Case filed for Kaltimex Asin contract rescission

By Dexter A. See

BAGUIO CITY – The local government filed with the Regional Trial Court (RTC) of Baguio city a petition seeking rescission of the contract entered into between local executives of Kaltimex Energy Philippines on  proposed rehabilitation, management and operation of the city-owned Asin mini-hydro power plants amidst efforts of the developer to look for a partner corporation in the implementation of the project.

City legal officer Melchor Carlos Rabanes said part of the petition is the local government’s position for the erring company to pay the appropriate damages incurred by the city in the non-performance of the contract resulting to the continuous non-operation of the city-owned renewable energy plants leading to loss of income to the city.

“We are simply awaiting the action of the court on our petition and prayer for damages before we take the appropriate legal steps to ensure the long-overdue realization of the desired rehabilitation and operation of the minihydro power plants owned by the city,” Rabanes said.

Earlier, the local chief executive confirmed Kaltimex Energy Philippines is currently looking for a corporate partner to help the embattled corporation implement the project which it won through a competitive public bidding over three years ago.

The city legal officer claimed apart from the company paying to the local government damages, the city is also seeking for the confiscation of the performance bond it posed to secure the contract for the desired rehabilitation and operation of the city-owned power plants which had been operational over five years ago.

On Oct. 2012, the Energy Regulatory Commission (ERC) ordered the local government to cease and desist from continuously operating the power plants because it failed to first secure a certificate of compliance from the regulatory body that rendered the said plants stagnant to date.

 2006, the contract between the Aboitiz-owned Davao Lights and the local government expired after its 25-year period lapsed that allowed the local government to push through with the operation of the renewable energy plants until it was issued a cease and desist order.

Rabanes said the local government is seeking rescission of its contract with Kaltimex because the company never performed its obligation to pursue the rehabilitation and operation of the power plants as stipulated in the contract even if the agreement was confirmed by the local legislative body after the lapse of over a year and the subsequent issuance of the required notice to proceed for it to start working on the project.

He added that it was over a year since the notice to proceed was issued to the company to start the rehabilitation project but no evident works had been started to make the Asin minihydro power plants operational and generate additional income for the local government.

Aside from the annual rentals it was supposed to pay to the local government, Kaltimex still owes the city substantial amounts in terms of penalties and surcharges for the unpaid lease rentals.