NPC: So what if P62-K firm got P956-M deal?
By Donnabelle Gatdula
Tuesday, July 15, 2008
State-owned National Power Corp. (Napocor) yesterday admitted that it has awarded a nearly P1-billion coal contract to Transpacific Consolidated Resources Inc. (TCRI), adding there was nothing wrong if the company had paid-up capital of only P62,500.
The newly appointed chair of the Energy Regulatory Commission denied allegations that her relatives are involved in the controversial coal contract even as she vowed to shield the ERC from “any political intervention.”
Zenaida Ducut was reacting to the July 13 column in The STAR of Federico Pascual which alleged that Leslie and Ressie Ducut of Pampanga were incorporators of TCRI and they bagged the coal contract despite the fact that their obscure company was only three months old and had only P62,500 in paid-up capital.
Ducut said she was not related to the Ducuts in question, and that her husband had told her “he must be with the poor Ducut clan.”
Meanwhile, presidential son and Pampanga Rep. Juan Miguel “Mikey” Arroyo took up the cudgels for the embattled ERC chair but emphasized that if the charges against her were proven, the President will recall her appointment.
“As of now, they are all sweeping allegations. I hope former congresswoman Zeny Ducut would be given a chance to explain her side,” Rep. Arroyo, who inherited the congressional post vacated by Ducut, said.
Napocor corporate communications head Dennis Gana, in a letter sent to The STAR, said: “Napocor did award a coal supply contract worth some P956 million, but not to a single local company. The contract was awarded to a joint venture, where the principal partner is PT Marsitero Marloan Prakarsa, an Indonesian mining company that has a yearly business turnover of between $10 million to $50 million,” He said TCRI, the local partner, is based and registered with the Securities and Exchange Commission (SEC) in Cebu City. It has only moved once from its former office in Quezon City to its current office in Greenhills.
“Since it is a joint venture, there really is no issue or irregularity with TCRI having a paid-up capital of only P62,500. Philippine corporation laws do not even set a limit, cap, ceiling or floor, on the amount of capitalization for local partners involved in a joint venture,” he said.
Gana clarified that Napocor did not hand over or gift TCRI with the contract. The award was made after the joint venture participated in an open public bidding based on the government’s very rigid, strict and meticulous procurement procedures.
The partnership underwent and accomplished all requirements in a pre-qualification process before it was able to join any public bidding, Gana added.
He said this includes submission of authenticated documents that prove their existence, capabilities, track record and corporate performance.
“As a GOCC, Napocor’s procurement is highly regulated by the Commission on Audit, Government Procurement Policy Board, National Economic and Development Authority (NEDA), Department of Energy (DOE), and the Energy Regulatory Commission (ERC),” he said.
Gana said coal procurement follows the Napocor board resolution wherein the company is only allowed to enter into 50-percent spot and 50-percent long-term. Maximum long-term contract is only for three years and price is renegotiated on a yearly basis.
“Napocor also follows the policy set by the DOE that supply should not be taken from any single country source. As per Napocor board policy, the imminent privatization of Napocor generation facilities makes it imprudent to enter into long term contracts,” he said.
Gana also said allegations that the price of the coal contract ballooned, from P320 million to P956.3 million, were not true.
“This is simply not true. The fact is, the joint venture of PT Marsitero and TCRI was awarded contracts for four panamaxes (one panamax is equivalent to 65,000 metric tons), through bidding, as mandated and dictated by pertinent government procurement laws,” he said. “We are very strict on this. We are talking of government funds and knowing how valuable these funds are, we have to safeguard and make sure that they are spent where they are intended and as approved by law.”
”No payment has been made to the Joint Venture of PT Marsitero and TCRI because it has not yet delivered the coal. It has a window of delivery of at the earliest in August 2008,” he said.
Gana also clarified that the contract with the joint venture of PT Marsitero Marloan Prakarsa and TCRI was awarded even before President Arroyo appointed former Pampanga representative Zenaida Ducut as ERC chair.
The new ERC chief hails from Lubao, Pampanga, also the hometown of President Arroyo.
She said she is married to a Ducut and had asked her husband if he was related to the individuals mentioned by The STAR columnist Federico Pascual in his July 13 column.
“My husband told me he was not related to them,” Ducut said. “He told me he must be with the poor Ducut clan.”
Pascual raised the issue of conflict-of-interest against the former Pampanga lawmaker since she will have authority over Napocor, which granted the contract to TCRI.
“They are not my relatives,” she said, but admitted that they may be “my kababayan.”
She also parried allegations that her apparent “ties” with the President and her family, and her alleged “connections” with Bong Pineda, would affect her functions.
She stressed that the ERC has nothing to do with Napocor operations and if the reports about the contract were true, then the deal was forged even before she was appointed to the ERC.
“We (ERC) have no jurisdiction at all over Napocor,” Ducut said.
She also defended her qualifications for the post, saying she worked with the judiciary in various posts, including as a prosecuting fiscal for over five years. She said she also engaged in private legal practice for several years and was a three-term congresswoman in her province.
She said she is now busy updating herself on her responsibilities at the ERC, a quasi-judicial body.
“I assure the people that I will do my job with objectivity, fairness and thoroughness while protecting the public interest,” the new ERC chair said.
She said she will act “immediately and decisively” on issues brought to the ERC.
In an interview after a simple turnover ceremony at the ERC, Ducut said she will review all pending rate cases and consumer complaints and call for the re-study of existing policies pertaining to the fixing of rates and its different components, including systems loss charges and lifeline discounts.
“Give me time to study them and we will address them properly. We will give everyone due respect, fair and reasonable treatment,” the new ERC boss said.
She also vowed to extend proper assistance to ERC employees through training and by increasing their salaries.
“But I would also have to check the budget of the commission, if we have some funds that can be used for their benefits,” she said.
ERC, created by the Electric Power Industry Reform Act (EPIRA), is dependent on Congress for its budget allocation.
At present, ERC is exempted from the Salary Standardization Law (SSL), but its employees are the lowest paid in the electric industry.
ERC is currently regulating such power firms as Napocor, National Transmission Corp. (Transco) and Power Sector Assets and Liabilities Management Corp. (PSALM), whose combined budget for 2003 is P263 billion and combined manpower is 7,601, compared to ERC’s budget of P104 million and 196 workforce.
Mikey to the rescue
“I believe in her genuine concern for the people in improving the energy industry,” Rep. Arroyo said in defense of Ducut.
“I’m sure she would prioritize end-users over and above management abuses by distribution utilities,” the chairman of the House committee on energy said. “She (Ducut) is well-respected in the community.”
Other members of the committee are Mikey’s brother Dato and uncle Iggy, who represent Camarines Sur and Negros Occidental, respectively.
As to allegations that the First Family wanted to rule over the energy industry following Ducut’s forthcoming appointment and his being head of the House energy panel, Arroyo said this is just an allegation of opposition Sen. Panfilo Lacson.
“Alam mo naman si Ping (You know Ping), he is very fond of sweeping allegations against our family. It’s quite normal for him. As far as I’m concerned, the majority nominated me there. I’m doing my job well,” he stressed.
Executive Secretary Eduardo Ermita and Press Secretary Jesus Dureza also came to the defense of Ducut, but hinted that the appointment could still be recalled if the allegations are proven.
They insisted, however, that it is still Mrs. Arroyo’s prerogative.
“The President is very discerning in her appointments and she chooses very well. She is also receptive to suggestions and criticisms so if these allegations are proven, she may reconsider her move,” Ermita said.
“We always find some redeeming value to criticisms, however sweeping and unfair they may be,” Dureza said on negative comments against Ducut and recent appointments of Mrs. Arroyo.
He said the President, by reason of her office, “does not need anyone or an additional office for that matter for the purpose of protecting herself or promoting personal interests as some critical sectors merrily claim.”
He said the residual powers of the presidency are so vast in reach and depth that no additional office or person can further enhance it.
“Moreover, it should not surprise anyone that persons who are close or perceived to be close to the President are appointed,” Dureza said. “The President merely ensures that the team she has to work with are those whom she thinks can perform and can approximate her rigorous demands of performance and diligence.”
“After all, the President, as appointing authority, takes responsibility and either benefits or suffers from the appointees’ performance or lack of it,” he said.
He said the bottom line is the President’s trust and confidence in officials she appoints.
Dureza added that the views of critics are valuable as they are “cautionary in nature and constant reminders that public office, whomsoever it is bestowed, is endowed with public interest, closeness to the appointing authority notwithstanding.” – Delon Porcalla, Paolo Romero