Without specifying the government’s position on the issue of new renegotiations of the IPP contracts, Energy Secretary Raphael P.M. Lotilla just set in context that while the first round of renegotiation was some sort of a "give-and-take" process on which both parties brought their concerns on the table before taking in a compromise, he hinted that any next round of such exercise, would always have to be done along this fashion.
But he noted that the primordial concern of both policymakers and industry players on stable regulatory environment would have to be given prime attention at this point; when the country is badly in need of fresh capital for its power industry.
Similarly, Mirant Philippines president J.R. Harris sounded off that "it’s really important that the sanctity of contracts should be respected and there has been a good growth in generation here in the Philippines and the future is going to be in any market."
The US energy firm itself made prior announcements of its planned expansion in the country; through its Pagbilao power facility; but as it voiced out, some concerns on the stability of the business environment has to be resolved first.
In this light, the energy chief expressed that "we’d like to see Mirant expand its operations in the country. And so we will like to have all other companies, we want to make sure that all the policy and regulatory framework will allow them to do so."
The energy secretary said the government is being cautious about this whole exercise as they want to prevent a scenario where the Philippine government, being the one extending guarantees to most of the IPP contracts, would be dragged to arbitration proceedings.
In fact, this early, the IPP players have already voiced out their strong opposition to the Senate on any new attempt to reopen or renegotiate their contracts; reminding government that they have already done their share on this respect.
The call for fresh round of renegotiation in the IPP contracts has been among the focal point of the legislative pieces filed in the Senate that provides for some amendments in the Electric Power Industry Reform Act.
The first phase of renegotiation was mandated under EPIRA and has been carried out by an interagency committee in 2002. The "mutually acceptable" terms of renegotiation were worked out by the Power Sector Assets and Liabilities Management Corporation (PSALM) with the IPP project sponsors.
The government has reported around $1.0 billion of savings generated from the contract renegotiations with the IPPs; and will eventually flow through consumers as reduction in their electricity bills, once the Energy Regulatory Commission (ERC) establishes the universal charge for such component in the rates.
It was gathered that PSALM is now down in the last contract that it has to come to terms with; and that is with Prisma Energy for the Subic power facility.
