventures (AEV), Alan T. Ortiz, Transco president and chief executive, said.
“We’re currently negotiating with the Aboitiz group for another P250 million worth of sub-transmission assets that are within its franchise areas,” Ortiz said in an interview.
He said the terms of the sale only need a “little fine-tuning” before the deal is finalized.
On top of the Aboitiz deal, the government expects to sign six more contracts this month, Ortiz added.
He also disclosed a meeting with Manila Electric Co. (Meralco) officials, who have expressed interest in buying transmission assets worth P500 million located within its franchise area.
The Lopez-led utility, which has yet to submit its acquisition program, has indicated willingness to start negotiations, Ortiz said.
Meralco has already offered to buy the assets through a deferred payment scheme, he said, adding Transco is evaluating the distributor’s proposal in light of its “improved financial status.”
The Lopez-led utility recently secured the approval of creditors for a longer repayment period for its debts.
“We think the terms have to be slightly different,” Ortiz said, without elaborating.
He said the government’s power assets sale program is gathering momentum, a clear sign that the industry has come to terms with the Wholesale Electricity Spot Market (WESM).
“Distribution utilities are now anticipating the onset of open access,” he said. “And in an open-access regime, distribution utilities will benefit a lot if they own the lines.”
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Malaya, Jan. 11, 2005
Malaysian oil company, Petronas has won rights to look for oil and gas at an offshore block in the Philippines with the PNOC Exploration Corp.
Petronas said it has budgeted $12.5 million, P700 million, for the project.
The two signed a deal to drill one exploratory well each in the Mindoro block, and hold the option to drill another well or acquire seismic data.
"The contract also calls for the partners to complete their work program during the first two years of the contract period, after which the contractors will decide whether to proceed," the statement said.
Petronas Carigali Overseas Sdn. Bhd., the overseas exploration arm of Petronas, holds an 80 percent interest in the 14,667 sq km (5,661 sq mile) block, and PNOC the balance 20 percent.
This is the third petroleum service contract signed in recent weeks after the Supreme Court last month declared the Mining Act constitutional.
The agreement was signed by Petronas President and CEO Tan Sri Dato Sri Mohd Hassan bin Marican, Energy Secretary Vincent Perez and PNOC-EC President and CEO Eduardo Mañalac.
"This new agreement has long been in the waiting. Now that the road has been paved clear, we look forward to the drilling of one of the most attractive exploration areas in the country," Perez said.
The work program under the Service Contract will be completed during the first two years, after which the contractors can decide whether to proceed with the subsequent phases of the exploration period in the Service Contract. Service Contract 47 exploration period is 7 years, consisting to 3 sub-phases. The first sub-phase is the first two years wherein the companies drill one Exploration Well with an option to either drill another 1 Exploration Well or acquire new seismic data. The expected Minimum Expenditure for the first two years is $3 million. The option exploration well or new seismic date can be credited to the commitment in the second sub-phase, should the Contractor elect to enter into the second phase.
The second phase is the third to fourth year wherein they would have to drill 1 Exploration well and acquire a minimum of 500 km of new seismic data. The expected minimum investment for the phase is $3.5 million.
The third sub-phase is the fifth to seventh year wherein the contractor have to drill two exploration well. It is expected to cost about $6 million.
After seven years, the contract could be extended for another 3 years upon justification.
It also has a 25-year development/production period renewable for a series of 5-year periods but not to exceed a total of 15 years.
The signing of the Offshore Mindoro Servie Contract marks another milestone for Petronas in its exploration activities in the Philippines following its previous efforts in the Cotabato Basin in Mindanao in 1995.
The DOE has awarded Service Contract 45 to China's South Sea Petroleum Holdings Limited to explore oil and gas in the Agusan-Davao Basin while Service Contract 46 was awarded to Japan Petroleum Exploration Co. Limited (Japex) for oil and gas exploration over the Tañon Straits in Negros Occidental.
Two other petroleum service contracts were awarded last year. These were Singapore-based firm Gas to Grid Pte. Ltd. in the Central Cebu area and British firm Premier Oil Philippines B.V. over the Ragay Gulf in the Bicol region and parts of Bondoc Peninsula in Quezon province.
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Malaya, Jan. 6, 2005
Fresh from the controversial $566.95 million sale of the Masinloc coal-fired power plants, the Power Sector Assets and Liabilities Management Corp. now takes comfort from the fact that prices for scrap metal is high.
PSALM yesterday official began the sale of decom-missioned power plants with the publication yesterday of the invitation to bid for the 200 megawatt (MW) Manila Thermal Power Plant.
The Manila Thermal Plant is the first of the four non-operational plants that will be sold by the first quarter.
PSALM President Raphael Lotilla said that while the Manila plant is well maintained, the government takes comfort and will take advantage of the good market for scrap metal to obtain optimal value".
He said that Manila Thermal's components have been kept in such good condition by National Power Corp. personnel they can be used as replacement parts for operational plants.
PSALM Vice President for Asset Valuation and Disposal Froilan A.
Tampinco said all the major plant systems of Manila Thermal are intact, and major equipment such as the generating unit are under preservation.
The sale of Manila Thermal will follow the same format of open and competitive bidding used from last year's successful sales, Tampico explained.
He added that PSALM will maintain a level playing field by keeping all bidders equally informed about the asset and the bid procedures.
PSALM is also set to bid out the 54 MW Cebu II plant in March, the 22.3 MW General Santos plant in April, and the 104 MW Aplaya plant in May this year.
All the said plants are decommissioned.
Thus far, PSALM has bid out the Talomo Hydroelectric Plant (HEP) for $1,370,000.00, the Agusan HEP for $1,528,000.00, the Barit HEP for $480,000.00, the Cawayan HEP for $410,410.00, the Loboc HEP for $1,420,000.00, and the Masinloc Coal-Fired Power Plant for $561,740,000.88, or total bid offers of $566,948,410.88.
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