The government realized savings amounting to P160 billion through previous contract renegotiations with some independent power producers (IPPs) of the National Power Corporation (Napocor), Cabinet Secretary and Deputy Presidential Spokesman Ricardo Saludo said this morning in a radio interview.

Saludo’s statement came on the heels of draconian cost-cutting measures imposed by Malacanang on all government operations and offices, including state-owned and controlled corporations.

Early this year, the Power Sector Assets and Liabilities Management Corporation (PSALM) said the savings realized by the government in the renegotiated contracts of 20 IPPs amounted to some $3 billion and is equivalent to three years’ worth of fixed payments to the IPPs.

Under the renegotiated contracts, the 20 IPPs agreed to grant the government an average of 9.8 centavos per kilowatt hour in savings for the remainder of the terms of their contracts.

Saludo explained that while the country has excess power, which it does not need at present, the government is obliged to comply with its contractual obligation with the IPPs and foreign investors.

No foreign investors would invest in the Philippines if the government does not live up to its contractual obligations, Saludo stressed.