Napocor may buy out local contracts of Enron Power Corp

The state-owned National Power Corp. (Napocor) is looking at the possibility of buying out the two existing contracts of Enron Power Corp. (Philippines) in light of the filing for bankruptcy of what was once the world’s largest trader of energy.

US-based Enron imploded in recent weeks after acknowledging it engaged in questionable accounting practices and overstated its profits by more than half a billion dollars over the past four years.

Napocor chairman and Energy Secretary Vincent Perez said "they (Enron) offered to sell the contract to Napocor and we said we will only do that for an attractive discount rate.

They offered a lower discount rate and we didn’t commit on that. But if they come back to Napocor and PSALM with an attractive discount rate they wish to sell, then we are prepared to sit down with them."

Perez said Enron has initially offered a 12-percent discount rate, resulting in a total cost of $250 million for the two power plants.

Enron Philippines is the local subsidiary of Enron Corp. which filed on Sunday for the largest US bankruptcy case ever.

At present, Enron Philippines has two build-operate-transfer (BOT) power contracts with Napocor.

These are the 105-megawatt (MW) Pinamucan-Enron oil-based power plant in Batangas and the 108-MW Subic-Enron 2 Unit 1-8 in Olongapo, Zambales.

According to Miguel Gaffud Jr. "the two power plants in Batangas and Subic are conducting safe and normal operations and will continue to do so despite the filing by Enron Corp. for voluntary petitions for relief under Chapter 11 of the US Bankruptcy Code."

"Both Batangas Power and Subic Power will be able to reasonably comply with their obligations to their lenders and will certainly meet their debt repayment schedule," Gaffud added.