Philippines Senator Slams ‘Inept’ Napocor Execs Over Coal

May. 02, 2007

MANILA — Senate Minority Leader Aquilino Q. Pimentel, Jr.
(PDP-Laban) scored top officials of the state-owned
National Power Corporation (Napocor) for their failure
to stock up enough coal to meet higher fuel demand
power generation during the summer months when its
hydroelectric plants are shut down due to low water
levels in dams, lakes and rivers.

Pimentel said this inexcusable lapse on the part of
Napocor management has fueled suspicion of an
artificial shortage of coal in its inventory to
justify the importation of this fuel at atrociously
high prices that will benefit some people tasked with
fund-raising for the administrations election

Napocor is creating an emergency to justify
high-priced coal-buying, giving rise to suspicion of
fund-raising for election. Pimentel said.

This critical oil supply problem could have been
avoided considering that the status of the countrys
coal is common knowledge among energy officials.

The opposition senator issued the statement in the
face of reports that Napocor has awarded several coal
procurement contracts in March-April this year,
contrary to its earlier claim that the company had
secured stocks last December.

Pimentel said the frantic effort to meet the coal
requirements of Napocor at this late stage is proving
too costly to the power firm because of prevailing
higher prices compared to those last year.

Napocor reportedly awarded a contract for five
shipments of coal at $84 per metric ton in early April
to the Australian firm Hunter-Valley Coal Corp. Pty
Ltd. at P312.2 million per shipment. The coal supply
is intended for the Masinloc plant in Zambales from
May 13 to 19.

Pimentel noted that at $84 per metric ton of
Australian coal, this is much higher than the
prevailing market price of $64 per MT. This is also
triple the procurement cost for coal at $28 to $30 MT
for power utility firms with long-term contracts.

According to reports, Napocor also awarded three
separate coal procurement contracts for $65 to $68 per
metric ton to PT Kaltim; PT Andalan and PT Baramulti.
This coal is meant for the power plant in Pagbilao,

Equally disturbing, Pimentel said, was that Napocor
will have to borrow $500 million just to secure its
fuel needs and meet other generating expenses this

He said the consumers and customers of Napocor deserve
an explanation from Napocor officials on why they
failed to work out long-term coal supply contracts in
order to avail of lower prices long before the onset
of the summer months to head off a fueled shortage.

Pimentel said it is the height of incompetence and
lack of foresight on the part of the Napocor
management not to have anticipated the sharp increase
in power demand during the summer months especially in
light of the El Nio phenomenon and global warming
that have caused the rapid drop in water levels in
inland bodies of waters that has rendered
hydroelectric plants inoperable.

As a consequence of the blunders of Napocor
officials, the consumers will suffer a lot not only
from higher power rates due to the higher cost of
power generation but also from occasional power
brownouts due to the precarious state of fuel supply,
he said.

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