Law Summary

Introduction

Executive Order No. 354, issued on July 5, 1996, by President Fidel V. Ramos, authorizes the National Power Corporation (NPC) to negotiate coal supply contracts to secure the fuel requirements for its power stations and independent power producers. This order arises from the need to enhance the Philippines' energy supply amidst global competition for coal resources.

Fuel Procurement

• Legal Principle: The order allows NPC to procure coal on a negotiated basis, deviating from the standard procurement laws stated in Executive Order No. 301.
• Key Definitions:
  • Fuel Requirements: Refers to the coal needs of NPC and its independent power producers.
• Requirements/Procedures:
  • NPC's Governing Board is mandated to ensure security and stability in fuel procurement.
  • Negotiated terms must align with international practices in fuel transactions.

• NPC is authorized to procure coal despite contrary provisions in existing laws.
• Emphasis on securing a stable coal supply due to rising global prices and competition.

Coal Supply Arrangements

• Legal Principle: NPC is empowered to enter into coal supply agreements with various entities, enhancing flexibility in sourcing coal.
• Key Definitions:
  • Coal Supply Agreements: Contracts with coal suppliers, traders, and government entities for the supply of coal.
• Requirements/Procedures:
  • Agreements can be made with foreign government entities and coal suppliers or operators.

• NPC can negotiate agreements directly with international coal suppliers.
• Emphasizes a government-to-government approach for some agreements.

Standards in International Coal Transaction

• Legal Principle: NPC must formulate rules and procedures for coal transactions, ensuring compliance with international norms.
• Key Definitions:
  • Rules and Procedures: Guidelines for executing coal transactions consistent with international standards.
• Requirements/Procedures:
  • NPC must seek approval from the Department of Energy for these rules.

• Compliance with international norms is mandatory for NPC's coal procurement activities.
• The Department of Energy oversees the approval process for NPC's procedures.

Repeal of Inconsistent Orders

• Legal Principle: Any prior orders or regulations that conflict with this Executive Order are repealed or modified.
• Key Definitions:
  • Inconsistent Orders: Previous directives that contradict the provisions of Executive Order No. 354.

• This order nullifies any conflicting legal provisions to streamline coal procurement.

Effectivity

• Legal Principle: The Executive Order takes immediate effect upon signing.
• Key Definitions:
  • Effectivity: The date from which the order's provisions are enforceable.

• The Executive Order is effective immediately as of July 5, 1996.

Key Takeaways

• Executive Order No. 354 empowers NPC to negotiate coal supply contracts to secure energy resources crucial for national development amidst global competition.
• It establishes a framework for direct coal procurement, allowing NPC to engage with both domestic and international suppliers while adhering to international standards.
• The order modifies existing procurement laws to enhance the efficiency and stability of energy supply in the Philippines.