Cebu's power situation already affecting business

November 24, 2003 -- Cebu businessmen are no longer just raising alarms about an impending power crisis. Its industrialists have already suggested a concrete and immediate plan to the government -- a sign that a power crisis has already hit the province. The Cebu Chamber of Commerce and Industry (CCCI) will ask President Arroyo to intervene and endorse a plan to transfer two privately owned power barges from Manila to add to Cebu's power capacity.

The President's intervention is needed according to the CCCI because the law prohibits the National Power Corporation from entering into new contracts with independent power producers. The Cebu Private Power Corp. (CPPC) owns two idle barges in Navotas which has a generating capacity of 116 megawatts.

The Cebu business chamber reported the alarming impact of the power situation on business operations in the province as well as on prospective investors. Some foreign investors are reconsidering plans to put up operations in the information and communication technology sector such as call center operations.

Metro Cebu was hit by successive brownouts from Wednesday to Friday last week as supply came short by an average of 15 megawatts. The National Transmission Company said the brownouts were temporary since one of the two coal-fired units on the Salcon Power Corp is undergoing preventive maintenance. Last month, Cebu was also hit with frequent brownouts, also due to various technical problems. On 30 September, the entire islands of Negros and Panay, including parts of Cebu, went powerless for 3 hours.

An article in Philippine Business Magazine (Vol. 10 No. 6) echoed the forecast made by the Department of Energy that the power situation in Visayas will be at a critical situation before the end of the year.

Maynilad ordered to honor concession agreement

November 11, 2003 -- An international arbitration committee ruled that the concession agreement between Maynilad Water Services and the Metropolitan Waterworks and Sewerage System (MWSS) is still in full force and effect. It also ordered the Lopez-led water utility company to pay the government more than P6.7 billion in concession fees covering 32 months, despite the former's plea that it was losing money.

This is a blow to Maynilad's move to extricate itself from the 25-year concession agreement last December, citing six grounds by which MWSS violated their agreement. The arbitration committee ruled that there is no ground for terminating the agreement. And according to their contract with MWSS, the arbitration committee's ruling on the disputes is final and binding on the parties.

Maynilad Water has a performance bond worth US$120 million that MWSS can draw on. However, the amount is not enough to cover the concession fees it owes the government. In the meantime, Maynilad announced it will continue to serve its customers in Metro Manila's West Zone (Pasay, Caloocan, Muntinlupa, Manila, and certain areas in Makati, Quezon City, Valenzuela and Cavite) and is studying available options very carefully.

Benpres Holdings Corp., the holding company of the Lopez family owns 60% of Maynilad while the French firm Ondeo owns 40%.

Low-sulfur diesel available by Nov.1

November 3, 2003 -- Under the Clean Air Act (CAA), sulfur content of diesel products must be reduced from 0.05% from 0.20% by 1 January 2004. But due to an agreement entered into by the oil companies with the energy and environment departments, this CAA provision will be implemented starting 1 November 2003.

The Department of Energy said the agreement is binding since the oil companies signed a contract. Thus, an oil firm selling high-sulfur diesel may be penalized. The DOE is already studying applicable penalties.

Eastern Petroleum, Unioil, Cityoil, Seaoil, and Jetti fast tracked the selling of low-sulfur diesel since late August. Petron, Pilipinas Shell, Total and Flying V also said they started selling CAA-compliant diesel before the November 1 deadline.