Under the letter-agreement, which still has to be approved by the creditors of the Bakun project, the P576-million savings will be realized through the voluntary assumption of the obligations of state-owned National Power Corp. (Napocor) which include the following:P555 million in real property taxes, P16 million for the construction of the Alilem-Sudipen Bridge in Ilocos Sur, and the condonation of around P5 million of accounts receivable.
The Bakun AC project, the first build-operate-transfer hydro power plant in the Phil-ippines, is a joint venture between Aboitiz Equi-ty Ventures (AEV) and Pacific Hydro Ltd. of Australia. This run-of-river project on the Ba-kun River is situated in the Cordillera Central mountain range in northern Luzon, a region that gets considerable rainfall during the year.
According to Edgardo del Fonso, president of the Power Sector Assets and Liabilities Management Corp. (PSALM), "On top of the estimated P576 million savings, additional savings will come in the form of a five percent reduction in nominated capacity for the facility. Luzon Hydro is entitled to nominate 105 percent or 73.5 MW as its nominated capacity and we have agreed to limit it to 100 percent or 70 MW. This will result in lower capacity fees and a reduction of our commitment to purchase this power during this time of surplus power." Out of the 29 IPP contracts under review by a committee led by Energy Secretary Vincent S. Perez Jr., the LHC contract is among the first to be concluded.
Erramon Aboitiz, LHC board chairman and Aboitiz Equity Ventures EVP & COO, said that "LHC’s power purchase agreement with Napocor will remain in effect and will not be changed. We have found a win-win solution wherein Luzon Hydro has been able to help government reduce Napocor’s costs, yet pre-serves the integrity of our contracts satisfying the concerns of our shareholders and credi-tors." He added that this is consistent with LHC’s vision of saving the country precious foreign exchange and supporting the Depart-ment of Energy’s campaign of self-sufficiency through clean and renewable sources of energy.
Del Fonso, Aboitiz and Napocor president Rogelio Murga recently signed the renegotia-ted IPP contract with Energy Secretary Perez witnessing the signing.