Statement of Mr. Nonito R. Bernardo, Jr, Vice President for Finance, in response to the article written by The Daily Tribune reporter Riza Recio entitled, "Meralco blamed for Masinloc flop," on 6 July 2006

08 Jul 2006

We write to clarify the news item written by Ms. Riza Recio (Meralco blamed for Masinloc flop) which appeared in The Daily Tribune on July 6, 2006.

  • Pursuant to Section 67 of the EPIRA and Rule 30 of the IRR, the National Power Corporation (National Power) shall file with the ERC for its approval of transition supply contracts negotiated with distribution utilities. To date, 118 electric distributors have signed power sales contracts with National Power.

  • As PSALM was preparing for the bidding of power plants, negotiations between a joint National Power/PSALM team and Meralco were iniated around 2003/2004. National Power/PSALM team gave Meralco an initial offer of P3.60 per kilowatt-hour (kWh) which was linked to the price of fuel and other indices. Please note that this is 80 centavos less than the average regulated rate of around P4.40 per kWh in Luzon before the spot market began operations. However, no supply contract between National Power/PSALM and Meralco had been concluded.

  • Despite the absence of a supply contract, PSALM decided to bid out Masinloc in December 2004 as there were indicators of investor interest in the plant even if it were sold on a purely merchant basis.

  • After the December bidding, it was now up to the winning bidder, YNN Pacific Consortium, to obtain on its own a supply contract(s) with electric distribution utilities/electric cooperatives should it require such contract(s). National Power or PSALM were not in any way involved in any of these particular negotiations.

Thank you very much for providing us the space to make these clarifications.

Truly yours,

Vice President for Finance
Asset Management and Electricity Trading
Power Sector Assets and Liabilities Management Corp.

Strategic Communications and Partnership Division
Tel. No. (632) 9029067