No rush to buy Enron Power – Perez

Energy Secretary Vincent S. Perez said yesterday there is no pressure for government to buy out the National Power Corp.’s contracts with Enron Power Corp.

In an interview, Perez said that although the Department of Energy (DOE) is hopeful that the Power Sector Assets and Liabilities Management Corp. (PSALM) could close a deal with Enron Power within this month, there are some conditions that have to be met before an agreement could be reached.

"We hope we could come to an agreement, if we could get the condition that we wish," he said.

He said PSALM, which was created to absorb all the assets and liabilities of Napocor under Republic Act 9136 or the Electric Power Industry Reform Act (EIRA), will have to study the matter carefully.

"PSALM does not really need to do the deal but if it is attractive enough and we could reduce our stranded contract cost, then we will do it," he said.

Perez said they also do not want to put pressure on PSALM to come up with a deal as soon as possible. "There’s no urgency in closing the deal by the end of the month," he said, noting that PSALM is particularly eyeing a higher discount than the original offer of Enron Power of 12 percent.

The absence of a buyout deal between PSALM and Enron Power, he said, would not create any problem. "What happens if there would be no deal, nothing," he said.

In fact, he said Enron Power is currently doing its usual course of business. "They are still operating. It is just the question of who becomes the owner. They will still remain as the owner. I don’t know what will they do. It could still operate as it is," he said.

Enron Power is the local unit of Enron Corp., one of the largest energy traders in the US. Recently, Enron filed for bankruptcy, the biggest bankruptcy filing in American corporate history.

PSALM earlier said it was willing to assume the contracts of Enron Power provided that the selling price is discounted. At present, PSALM is conducting its due diligence on Enron to review the planned buyout.

Asisclo Gonzaga, Napocor chief operating officer, and National Transmission Co. (Transco) president, said the Enron people had assured Napocor that, at the moment, the US power giant’s local arm will continue to operate its business here.

The proposed buyout will involve two build-operate-transfer (BOT) power plants, namely: 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. The two plants have a combined estimated value of $250 million.