29 October 2002 – Atlanta-based energy company Mirant yesterday said it had successfully resolved all outstanding issues related to Mirant’s electricity generation in the Philippines through a bilateral agreement between the company, the Philippine Department of Energy (DOE) and the Power Sector Assets and Liabilities Management Corporation (PSALM).

In a statement, Mirant said that the agreement upheld the sanctity of the existing power contracts between Mirant and the National Power Corporation (Napocor), the state-run agency that purchases power for the Philippines.

This agreement includes the following points:

* Mirant will decrease by five per cent the amount of power it will provide from its Pagbilao plant and sell to Napocor under the existing contract, a reduction of approximately $10 million in annual pre-tax revenue. As a result, Mirant will have more opportunity to sell additional power generated at Pagbilao to prospective industrial and commercial customers through its energy supply business.

* The agreement clarified the number of days allowed for planned outages and unplanned outages related to Mirant’s Pagbilao plant. This will reduce the potential for penalty payments to Napocor.

* Regarding Mirant’s Navotas I and II plants, Mirant will buy the facilities from Napocor for approximately $22 million and sell the output to prospective industrial and commercial customers through its energy supply business. Control of these plants had previously been planned to transfer to the government in 2003 and 2005, respectively. Napocor will pay Mirant approximately $10 million in 2002 to cover the balance of the capacity fees over the remaining contract life.

“Mirant’s existing contracts with Napocor are legally sound and will remain in effect,” said Rick Kuester, senior vice president, international, Mirant. “The Philippine government asked that we work with them to resolve power price and reliability concerns. Under the voluntary agreement, Mirant’s operational position in the Philippines is reaffirmed and strengthened, while future energy costs for the Philippines will be curtailed. Mirant looks forward to continuing its operations in the Philippines under this mutually beneficial agreement.”

This bilateral agreement will allow Mirant to sell additional power through its energy supply business, and to continue to provide private sector assistance in support of the Philippine government’s Project Beacon, a program to provide complete electrification of all Philippine villages by 2006.

Mirant entered the Philippines in 1997 and invested in the expedited development of new power generation. Filipino consumers and industry continue to benefit from the electricity that Mirant power plants generate.

Mirant currently operates seven separate power plants in the Philippines with a combined generation of approximately 2000 MW.