Meralco, Duracom deal seen to hurt Napocor financially

The National Power Corp. (Napocor) stands to lose P1.3 billion per year (or P3.6-million per day) in revenues if the Manila Electric Co. (Meralco) signs an agreement with independent power producer (IPP) Duracom Power.

Meralco has reportedly approached Duracom for the continuation of its services as a direct IPP after the latter's supply contract with Napocor (through East Asia Power expired in May last year.

"The Meralco need up to 3,600-MW and Napocor can definitely supply that volume as there is an over capacity right now," energy sources said. "And why should Meralco buy more expensive power from Duracom when they can acquire energy from Napocor?"

Duracom operates several diesel-fired power barges in the Philippines. Two of its power barges were utilized by East Asia Power for its contract with Napocor for the past years until the contract expired last may 1999. Napocor did not renew the contract as there was already an excess capacity in the Luzon Grid.

Napocor officials said electricity from the diesel-fired Duracom units will cost P1.70 to P1.90 per kilowatt-hour (kwH) while that from the coal -fired plants is only P0.62 per kwH.

"Using these oil-fired units would further increase the country's fuel imports inspite of the fact that we have lower cost options like coal and other indigenous resources. This runs counter to our policy of promoting the use of indigenous resources and providing power at the least cost," Napocor said.