Definitions

power service

National Power Corporation

The National Power Corporation (Filipino: Pambansang Korporasyon sa Elektrisidad), also known as the NPC or Napocor, is a state-owned company that serves as the largest provider and generator of electricity in the Philippines. It is also the principal power provider for Manila Electric, the only power distributor in the Metro Manila area.

Napocor is also the country's largest corporation in terms of revenue, though profitability is a problem. Allegations have been made that the company engages in unlawful accounting practices, causing the poor profitability. This is still to be proved. Others argue that unprofitability is just due to the economic environment.

History

Creation

The National Power Corporation was created under Commonwealth Act No. 120 approved by President Manuel L. Quezon on November 3, 1936. The law nationalized the hydroelectric industry and reserved for the use of NPC, all streams, lakes and springs in the Philippines where power may be developed, subject to existing rights. The corporation was originally organized as a non- stock public corporation under Commonwealth Act No. 120. In 1960, however, under Republic Act No. 2641, it was converted into a stock corporation, wholly government-owned, with a capitalization of PHP100 million.

Revising the Charter

The authorized capital stock was increased to PHP250 million under Republic Act No. 3034 passed on June 17, 1961 and was further increased to PHP300 million under Republic Act No. 4897 approved on June 17, 1967. A major event in the corporate existence of the NPC was the passage on September 9, 1971 of Republic Act. No.6395 which gave birth to a revised charter for NPC. Under the revised charter, the activities and functions of the corporation were decentralized and carried out by three regional offices to be established in Luzon, Visayas and Mindanao. The charter, likewise, extended the corporate life of NPC to the year 2036.

NPC placed in charge of Electrifying the Philippines

With the government’s aim of promoting the economic welfare of the country through the attainment of total electrification, especially in rural areas, Presidential Decree No. 40 was issued on November 7, 1972 for the setting up of island grids with central/linked-up generating facilities and cooperatives for the distribution of power. The NPC, as the authorized implementing agency of the state, was entrusted with the responsibility of setting up transmission line grids and the construction of associated generating facilities in Luzon, Mindanao, and major islands of the country, including the Visayas.

In January 1974, President Ferdinand Marcos issued Presidential Decree No. 380 placing the NPC directly under the Office of the President. The move was intended to make the NPC a more efficient implementing arm of the government in the conservation and utilization of water resources and in the total electrification of the country. The Decree further boosted NPC’s capitalization to PHP2,000 million and its principal indebtedness, exclusive of interest, to PHP3,000 million.

In December 1975, pursuant to the continuing effort of the President to make the government machinery more attuned and responsive to the needs of the service and of the people, the President decided to attach the NPC to the Department of Public Works, Transportation and Communication. The transfer was effected by Letter of Implementation No.31 dated December 11, 1975, pursuant to Presidential Decree No.830 dated November 27, 1975 which extends ‘flexible and continuing authority to the President to restructure the Office of the President.”

Increasing capitalisation

The latest Presidential action giving added impetus to the corporation in the implementation of its power development program is embodied in Presidential Decree No.938 issued on May 27, 1976 which further increased NPC’s capitalization to PHP8,000 million and its principal indebtedness to PHP12,000 million. It also authorized NPC to contract foreign loans of up to U$4,000 million. The corporation’s accelerated offers to tap possible sources of power, particularly its entry into nuclear power development, necessitated greater strength and vigor in its financial capacity. On October 6, 1977, with the creation of the Department of Energy under Presidential Decree No. 1206, the NPC was attached to the new department for purposes of policy coordination and integration with sectoral programs.

In a move which underscored the critical importance of power to the country’s economic progress, and in a show of confidence in the capability of NPC men to rise to the challenge of the times, President Marcos increased the capitalization of NPC to PHP50,000 million. The record-setting action of the President was made through the issuance of Presidential Decree No.1360 on April 24, 1978, which effectively established the NPC as the biggest corporation in the country.

The increase in NPC’s capitalization to PHP50,000 million was deemed imperative to enable NPC to pursue its accelerated power expansion program involving the construction of generation facilities in Luzon, Visayas and Mindanao and the setting up of appurtenant transmission line grids. Under a previous decree, (P.D.No.938) issued on May 27, 1976, the capitalization of NPC was fixed at PHP8,000 million while the ceiling on foreign borrowing was pegged at U$4,00 million. These amounts, it was believed, would no longer be sufficient by the year 1987 to enable NPC to successfully pursue and complete its power expansion program.

The increased in capitalization is expected to afford a greater degree of corporate flexibility in the implementation of the power program, as well as in corporation management. In a simultaneous development, the president appointed Gabriel Y. Itchon as Deputy Minister of Energy and concurrently president and chief executive officer of the National Power Corporation, the first ever to be appointed in such capacity in the then 43-year history of the corporation. Under P.D. No.1360, the designation of President replaced that of the General Manager as head of the office. Along with the appointment of Itchon as NPC president were the appointments of top management men to the positions of senior vice president, vice president, and department manager as part of the reorganization move to make the corporation more responsive and attuned to the needs of the service and the demands of the times.

Take-over of Meralco

In November 1972, when the President issued Presidential Decree No. 40, the National Power Corporation was authorized “to own and operate, as a single integrated system, all generating facilities supplying electric power to the entire area embraced by any grid set up by NPC.” Contemplated to be integrated in the system were all Meralco generating units, and thus began a long drawn-out negotiation for the sale and turnover of these units to the government at terms and conditions acceptable to all parties.

Finally, on June 11, 1978, such negotiation reached a successful climax with the signing of a contract between the government and Meralco for the purchase of the latter’s power-generating units at a total cost of PHP1,100 million. The contract was signed by Finance Minister Cesar E.A. Virata, representing the government, and Cesar C. Zalamea, chairman of Meralco, with Energy Minister and NP Board Chairman Geronimo Z. Velasco, Energy Deputy Minister and NPC President Gabriel Y. Itchon, IBP Assemblyman Emilio M. Abelo, Sr. and Meralco Treasurer Antonio Ozateta as witnesses.

The government purchase of the thermal plants of Meralco was in line with the NPC policy to centralize all generating capacities in Luzon under its operations as part of the unification of the so-called Luzon grid. Such centralization is aimed at providing energy throughout the Philippines and building up additional generating capacity for electricity in pursuance of the government objective of total electrification of the country.

Meralco units covered by the initial sale are those of Malaya 1 in Pililia, Rizal; Gardners 1 and II and Synders 1 and II in Sucat, Paranaque, and fuel storage facilities in San Pascual, Batangas. Negotiations for the Meralco sale began in 1975 when Meralco approached the government for assistance in view of financial problems that made it difficult for Meralco to meet its huge debt service requirements. Consequently, an inter-agency government panel was formed to conduct valuation studies.

On August 11, 1975, the first memorandum agreement between the government and Meralco was signed by then Executive Secretary Alejandro B. Melchor, Jr. and former Meralco Chairman Emilio M. Abello, Sr. Through the years, the composition of the government panel underwent several changes brought about by retirements from service, shifts in assignments and appointments of technical men. Representations for NPC started with Ramon R. Ravanzo in 1975, then to Conrado D. del Rosario later that year, and on to President Gabriel Y. Itchon.

The historic EDSA revolution in February 1986 swept Corazon C. Aquino into power becoming the first woman president in Asia. In 1986, NPC President Gabriel Y. Itchon retired from the government service. President Aquino appointed former NPC General Manager Conrado D. del Rosario as the new NPC president who assumed office from May 1986 to November 1987. Del Rosario was replaced by Ernesto M. Aboitiz when the latter was appointed by President Aquino as NPC president in November 1987.

NPC takes over other power generators

The most significant achievement of NPC in 1988 was the signing of a memorandum of agreement with the National Electrification Administration (NEA) for the takeover by NPC of the generation facilities of electrical cooperatives in the remote islands of the archipelago. President Aquino’s directive pegged electricity rates nationwide to no more than PHP2.50 per kilowatt-hour and impelled NPC to take over the electricity production activities of cooperatives in the small islands and isolated areas.

As of April 1991, the NPC has taken over the generation facilities and technical operation of various electric cooperatives of 26 remote islands of the archipelago. Fully supportive of the government’s policy of encouraging private sector investments, the NPC has finalized in 1989 the implementing rules and regulations of Executive Order No.215, which allows private investors to participate in electric power generation through schemes such as Cogeneartion, Build-Operate Transfer (BOT), and Build-Own-Operate (BOO). This directive bolsters the national policy of encouraging active private sector involvement in the major economic activities of the country, recognizing that the private sector can be a partner in nation-building.

Increase in generator capacity

In addition, proposals from various BOT and BOO proponents were entertained in 1988 and in early part of 1989. This culminated in the signing by end-1988 of a BOT agreement between the NPC and Hopewell Energy Management Limited of Hong Kong for the Installation of the two 110-megawatt turbine plants in Luzon. Gas turbines have been favored over conventional power plants due to their simplicity in construction, quick start capability, and ease of connection to the power grid and shorter installation period. The ultimate goal of NPC is to achieve the total electrification before the 21st century. For such ambitious plan, NPC envisions the interconnection of all-independent grids in Luzon, Visayas and Mindanao through the advanced system of overhead lines and submarine cables. In 1990, the Negros-panay interconnection project was finally put into operation. The 18.3 km (11.4 mile) submarine cables interconnecting the two islands enable NPC to utilize the excess steam from the Palimpinon Geothermal power plant in Negros. The project is part of the master plan to develop an electric superhighway for the entire country. The major component of this project is the interconnection of the Luzon grid to Leyte where the large steam field of Tongonan is located.

Hand-in-hand with its efforts of ensuring the efficient power service, NPC endeavoured to assist in the development of the communities situated in areas where its power plants and transmission line facilities are located. On June 13, 1991, Pablo V. Malixi was appointed by President Corazon C. Aquino as the fourth president of the corporation replacing Ernesto M. Aboitiz who was named chairman of the National Power Board.

In the same year, the National Power Corporation installed and commissioned 11 gas turbine units throughout the country to meet the urgent power supply deficiencies, caused by an extended dry spell. In addition, the state-owned power firm installed 768 diesel generator sets (with a total capacity of 19.7 KW) to serve the consumers in isolated islands – in line with NPC’s mission to bring the benefits of electricity to the farthest corners of the country. There was a change in NPC corporate leadership in 1993. Dr. Francisco L. Viray was named new NPC president. He took his oath of office on May 18, 1993 at Malacañang with President Fidel V. Ramos himself administering the oath.

In September 1994, just 17 months after, there was another change in the corporate leadership. Guido Alfredo A. Delgado, a banker, assumed the post of NPC president at oath taking rites held in Malacañang on September 28. Delgado is the sixth president, and at 36, the youngest to assume the headship of NPC. He succeeded Dr. Viray who was designated Secretary of energy, vice former NP Board Chairman Delfin L. Lazaro who opted to retire from government service. NPC concluded the year 1995 with a total generating capacity of 9,507 megawatts (MW), a 4.84% rise from the 1995 figure of 9,068 MW. This was due to the commissioning of a number of power plants during the year by NPC and by independent power producers. Likewise, a total of 312 circuit km (195 miles) of new transmission lines were put up all over the country.

NPC’s energy production rose to 33,296 gigawatt hours (GWh) in 1995, an 8.7% growth over a year-ago figures, while energy sales grew by 7.9% to 31,031 GWh. This expansion in production and sales matched the rising demand for power during the year which rose by 10.68% to 5,328 MW. In 1996, NPC commissioned the 10-kilowatt wind turbine power plant. In addition, the 700-mega Pagbilao coal-fired power plant built by Hopewell under the Build-Operate-Transfer scheme is commissioned into operation.

On September 19, 2008, Energy Secretary Angelo Reyes confirmed the September 8 resignation for health reasons, of incumbent Napocor president Cyril del Callar, effective on September 30. Eduardo Ermita, on September 22, formally announced the appointment of Power Sector Assets and Liabilities Management Corp. (Psalm) officer Froilan Tampinco as the new NPC head.

References

See also

External links

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