Stop honoring IPP contracts instead of additional rate increase

“Instead of petitioning for a P1.87 rate increase to attract the private sector to come in and invest in the cash-strapped government utility, NAPOCOR should stop honoring its contracts from its Independent Power Producers,” Josua Mata, Secretary General, Alliance of Progressive Labor, said during the picket of APL in front of the National Power Corporation (NAPOCOR) head office in Quezon City this morning.

NAPOCOR has an outstanding debt of 900 billion pesos to its IPP’s at the end of 2003. It keeps on ballooning since NAPOCOR’s IPP contracts stipulate that the government would shoulder any fluctuations in the prices of oil that the IPPs are using while guaranteeing 75%-90% payment of the power produced by the IPP’s. Unfortunately, most of the IPP’s are producing only 10%–25% power while some are producing no electricity at all.

The IPPs first came during the time of Cory Aquino but has been continuously allowed by the government to enter up to this time even though we are already producing more power than what we need since 1994. And in line with its privatization thrusts, the government opened NAPOCOR to private ownership with the passage of the EPIRA law in 2001.

Now, the government is going to assume 500 billion pesos worth of NAPOCOR total debts amounting to P1.3 billion in which we the consumers are bound to pay through the taxes we pay. Ironically, the government is saddled with more than 200 billion pesos of budget deficit that it plans to resolve by imposing additional taxes that include increasing the value added tax to 11–15%.

“The move to assume the NAPOCOR debt is an obvious attempt to entice capitalists that investment risks will be shouldered by the government thus guaranteeing super profits for the investors,” Mata added.

The APL vows to continue campaigning against the rate increase petition and calls on the government to reverse its privatization program for the interest of the Filipino people.

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