Take or pay, the Telcos’ version

June 1, 2008 at 11:59 pm Leave a comment

We have been complaining of the “take or pay” provision in the contracts of the independent power producers (IPPs) with Napocor and Meralco. But we have not complained as much against the same provision imposed on us by the telcos.

Thus, in the power industry, for example, in 2002, Napocor paid P30.44 billion for 8.119 billion kwh which Napocor contracted from its IPPs but did not use, and therefore were not delivered.

But because of the take or pay provision of its contract, it had to pay the full amount, which was eventually passed on to its customers, including the distribution utility Meralco, which eventually passed them on to us.

In the telecom industry, It is not probably obvious but we have a similar take or pay provision. For example, when you contract for a 30-peso load, you have to use it within 3 days, otherwise whatever unused load that remains is lost. If there is no such take or pay provision we could scrimp and stretch our 30-peso load to as many days as we could. And to think that you paid for it in advance!

When you call and have an actual air time of only 20 seconds you pay for a full minute. In other words, you used only 1/3 of your contracted time, but you paid for the full contracted amount. But the good news though, after so many years of such practice, a telco is now offering a per second charge.

Entry filed under: 1. Tags: , , , , .

Quote for the day, June 1, 2008 Regulate the grid!

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