Quezon Power gives Meralco another discount

The Quezon Power Philippines Ltd. (QPPL), one of the independent power producers (IPPs) of the Manila Electric Co. (Meralco), has indicated willingness to enter into an agreement with Meralco that will result to some $50 million savings for the latter.

"The first indication was Quezon Power is willing to amend the contract to give Meralco an additional $50 million of savings over five to six years," Energy Secretary Vincent S. Perez said.

Aside from QPPL, the other IPPs of Meralco are the gas-fired power plants of First Gas Power Corp.-Sta. Rita and San Lorenzo, and Duracom.

Perez said there are no concrete indications from First Gas and Duracom. "So far nothing is happening between Meralco and First Gas," he said.

But he said they continue to urge the power firms to sit down and talk about the issue.

Last week, Perez, acting as a government-designated convenor for the Meralco issue, had started talks with various stakeholders and creditor banks of the power distribution utilities to come up with solutions on how to address the possible financial dilemma brought about by the recent Supreme Court decision on Meralco.

Meralco has a power purchase agreement for a 440-megawatt (MW) supply of electricity with QPPL and another 1,500-MW power supply contract with First Gas.

The power firm is likely to face a financial difficulty once the SC decision, ordering Meralco to refund its customers overcharges amounting to P11 billion for the period 1994-1998, becomes final and executory.

According to the energy chief, he had discussions with the senior officials of Shell during his visit to Netherlands and United Kingdom to appraise them on the Meralco situation.

He said there is an urgent need for Shell and Chevron/Texaco to take the lead within the Malampaya consortium to provide some financial flexibility on the take-or-pay provision of the gas sales contract it signed with First Gas. The take-or-pay provision requires First Gas to pay the Malampaya consortium a minimum off-take whether the gas was actually consumed or not.