The Burning Coal Issue
Napocor gives a summary of imported coal deliveries for five coal-powered plants with an average price per MT of $50.15 as cost of coal and $15.39 as freight/delivery cost. These plants are located in Pagbilao, Quezon; Sual, Pangasinan; Naga, Cebu; Masinloc, Zambales and in Batangas.
Is the coal being purchased by the government for its power plants overpriced? This nagging question has been at the back of the public mind long before the outbreak of the controversy over the government’s plan to take over or change the management of the Manila Electric Co. and transfer it from the Lopezes to other power firms by breaking up its franchise?
Consumers are curious to know the truth because ultimately, they are the ones who suffer from any bloated price of coal which the National Power Corp. reportedly imports at a cost of about P20 billion a year. In Luzon, coal-fired power plants produce close to 35 percent of the total kilowatt-hours of power each year.
Some congressmen and cause-oriented groups have blamed a so-called Napocor mafia for the alleged overprice for which the latter allegedly get fat kickbacks from unscrupulous suppliers. Members of Congress have vowed time and again to investigate the alleged scam, but they have conveniently forgotten to do so up to now.
You must have read a one-page ad in the Business Mirror on May 12 showing that Napocor supposedly imports coal at $109 per metric ton while the Quezon Power Philippines Ltd. supposedly buys the fuel for only $64 per MT—a difference of $45. QPPL was identified by Winston Garcia, president and general manager of the Government Service Insurance System (which has 23 percent share in Meralco) as an independent power producer owned by Meralco. But Meralco corrected this by saying that QPPL is an American power firm.
The unmistakable inference is that Napocor’s coal import was fraught with anomaly. You can deduce this from the ad’s headline which asked “May Bukol ba ang Presyo ng Napocor Electricity?” In our local lexicon, the word, the word bukol is widely understood to mean kickback.
Note that the ad did not name the supplier and country from which the coal is purchased. Neither did the ad state the specific dates when the imports were made, or will be made, although it states that these were supposed to be in 2008. These data are important because the price of coal differs according to the source (Australia, China and Indonesia are the leading sources), and the date of importation, since the price also depends on the supply-and-demand situation prevailing at the time the coal is ordered.
Other factors that determine the price are weather conditions, freight rate and the availability of freight and related transport facilities. Those who placed this particular ad may have realized that the absence of these data could give rise to a credibility problem. And possibly because of this, another ad was published three days later, or on May 15, in the same business daily, this time focusing on 2007 coal imports.
This time, the ad cited specific dates of solicitation of supply. The given data put “Total Volume per metric ton” at 325,000 for March 29, 2007; 65,000 for April l8, 2007; and 64,000 for July 20,2007. What seems to be puzzling though, is that the costs given for the Contract Unit Price (US$/MT) were the same price for the three coal purchase transactions last year.
At the bottom of the ad, the price of coal bought by Napocor was again given at $109 per MT and that for the Quezon Power at $64 per MT—exactly the same prices cited in the first ad that supposedly dealt with the 2008 market situation.
The second ad also gives a supposed total overprice of P548.08 million for March 29; P50.16 million for April 18 and P78.11 million for July 20 involving the total contract price of P1.38 billion; P217.47 million and P245.26 million, respectively. The trouble is that those who prepared and placed the ad did not explain how they arrived at these figures. Did they expect the public to swallow these figures hook, line and sinker without explanation at all?
On the other hand, Napocor claims that for 2007, its average price index of coal imports per metric ton was $56.38 for Indonesia: $72.99 for China: and $64.82 for Australia.
Still for 2007, Napocor gives a summary of imported coal deliveries for five coal-powered plants with an average price per MT of $50.15 as cost of coal and $15.39 as freight/delivery cost. These plants are located in Pagbilao, Quezon; Sual, Pangasinan; Naga, Cebu; Masinloc, Zambales and in Batangas.
What was omitted or overlooked in the ads critical of Napocor was that the price, grade and quality of coal are major factors that determine the price of coal. These are things that only engineers and other technically equipped people can understand.
According to Napocor, the regional coal supply situation has lately become critical. This it attributes to the increasing demand for bituminous coal from India, China, Japan, Korea and Taiwan, among other factors. Indonesia’s reserves of bituminous coal are reportedly being depleted at an alarming rate. Changes in global weather have wreaked havoc on the production of coal in several coal-exporting countries. Snow storms have compelled China to impose an export ban on coal that was lifted only last March.
On the matter of prices, the world market price of coal in 2007 rose to more than $100 per MT. Reports said the price in the international market has shot up to $160 per MT this year.
Napocor has been severely criticized for failing to enter into long-term coal supply contracts when markets are calmer that would have resulted in huge savings.Why, it is often asked, does Napocor prefer to buy coal on a per shipment basis which naturally costs higher? This has fueled suspicion that this poor practice is resorted to because of the commission paid for every shipment delivered.
This is Napocor’s reply to this criticism: “While the power firm was forced to buy coal on per-shipment basis on certain situations, it has expressed preference for long-term contracts. It is seeking a review of its procurement policy to enable it to enter into such an arrangement for its five coal-fired plants.’
“It is true that long-term contracts may result in lower prices. Napocor is presently reviewing the policy to procure more than the existing 50 percent of its coal requirements through long-term contracts,” Napocor said adding that it will request for exemption from the Government Procurement Reform Act. Fel Maragay, First Crack - Manila Standard Today
Consumers are curious to know the truth because ultimately, they are the ones who suffer from any bloated price of coal which the National Power Corp. reportedly imports at a cost of about P20 billion a year. In Luzon, coal-fired power plants produce close to 35 percent of the total kilowatt-hours of power each year.
Some congressmen and cause-oriented groups have blamed a so-called Napocor mafia for the alleged overprice for which the latter allegedly get fat kickbacks from unscrupulous suppliers. Members of Congress have vowed time and again to investigate the alleged scam, but they have conveniently forgotten to do so up to now.
You must have read a one-page ad in the Business Mirror on May 12 showing that Napocor supposedly imports coal at $109 per metric ton while the Quezon Power Philippines Ltd. supposedly buys the fuel for only $64 per MT—a difference of $45. QPPL was identified by Winston Garcia, president and general manager of the Government Service Insurance System (which has 23 percent share in Meralco) as an independent power producer owned by Meralco. But Meralco corrected this by saying that QPPL is an American power firm.
The unmistakable inference is that Napocor’s coal import was fraught with anomaly. You can deduce this from the ad’s headline which asked “May Bukol ba ang Presyo ng Napocor Electricity?” In our local lexicon, the word, the word bukol is widely understood to mean kickback.
Note that the ad did not name the supplier and country from which the coal is purchased. Neither did the ad state the specific dates when the imports were made, or will be made, although it states that these were supposed to be in 2008. These data are important because the price of coal differs according to the source (Australia, China and Indonesia are the leading sources), and the date of importation, since the price also depends on the supply-and-demand situation prevailing at the time the coal is ordered.
Other factors that determine the price are weather conditions, freight rate and the availability of freight and related transport facilities. Those who placed this particular ad may have realized that the absence of these data could give rise to a credibility problem. And possibly because of this, another ad was published three days later, or on May 15, in the same business daily, this time focusing on 2007 coal imports.
This time, the ad cited specific dates of solicitation of supply. The given data put “Total Volume per metric ton” at 325,000 for March 29, 2007; 65,000 for April l8, 2007; and 64,000 for July 20,2007. What seems to be puzzling though, is that the costs given for the Contract Unit Price (US$/MT) were the same price for the three coal purchase transactions last year.
At the bottom of the ad, the price of coal bought by Napocor was again given at $109 per MT and that for the Quezon Power at $64 per MT—exactly the same prices cited in the first ad that supposedly dealt with the 2008 market situation.
The second ad also gives a supposed total overprice of P548.08 million for March 29; P50.16 million for April 18 and P78.11 million for July 20 involving the total contract price of P1.38 billion; P217.47 million and P245.26 million, respectively. The trouble is that those who prepared and placed the ad did not explain how they arrived at these figures. Did they expect the public to swallow these figures hook, line and sinker without explanation at all?
On the other hand, Napocor claims that for 2007, its average price index of coal imports per metric ton was $56.38 for Indonesia: $72.99 for China: and $64.82 for Australia.
Still for 2007, Napocor gives a summary of imported coal deliveries for five coal-powered plants with an average price per MT of $50.15 as cost of coal and $15.39 as freight/delivery cost. These plants are located in Pagbilao, Quezon; Sual, Pangasinan; Naga, Cebu; Masinloc, Zambales and in Batangas.
What was omitted or overlooked in the ads critical of Napocor was that the price, grade and quality of coal are major factors that determine the price of coal. These are things that only engineers and other technically equipped people can understand.
According to Napocor, the regional coal supply situation has lately become critical. This it attributes to the increasing demand for bituminous coal from India, China, Japan, Korea and Taiwan, among other factors. Indonesia’s reserves of bituminous coal are reportedly being depleted at an alarming rate. Changes in global weather have wreaked havoc on the production of coal in several coal-exporting countries. Snow storms have compelled China to impose an export ban on coal that was lifted only last March.
On the matter of prices, the world market price of coal in 2007 rose to more than $100 per MT. Reports said the price in the international market has shot up to $160 per MT this year.
Napocor has been severely criticized for failing to enter into long-term coal supply contracts when markets are calmer that would have resulted in huge savings.Why, it is often asked, does Napocor prefer to buy coal on a per shipment basis which naturally costs higher? This has fueled suspicion that this poor practice is resorted to because of the commission paid for every shipment delivered.
This is Napocor’s reply to this criticism: “While the power firm was forced to buy coal on per-shipment basis on certain situations, it has expressed preference for long-term contracts. It is seeking a review of its procurement policy to enable it to enter into such an arrangement for its five coal-fired plants.’
“It is true that long-term contracts may result in lower prices. Napocor is presently reviewing the policy to procure more than the existing 50 percent of its coal requirements through long-term contracts,” Napocor said adding that it will request for exemption from the Government Procurement Reform Act. Fel Maragay, First Crack - Manila Standard Today
Labels: coal fired plant, zambales
posted by OlongapoCity Zambales at
6:08 AM
0 Comments:
Post a Comment
<< Home