BAGUIO CITY – The City Council invited the key officials of Kaltimex Energy Philippines to appear before the regular session of the local legislative body on Monday, January 30, 2017 to shed light on various issues related to the proposed rehabilitation of the city-owned Asin minihydro power plants before it will confirm the contract entered into by the local government and the private developer.
The Special Bids and Awards Committee (SBAC) created by Mayor Mauricio G. Domogan several years ago resolved to award the rehabilitation and upgrading of the city-owned Asin minihydro power plants to Kaltimex which was declared as the complying and responsive bidder after the failure of bidding for four consecutive times.
The signed contract between Kaltimex and the 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 the Council Committee on Laws, said the local legislative body must confirm the long overdue contract to determine if the company has the capability to sustain the multi-million project that will operationalize the Asin minihydro power plants which ceased operation sometime in October 2012.
However, members of the local legislative body agreed to instead first invite officials of Kaltimex to answer their questions relative to its financial capacity to implement the project and bring back the operation of the city-owned renewable energy plants to earn income for the city instead of being a white elephant.
Under the contract, Kaltimex is obliged to secure the pertinent permits from concerned local governments and various agencies within a 6-month grace period and that it shall pay to the local government the amount of P18 million annually with or without the operation of the power plants after its rehabilitation.
In 1981, the local government awarded the maintenance and operation of the Asin hydropower plants to the Baguio Water Distrcit (BWD) for a 25-year lease agreement but the BWD reportedly ceded its rights to the Aboitiz-owned Davao Lights before it was again transferred to its sister company, the Hydroelectric Development Corporation (HEDCOR).
After the expiration of the 25-year lease agreement, the local government took over the maintenance and operation of the three minihydro 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 that the facilities were not issued the required certificate of compliance from the regulating agency.
Olowan disclosed 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 the performance of its obligations under the agreement.
The Asin minihydro power plants are within the jurisdiction of the Tuba municipal government and the facilities are tax-declared by Aboitiz which should not have been the case because it is the local government of Baguio that owns the said properties.
By Dexter A. See