PEZA distribution system accord hit

BAGUIO CITY  – The joint venture of the National Transmission Corporation (TransCo) and the Benguet Electric Cooperative (BENECO) is demanding from the management of the Philippine Economic Zone Authority (PEZA) to reconsider its declaration that the joint venture proposal to operate, maintain and manage the Baguio City Economic Zone’s power distribution system failed to pass detailed evaluation based on the merits of the information and clarifications the partnership provided for the three issues raised.

In a 12-page letter to PEZA Director-General Charito Plaza, TransCo president and chief executive officer lawyer Melvin A. Matibag alleged that the lack of transparent process, guidelines, terms of reference, very short transaction schedule and evaluation criteria are for the account of PEZA and could not be the reason for rejecting the joint venture proposals.

We also find PEZA’s procedures quite inconsistent with government’s thrust for complete transparency, competitiveness, simplicity and accountability. Thus, a third party observer might entertain a reasonable conclusion that the transaction might be giving unwarranted benefits, advantage or preference to a private entity which is the  act sought to be prevented by the provisions of Republic Act 3019,”Matibag stressed.

He underscored that it appears to the TransCo-Beneco joint venture that PEZA is using the framework of the Build-Operate-Transfer (BOT) law in the selection of long-term concessionaire for BCEZ but it also appears that the requisites specified in RA 6957 as amended by RA 7718 and the Revised Implementing Rules and Regulations issued by the National Economic Development Authority (NEDA) has not been fully observed in the said transaction.

‘We have noted that PEZA awarded and entered into long-term concession agreement with Mactan Electric Company for the Mactan Economic Zone and Manila electric Company for the Cavite Economic Zone without the benefit of any competitive selection process. WE are hoping that this time the award of long-term concession agreement for the Baguio City Economic Zone will go through a transparent and truly competitiveness process,” Matibag added.

The Transco-Beneco joint venture pointed out that the terms of reference of the obviously rigged transaction that PEZA issued could hardly be called as terms of reference since it does not contain the specifications and requirements to be met by proponents and the evaluation methodology and criteria to select the final proponent.

According to the proponent, the terms of reference only provided the summary of the Meralco proposal deemed accepted by PEZA and that the long clarifications that the partnership has to make about its proposal and PEZA’s evaluation is just a consequence of the lack of specific and clear terms of reference to guide proponents in preparing comparative proposals and to be used by PEZA in evaluating proposals.

Matibag argued the lack of well written term of reference can actually mislead proponents which happened to the TransCo-Beneco joint venture in responding to questions which are supposed to be clarificatory and unfortunately, the same answers to misleading questions were used by PEZA to declare their proposal non-compliant even if the compliance requirements is nowhere to be found.

He asserted that the lack of evaluation framework, methodology and criteria makes it difficult for proponents to prepare responsive proposals and problematic in evaluating proposals apple to apple.

The joint venture proponent emphasized the 15-working day schedule from publication to submission of proposals is very challenging and the very short period for a big and long-term contract to be entered by government after the transaction cannot guarantee the conduct of due diligence and prepare responsive proposals. Instead of obtaining the best and most advantageous proposal, the 15-working day time-constraint can lead to submissions that are prone for disqualification due to hurriedly prepared documents.

Matibag cited that even the procurement of common goods and services by government are afforded ample time to achieve competitive outcome.

He stipulated that the transaction such as the one in search for the best and most advantageous long-term 25-year concession to operate and maintain critical facilities of government in the economic zones is unlike the procurement of common goods and services since interested parties should not only be given time to prepare, they must also be afforded a venue such as conferences to clarify issues, procedures, requirements and evaluation process and evaluation criteria.

He clarified that the functions of the electric power distribution utility in the economic zone is to provide reliable and quality distribution service at the least cost possible for locators and it is unfortunate the PEZA did not specify the evaluation framework, methodology and criteria in the said transaction.

“We believe that for this transaction, the evaluation criteria for the selection of the final proponent should be who can provide the lowest rate for the locators in the economic zone and not who can give the highest concession fee to PEZA. PEZA’s business is not to maximize revenue from concession agreements but to maintain the eco zone attractive to investors. In the context of the Philippine’s low ranking in global competitiveness with high power rates as major factor, it is imperative that the contest for BCEZ long-term concessionaire is focused on meeting global standards for distribution services and reducing the distribution rates for the locators,” Matibag exclaimed.

Earlier, PEZA issued to TransCo-Beneco a nullification letter dated November 8, 2018 informing the proponent that their proposal for the operation, maintenance and management of the Baguio Economic Zone’s power distribution system for 25 years through lease concession agreement did not pass evaluation.

Earlier, TransCo and Beneco entered into a joint venture agreement to bid for the said concession agreement considering that the same was about to expire.

TransCo submitted the reconsideration letter dated November 26, 2018 with the full knowledge and authority of its partner, Beneco, to convince PEZA management to reverse its earlier decision to disqualify the joint venture proponent form pursuing its proposal.

The PEZA Board also questioned management for unilaterally award the concession agreement to the Aboitiz group without the concurrence of the policy-making body which should give its consent for such a huge endeavour of the PEZA.

By HENT

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