CalEnergy open to proposal to extend contract

California Energy International Services Inc. (CalEnergy) is open to the proposal for a possible extension of its contracts with the PNOC-Energy Development Corp. (EDC).

"That’s an option that we would like to look at to resolve the issue," CalEnergy vice president Robert G. Eugenio said in an interview with The STAR.

But he said the proposal for a buy out may not be feasible. "We are not inclined to do that (sell the contracts to EDC)," he said, reacting to EDC president Sergio Apostol’s California-based energy firm.

Eugenio admitted that they have also been approached by ABN-Amro to help them in finding ways to resolve the issue between the two firms. "We have been approached by ABN-Amro. But this is as far as it goes. No decision yet on their part," he said.

Apostol earlier reported that they have commissioned ABN-Amro and Credit Suisse to serve as the third party in the possible negotiations between the two power firms.

Eugenio explained that CalEnergy and EDC are now in the midst of two arbitration processes involving two build-operate-transfer (BOT) contracts for Malitbog and Mahanagdong geothermal power plants.

The two firms are disputing a discrepancy in the minimum required steam that EDC should have been delivering to CalEnergy. EDC supplies steam to CalEnergy-run power plants. Over the five year-period, the contested power has now reached 10 MW.

The second arbitration involves its 10-year BOT contract for the three-unit 231-megawatt geothermal power plant in Leyte (Malitbog) which started in 1997. After 10 years, the foreign power firm will transfer the operation of the plant to EDC.

Apostol earlier said that they want to extend the contract with CalEnergy to reduce its monthly amortization from $14 million to $20 million to only $4 million due to financial constraints. – Donnabelle Gatdula