Press Release
May 1, 2007

PIMENTEL SLAMS INEPT NAPOCOR
OFFICIALS OVER COAL SUPPLY PROBLEM

Senate Minority Leader Aquilino Q. Pimentel, Jr. (PDP-Laban) scored top officials of the state-owned National Power Corporation (Napocor) for their failure to stock up enough coal to meet higher fuel demand power generation during the summer months when its hydroelectric plants are shut down due to low water levels in dams, lakes and rivers.

Pimentel said this inexcusable lapse on the part of Napocor management has fueled suspicion of an artificial shortage of coal in its inventory to justify the importation of this fuel at atrociously high prices that will benefit some people tasked with fund-raising for the administrations election campaign.

Napocor is creating an emergency to justify high-priced coal-buying, giving rise to suspicion of fund-raising for election. Pimentel said.

This critical oil supply problem could have been avoided considering that the status of the countrys coal is common knowledge among energy officials.

The opposition senator issued the statement in the face of reports that Napocor has awarded several coal procurement contracts in March-April this year, contrary to its earlier claim that the company had secured stocks last December.

Pimentel said the frantic effort to meet the coal requirements of Napocor at this late stage is proving too costly to the power firm because of prevailing higher prices compared to those last year.

Napocor reportedly awarded a contract for five shipments of coal at $84 per metric ton in early April to the Australian firm Hunter-Valley Coal Corp. Pty Ltd. at P312.2 million per shipment. The coal supply is intended for the Masinloc plant in Zambales from May 13 to 19.

Pimentel noted that at $84 per metric ton of Australian coal, this is much higher than the prevailing market price of $64 per MT. This is also triple the procurement cost for coal at $28 to $30 MT for power utility firms with long-term contracts.

According to reports, Napocor also awarded three separate coal procurement contracts for $65 to $68 per metric ton to PT Kaltim; PT Andalan and PT Baramulti. This coal is meant for the power plant in Pagbilao, Quezon.

Equally disturbing, Pimentel said, was that Napocor will have to borrow $500 million just to secure its fuel needs and meet other generating expenses this year.

He said the consumers and customers of Napocor deserve an explanation from Napocor officials on why they failed to work out long-term coal supply contracts in order to avail of lower prices long before the onset of the summer months to head off a fueled shortage.

Pimentel said it is the height of incompetence and lack of foresight on the part of the Napocor management not to have anticipated the sharp increase in power demand during the summer months especially in light of the El Nio phenomenon and global warming that have caused the rapid drop in water levels in inland bodies of waters that has rendered hydroelectric plants inoperable.

As a consequence of the blunders of Napocor officials, the consumers will suffer a lot not only from higher power rates due to the higher cost of power generation but also from occasional power brownouts due to the precarious state of fuel supply, he said.

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