PNOC-EDC wins arbitration case against CalEnergy

The Philippine National Oil Co.-Energy Development Corp. (PNOC-EDC) won four out of five arguments in an arbitration case against the US-based California Energy International Services Inc. (CalEnergy), PNOC-EDC chairman and president Sergio Apostol said yesterday. The Arbitration Tribunal, based in Australia, has ruled three claims in favor of the state-run geothermal company.

But the Arbitration Tribunal based in Australia ordered PNOC-EDC to pay CalEnergy a total of $13 million for undelivered steam covering the period July 1999-July 2002.

"Although we will be paying them $13 million, we won in four grounds. This means that out of the five arguments, the High Tribunal ruled four in favor us. The decision sets the principles upon which both firms will agree," Apostol said.

The $13 million will cover for the disputed 11 MW of undelivered steam (221 MW as claimed by CalEnergy as against 210 MW claims of EDC).

Apostol said the EDC and CalEnergy may likely go back to arbitration since the latter ruled for the period of 1999-2002 only. "We don’t know what will happen for the period after July 2002. Maybe we can seek the Arbitration Tribunal again to settle the same issue to cover for the rest of the cooperation period," he said.

He said on the second subject of arbitration on outages, the Tribunal ruled that PNOC-EDC’s claim is correct and CalEnergy will have to pay $2 million to the former. Aside from this, CalEnergy will have to shoulder all the litigation costs and fees amounting to about $2 million including all the expenses related to the arbitration case such as travel expenses.

On the steam efficiency production payment, CalEnergy will pay 60 percent more to PNOC-EDC if the latter will prove that it is able to provide efficient and high quality steam that may result in more power generation. Computation of this efficiency payment will be subject to steam availability.

On the issue of preventive maintenance, the court ruled that PNOC-EDC will pay an equivalent of 20 days minimum instead of 45 days minimum as claimed by CalEnergy.

PNOC-EDC has an existing 10-year BOT contract with CalEnergy involving three geothermal power plants in Leyte. The three plants have an aggregate capacity of 462 megawatt.

Before the arbitration court released its ruling, PNOC-EDC had been paying some $20 million in penalty for its failure to fully deliver the required steam.