Savings of $1 billion are expected from the renegotiation of electricity supply contracts between the Philippine state-owned National Power Corp (Napocor) and independent power firms.
The Power Sector Assets and Liabilities Management Corp. (PSALM) reportedly hopes to finish negotiations soon on seven remaining power sales contracts with three firms, the last of 35 previously identified for review. The group said the cost reduction of $1.04 billion is calculated in net present value terms.
The long-term power purchase agreements are with independent power firms that put up plants in the country during the late 1980s and early 1990s. The contracts are worth some $11.2 billion and Napocor also had debts of $10.8 billion at the end of 2004. The poor state of its finances has delayed the privatisation of Napocorp and the government hopes to speed up the sale of its power plants and transmission facilities by addressing the situation.
Napocor hopes to raise up to $5 billion from the sale of generation assets and the national transmission grid.
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