Financial capability of Asin hydro power plants’ winning firm questioned

BAGUIO CITY – Operations of the mothballed Asin mini-hydro power plants in Tuba, Benguet may not commence in the near future.

This, after reports executives of Kaltimex Energy Philippines, which won the bid to rehabilitate the “city-owned” power plants surfaced saying the firm may not have financial capability to make these operational.

The city council invited key Kaltimex officials to appear before its Jan. 30 regular session to shed light on issues related to rehabilitation of the power plants before it will confirm the contract entered into by the local government and private developer.

But to date, there is still reportedly no response from the supposed power firm officials who reportedly have not been appearing in council sessions.

The special bids and awards committee created by Mayor Mauricio G. Domogan resolved to award rehabilitation and upgrading of the power plants to Kaltimex which was declared winning bidder after failure of bidding for four consecutive times.

The signed contract between Kaltimex and local government was transmitted to the city council for confirmation more than a year ago but its confirmation was overtaken by various events that transpired, including the May 9, 2016, general elections.

Councilor Faustino Olowan, chairman of committee on laws, said the local legislative body must confirm the long overdue contract to determine if the company has capability to sustain the multi-million project that will operationalize the Asin mini hydro power plants which ceased operation in October 2012.

However, the city council agreed to instead first invite officials of Kaltimex to answer their questions relative to its financial capability to implement the project and bring back operation of the energy plants to earn income for the city instead of being a white elephant.

Under the contract, Kaltimex is obliged to secure permits from local governments and agencies within a 6-month grace period and that it shall pay to the local government P18 million annually with or without the operation of the power plants after its rehabilitation.

 In 1981, the local government awarded maintenance and operation of the Asin hydropower plants to the Baguio Water District for a 25-year lease agreement.

However, the BWD reportedly ceded its rights to the Aboitiz-owned Davao Lights before it was again transferred to its sister company, the Hydroelectric Development Corp. (Hedcor).

 After expiration of the 25-year lease agreement, the local government took over the maintenance and operation of the three mini hydro power plants sometime in 2006.

In October 2012, the Energy Regulatory Commission ordered the local government to cease and desist from operating the hydro power plants after it found the facilities were not issued the required certificate of compliance from the regulating agency.

Olowan said it is best for the city to confirm the Kaltimex contract because it will put the burden on the company to fulfill its contractual obligations and its failure to do so will constrain the local legislative body to take the necessary steps in cancelling the agreement once the company will be remiss in performance of its obligations under the agreement.

Baguio officials said theAsin-mini hydro power plants are within jurisdiction of the Tuba municipal government and facilities are tax-declared by Aboitiz which should not have been the case because it is the local government of Baguio that owns said properties. -- Dexter A. See