House committee backs Napocor position on sale of Mirant’s assets in RP

The House committee on energy supported yesterday the stance of the National Power Corp. (Napocor) that Mirant Corp. should seek prior consent before selling its interests in Mirant Philippines Inc.

During a House inquiry on the sale of Mirant’s Philippine assets yesterday, Lanao del Norte Rep. Alipino Cirilo V. Badelles, who chairs the committee, said "this representation supports the bid for Napocor consent".

Badelles, in backing up Napocor’s stand, pointed out that the assets of Mirant are of public interest as these constitute 30 percent of the power of the Luzon grid. Mirant has more than 2,000-MW capacity.

The House body’s stance also gave weight to the argument raised by Napocor president Cyril del Callar that the existing contracts between the two firms call for a consent.

Del Callar specifically cited the energy conversion agreement (ECA) for the Sual power project and contract for the supply of electricity for the Pagbilao power project. Sual and Pagbilao are owned by Mirant and are independent power producers (IPPs) of Napocor.

Testifying before the committee, del Callar said that the Napocor "will invoke the law "in asserting our consent under the Build-Operate-Transfer Law."

He noted that Article 19.2 of Napocor’s ECA with Mirant states that the contract may not be transferred without consent. Atlanta-based Mirant Corp. had announced in July that it would be selling its Philippine assets to concentrate its operations on the US market.

Mirant Philippines president Jose Leviste Jr., for his part, said that the company will seek the consent if and when needed.

"It is foolish to ask for consent when it is not required and it is foolish not to ask for consent when it is required," Leviste said. "Our position has been the same. If a consent is required, we will study and ask for it."

Leviste also assured Napocor that they would find a buyer that will be able to handle the operations of Mirant Philippines properly.

"We will find a buyer who can not only maintain existing capacity but can also expand operations of Mirant. The final buyer will have the same capability as Mirant or even better," Leviste said.

Badelles also asked Mirant on its severance plan for employees who may be affected by the sale.

In response, Leviste said Mirant has an existing severance package for employees that would give them 2.5 months of pay for every year of service should they be separated.

However, a source, speaking on behalf of the Mirant employees, said that this package is non-binding on the new owners.