Napocor, PGI agree on new service contract

The settlement of the operation of the Tiwi and Makiling-Banahaw steamfields and power plants has reached another chapter.

In a press briefing held Tuesday night, both the National Power Corp. (Napocor) and the Philippine Geothermal Inc. (PGI) said that they have agreed to work for a new service contract using the valuation presented by a third party consultant, Navigant Consulting Inc.

Navigant Consulting valuation puts the power plants and its equipment at $234 million, the geothermal steamfields at $106 million, and the real property at $1.9 million.

It was further proposed by Napocor that the disposition of these assets will be done separately (e.g. the steamfileds will be negotiate through the service contract while the power plants will be sold through a public bidding).

The Power and Renewable Energy Corp. (PowerCorp), the joint venture between PGI and businessman Eusebio Tangco Jr., had earlier sought to purchase both the steamfileds and power plant. The benchmark was likewise a Navigant Consulting valuation placing a $225-million price tag for the integrated disposition of both the steamfield and the power plant.

However, Napocor decided that the assets should be disposed of separately in the interest of the government.

PGI executive vice president Luli Heras-de Leon said the company was prepared to conduct an out-of-court settlement for the steamfields.

"We believe the proposed structure dovetails with our long term business objectives and outlook for the Philippines and the Asean region," De Leon said.