"Later this year, we will be able to finish the 350-megawatt (MW) Kalayaan facility," CBK Power president and chief executive officer Gerard Katz said.
Katz said they have already spent some $400 million of the total $470 million project cost for the rehabilitation of the 750-MW CBK (Caliraya-Botocan-Kalayaan) hydropower facility in Laguna.
Katz said the rehabilitation program is expected to proceed as scheduled after the company resolved the renegotiation of its contract with the government, particularly with the National Power Corp. (Napocor) and Power Sector Assets and Liabilities Management Corp. (PSALM).
"Our concession agreement with the PSALM/Napocor resulted to the reduction in fees and lowering of obligation of government," Katz said.
Last June, the government successfully renegotiated its contract with CBK Power resulting in savings of $96 million or approximately P5 billion.
PSALM president Edgardo del Fonso said the global settlement with CBK Power will yield savings of approximately $95 million in nominal terms. This includes CBK Power’s concession to waive its right to collect from Napocor the last four installments, amounting to $26 million, due on the security deposit.
The $70-million security deposit was effectively an interest-free loan which CBK Power extended to Napocor.
Del Fonso said under the agreement, CBK Power agreed to waive part of its claims for capital recovery fees as well as the operation and maintenance (O & M) fees on Kalayaan Stage II until December 2003.
CBK Power, on the other hand, agreed to provide Napocor free of charge for any electricity delivered above the minimum guaranteed power for a period of 30 months. The agreement is subject to consent of CBK Power’s lenders.
"This settlement benefits both parties and will eventually help reduce power rates," Del Fonso said. "The agreement will not result in any stranded contract costs," he added.
The CBK complex is considered a critical and indispensable component of the Luzon grid. Given its start-up capability, the CBK pumped-storage power plant can help reduce the incidence of prolonged power blackouts.