Napocor threatens to cut off Meralco over P1.37-B debt

So, even Meralco gets a disconnection notice.

State-run National Power Corp. (Napocor) has threatened to pull the plug on Manila Electric Co. (Meralco), Metro Manila’s electricity distributor.

This is because of the Lopez-controlled firm’s refusal to pay P1.37 billion in back bills accumulated over a few years.

If Meralco is disconnected from this source of power, limited outages might take place in the metropolis, Napocor said.

Explaining the situation in a letter to Malacañang, Asisclo Gonzaga, Napocor senior vice president and chief operating officer, said they need the money to pay oil companies.

Oil companies like Petron Corp. and Pilipinas Shell Petroleum Corp. supply bunker fuel, used for firing up Napocor’s power plants and generating electricity.

"Should continued non-payment by Meralco cause Napocor to, in turn, fail to pay its own suppliers, the absence of fuel would automatically shut down Napocor’s generators," Gonzaga stated in his letter to Press Secretary Ricardo Puno Jr.

"Under such a scenario, Napocor will not be able to supply all its customers, and will be forced to disconnect the non-paying ones," Gonzaga continued.

Under its 1994 contract with Meralco, Gonzaga pointed out, Napocor has "the right, subject to not less than seven days advance notice to (Meralco) to discontinue supplying electric services for non-payment of bills and to refuse to resume electric service as long as any amount including any accrued interest remains unpaid."

Reacting to Napocor’s complaint, Meralco treasurer Rafael Andrada explained in a press statement that the non-payment was due to Napocor’s failure to transmit power generated by Meralco’s independent power producers, as Napocor promised in another agreement with Meralco.

Aside from buying electricity from Napocor, Meralco also buys electricity from independent power producers to keep its distribution costs down.

Andrada said Meralco decided to withhold payments to Napocor "to protect the public from unnecessary costs... to keep the price of electricity at its normal level."

Napocor is currently building a power relay substation in Zapote, Las Piñas, which will be used to transmit electricity generated by independent power producers in Sta. Rita and San Lorenzo, both in Batangas, and Mauban, Quezon.

Gregorio Cayetano, Napocor manager for operations control, said the Las Piñas substation is not yet ready for commissioning because it is encountering right-of-way problems. He said the relay station will be completed in June next year.

"The fact that the Zapote substation is not yet operating cannot be construed as inefficiency on our part because the project has encountered serious right-of-way issues," Cayetano said without elaborating.

Meralco’s P1.37-billion bill is said to be part of a prolonged dispute over a deal Meralco entered with Napocor.

Meralco and Napocor signed a 10-year contract in 1994, wherein Meralco will buy 2,500 megawatts from Napocor. However, the deal never got off the ground because the details were never settled.

Malacañang had directed the Department of Energy to intervene in the stalled talks.

Energy Secretary and Napocor board chairman Mario Tiaoqui was instructed by the President to help solve the row between the two companies before the situation gets worse.