ArchivesSeptember 2010Bizmen ask Noreco: seal the deal

Bizmen ask Noreco: seal the deal

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Negros Oriental businessmen have called on the two Negros Oriental Electric Cooperatives (Noreco 1 and Noreco 2) to seize the offer of the Green Core Geothermal Inc. to supply power to the two electric cooperatives in Negros Oriental once their contract with the National Power Corporation expires in December.

The businessmen made the call during a power forum organized by the Negros Oriental Chamber of Commerce and Industry Inc. last Wednesday at the Bethel Guest House, which Nocci interim president Edward Du said was called to find a solution to the problems of insufficient power supply and low voltage affecting all electric consumers in the province.

Frederick Dael, corporate member of Foundation University and managing director of CEOs, Inc., said the economy of Dumaguete is growing faster than the capacity of the electric company to provide power.

“I guess many Dumaguetenos are willing to pay a higher price for reliable power,” Dael said, as he bared that an increase in the cost of electricity will still be much lower than using diesel power generators.

Dael said the Silliman Medical Center, for instance, generates its own power during brownouts at a cost of from P14 to P16 per kilowatt hour. Noreco 2 residential consumers pay a rate of almost P7 per kwh.

“Even, say, at P10 per kilowatt hour, that will still be cheaper than P16,” Dael said.

Dael reminded the power stakeholders that the BPO industry in Negros Oriental, which pumps in millions of new money into the economy every month, is dependent on power. “If we don’t have enough power, these businesses will go away and we haven’t realized the impact of such a scenario.”

Green Core, which bought the National Power Corp. power plant in the town of Valencia last year, is offering to sell power to both Noreco 1 and Noreco 2 at P4.70 per kwh. The Noreco 2 buys power from Napocor at a subsidized rate of P3.82.

Most of the businessmen present in the four-hour forum which lasted until 11 p.m. appeared to agree with Dael’s suggestion for the Noreco to seal the deal, even as the two electric cooperatives pointed out that the Green Core offer is no guarantee that there would be no more rotating brownouts.

“Contracting with Green Core is not a solution to the crisis because they also have load shedding,” said Engr. Chito Lozano, Noreco 2 engineering services manager. Engr. Elvin Dennoyo, chief of the Noreco 1 operations and maintenance division, also pointed out that both the NPC and Green Core have been resorting to load shedding in the areas they serve due to limited generation capabilities.

“We are now on equal footing to negotiate with Green Core,” Lozano said. 23 electric cooperatives in the Visayas, which have banded together in an effort to improve their bargaining position, want to buy power from Green Core at between P3.00 and P3.50. “The price of geothermal energy today is only P2.80. The price of P4.70, which Green Core is offering, is too high because it is pegged on the price of coal energy,” said a source privy to the negotiations, who asked not to be named.

Lozano said the five electric cooperatives in Negros island have a plan to invite investors to put up a 50 mw diesel plant in the island to be used solely to address shortages during peak hours.

The contract between both Norecos and the Napocor will expire on December 30, although Napocor has already assured the two Negros Oriental electric cooperatives that they will extend their supply contracts for one year. Napocor will supply Noreco 2 with 16.6 MW next year, and Noreco 2 are in negotiations with Green Core and Kepco for an additional 14 MW.

Ricky Tantoco, president and chief operating officer of the Energy Development Corporation, of which Green Core is a subsidiary, said their offer to the two Norecos has been on the table for some time.

Tantoco said the Green Core offer is the best option for Noreco because of its close location. He said that if Noreco buys from them, they do not have to experience the present problem of low voltage. There are also fewer chances of power interruptions.

Tantoco also said that the electricity they will sell to Noreco will actually be cheaper because power from geothermal energy is VAT-free and there will be fewer transmission costs and power losses.

Arman Lapus, vice president of First Gen, another Lopez-owned company, said now is a good time for Noreco to enter into a contract with them because other power companies in Cebu are interested on buying whatever they can supply at 60 percent load factor.

“The name of the game is contracting. If you don’t have a contract, you’ll be the first [to have load shedding],” Lapus said.

Gov. Agustin Perdices and Dumaguete Mayor Manuel Sagarbarria, on the other hand, agreed that the need of the hour is for Noreco to get stable power at reasonable cost. Perdices also volunteered to help the electric cooperatives evaluate their options in order to come up with the best solution to the power problem.



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