Manila, Jan. 19, 2003 (Tribune) - With the public heat on the the Argentine power producer's alleged $14-million bribe in exchange for a sovereign guarantee, with some Arroyo officials, including the presidential couple, reportedly getting a piece of the alleged bribe pie, officials said the Arroyo administration is currently in the process of renegotiating the controversial $450-million power contract of the Argentine firm Industrias Metalurgicas Pescarmona Sociedad Anonima (Impsa), because of some flaws in its supplemental agreements.

Finance Secretary Jose Isidro Camacho disclosed this yesterday.

The Finance chief said the inter-agency committee that was tasked to review all the power contracts entered into by the government with independent power producers, has found flaws in the supplemental agreements and in the government undertaking that provides a support for the obligation of the National Power Corp. (Napocor) under the build-rehabilitate-operate-transfer (BROT) agreement.

"We believe there's room for improvement. That's why the recommendation is for renegotiation, which is what the President instructed (and that is) what is happening right now," Camacho said at the weekly Kapihan sa Sulo in Quezon City.

Camacho, however, explained that as far as the legality of the contract is concerned, it is legally binding.

Camacho said the IPP review committee has recommended the reexamination of the supplemental agreement that requires the government to pay a pre-completion payment to Impsa, which started with the rehabilitation project.

He said there were also some defects in other supplemental agreements, which include provisions that were not in the original contract's terms of reference.

When asked why the Arroyo administration did not try to cancel the contract, as it did with Philippine International Air Terminals Co. Inc., considering the defects discovered, Camacho said, "In the legal review it (power contract) was deemed to be a legally binding contract. In other words, it has all the legal requirements to make it a legally binding contract."

"As we may know, the policy of the IPP review is to renegotiate bilaterally to see if we can get an amicable negotiation that will be acceptable to both parties because we recognize also the validity of the contract and the agreement," he said.

Camacho maintained that the present government did not include a sovereign guarantee in the legal opinion issued by resigned Justice Secretary Hernando Perez in the contract.

He also denied there was such guarantee made by the present government to any loan made by Impsa from foreign banks.

He added that only a government undertaking is present in the records that he said was actually done during Estrada's term, adding that all contracts pertaining to the CBK project were done during Estrada term.

All rights reserved