Japanese traders concerned over review of IPP contracts

The Japanese Chamber of Commerce and Industry of the Philippines Inc. (JCCI) expressed concern yesterday over the government’s decision to review the contracts with the independent power producers (IPPs).

JCCI, however, said they support the government’s efforts in bringing down the cost of electricity through reforms in the power industry.

The Japanese group, however, questioned why the government came about terming the IPP contracts as "onerous or bad contracts" in the first round of the review process when there was no pre-set or clear guidelines on the conduct of the review.

JCCI said the Japanese-IPP companies have appealed that the conduct of the IPP contract review be made in a transparent and straight-forward manner so that well-meaning Japanese business entities who are mostly JCCI members are not unjustly marked or tagged as bad businessmen.

"If the government needs to intervene in this sector to protect the public good, let such intervention be reasonable and fair," it said.

Japanese companies involved in the power sector were among the first to heed the government’s call to invest in power generation under the build-operate-transfer (BOT) and build-operate-own (BOO) schemes at the height of debilitating power outages in the early 1990s.

It said the JCCI member-companies have continuously been supported by the Japan Bank of International Cooperation (JBIC) and the Ministry of Economy, Trade and Industry of Japan to make investments in IPP projects in the Philippines.

According to JCCI, all IPP contracts went through strict bidding procedures and were based on a model BOT/purchased power agreement (PPA) contract that had been pre-approved by most foreign and local lending institutions and all government regulatory agencies.