NEGOTIATED CONTRACTS NOY’S HIGH COST SOLUTION
The high power cost solution of President Aquino for Mindanao which is now suffering from daily power outages will involve the farming out of contracts for diesel generators that electric cooperatives will have to lease and which will involve government contracts, based on information the Palace provided yesterday.
Presidential spokesman Edwin Lacierda said the government would have to enter into written contracts, without bidding, for transactions on the power sector under the solutions that the Department of Energy had proposed to Mindanao electric cooperatives.
The last time that the government resorted to negotiated contracts was during the term of former President Fidel Ramos that resulted in the cost of electricity in Luzon to shoot up into becoming the most expensive in Asia next to Japan.
The government earlier had ruled out the shipping of power barges into Mindanao, saying that this would be too expensive even if the floating generators are privatized.
“It’s impossible for government not to enter into contracts. I can assure you that everything will be legal and there would be documentation on that,” Lacierda said.
Lacierda added that some options have already been discussed with electric cooperatives on which he refused to provide details.
“There are, I think, three or four options that are being presented to the electric cooperatives. So let’s hold off on any of these options, the details, because Secretary Petilla would have the details of those options,” Lacierda said.
Lacierda added “there would be no manipulation that could arise on the distribution of the power generators to electric cooperatives because the National Electric Administration has the list of cooperatives which are performing their obligations.”
“NEA has a list of class A, class B, class C, and class D cooperatives based on how good they are in meeting their obligations. There is an evaluation,” Lacierda said.
Lacierda said the scheme being proposed “will not be abused” and that Energy Secretary Jericho Petilla “would not succumb to any form of abuses.”
“We have evaluated the electric cooperatives and all these mechanisms will be provided and will be explained, and all these cooperatives will be evaluated based on their ability on certain requirements,” Lacierda said.
Petilla said Mindanao will have additional power by 2015 as indicated by committed projects in the region.
“The challenge now is how to address the power situation from now until 2015,” he said.
Since early this year, highly populated areas in Mindanao such as the cities of General Santos, Iligan and Zamboanga have endured daily power outages that last up to eight hours.
The supply shortfall is primarily brought about by Mindanao’s reliance on hydroelectric power plants, which generate over half of the region’s electricity requirement during normal weather and reservoir conditions.
Lacierda said the solution presented to power cooperatives would not involve government disbursements to resolve the power crisis in Mindanao.
Lacierda said the duty of Petilla is only limited to the presentation of alternatives but not to provide assurance on the shelling out of funds to purchase the needed power barges as a short term solution.
“If I’m not mistaken, it was yesterday or today that he’s meeting with the electric cooperatives. We will get the details as to what is the mechanism,” Lacierda said.
Lacierda explained that the government is not expected to deliver anything to augment the crisis but the task will be passed on to electric cooperatives.
“I don’t believe it’s the government purchasing it. It’s not that way. The mechanism itself will be explained to the electric cooperatives. If you’re saying: is the government buying it? No, it’s not the government. It’s not buying it for the electric cooperatives,” Lacierda said.
President Aquino had said that one of the alternatives which his men had recommended was the Iligan Diesel Power Plant that was supposed to be disposed of by the National Power Corp. last year.
Lacierda said the Iligan Power plant is capable in supplying electricity once activated again. He said the equipment was not junked.
“It was not junked. There was a case. There was a previous operator of the Iligan power plant. It was operated by some entity. It was taken over by Napocor,” Lacierda said.
The supposed intention to bid out for disposal was stopped because of an issue of an unpaid local taxes.
“Unfortunately for Napocor, it failed to pay the tax arrears, real property tax of Iligan City. So the Iligan City foreclosed on the Iligan power plant and so they foreclosed it. They sold it at auction and it required a prior approval of CoA,” Lacierda said.
Lacierda said it was the Alsons Power Group that offered to assume operation of the 98-megawatt Iligan power plant in 2011.
“CoA very recently, I think but it was approved already. They were able to secure the approval of CoA and now it was sold to, I think it’s the Alcantara Group,” Lacierda said.
Lacierda said the Alsons Group has already tendered its intentions to rehabilitate the power plant.
“They are now going to operate it, rehabilitate it, and so hopefully it will come on stream. At the moment, the situation in Mindanao will improve as the Iligan power plant is rehabilitated fully,” Lacierda said.
Lacierda said the reactivation of the power plant would somehow ease up the burden of brownouts in Lanao provinces because the power plant could be technically operative to supply power.
“It’s not junked. Just to be clear, it’s not junked. It’s still there, that’s the reason there was a private company that was able to buy the Iligan power plant. It’s going to be operational,” Lacierda said.
Lacierda said Secretary Petilla has almost completed his presentation to the local groups of electric cooperatives of the “mechanism” which would show the options on how to resolve the crisis.
“That’s what we called the mechanism. The options will be presented to the electric cooperatives and that’s what Secretary Petilla is presenting to the electric cooperatives,” Lacierda said.