City negotiates with Beneco for Asin hydros

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Friday, October 12, 2012


MAYOR Mauricio Domogan recently admitted that Terms of Reference (TOR) for the privatization of the Asin mini-hydroelectric power plants needs further fine-tuning after two failed public biddings.

Domogan, in his weekly press briefing Wednesday, said the technical committee in charge of drafting the TOR of the city-owned mini-hydro has forwarded the terms to the National Economic Development Authority (Neda) for review.

“If the Neda finds anything that needs revision, we will revise and then we will offer it again for public bidding. Unless there is an interested investor because in the past, there is already two failure of bidding, maybe we can possibly negotiate also,” Domogan said.

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The mayor said that in a recent meeting with Benguet Electric Cooperative (Beneco) board of directors and general manager Gerardo Versoza, they also discussed the purchase agreement on the electric cooperative’s continued buying of power produced by the Asin mini-hydro.

He said Beneco officials informed him that under the implementing rules and regulations of the Electric Code, the city as generator has the obligation to sign an agreement with Beneco as power distributor and buyer.

“I informed them that it is not a problem. We can sign a memorandum agreement whatever the Energy Regulations Commission says pursuant to existing laws, the city as power generator will follow. So as whatever the ERC says Beneco will also follow as buyer and distributor,” he said.

The mayor also was informed of the Beneco Board of Director’s recent resolution asking for the termination of their purchase of power generated by the Asin mini-hydroelectric plants.

He said Beneco officials told him they will discuss in their next meeting the result of their dialogue with him and possibly come up with a MOA to detail obligations of both parties as power generator and power distributor and buyer.

“What we want to achieve here is to improve partnership with Beneco so that we can also improve the services given to the people,” he said.

The city mayor said the Asin mini-hydro already generates less power compared to the time when it was still operated by Hedcor that it needs rehabilitation of decades-old machines in the plant.

“That is why the city made an effort to make a TOR for the old Asin mini-hydro already be subject to development,” he said.

To develop and rehabilitate the city-owned Asin mini-hydro, he said, it will take the city an estimated P500 million capital for rehabilitation which is why the city government is offering the facility for any interested private investor.

Meanwhile, at the City Council, committee on public utilities chairman Councilor Nicasio Aliping recently proposed an amendment to the TOR in the privatization of the Asin mini-hydro after two failed biddings last January 27 and June 15.

The councilor wanted to amend the provision that only cooperatives duly registered with the Cooperatives Development Authority (CDA) will be allowed to join the bidding.

This after one of the interested bidder, Beneco, has been disqualified to join the bid at the pre-bidding stage due to its status of not being registered to the CDA and the Securities and Exchange Commission (SEC).

However, Beneco claimed cooperatives have the option to convert but is not mandated to convert either as a stock cooperative under the CDA or stock corporation under the SEC.

Based on the Implementing Rules and Regulations of Republic Act 9136 or the Electric Power Industry Reform Act, electric cooperatives which opt to remain as non-stock cooperatives shall continue to be registered with NEA and shall be governed by Presidential Decree 269 or the NEA law.

The power utility firm also stressed that they are part of some 109 of 119 electric cooperatives in the country that remain non-stock and non-profit while only 10 have converted as stock cooperative and registered with the CDA.

Aliping, in his proposed amendment, said it would be proper that cooperatives duly registered or not registered with the CDA may be allowed to join the bidding of the Asin mini-hydroelectric power plants.

This way he said interested parties may join the public bidding and hasten the rehabilitation of one of the city’s sleeping assets. (JM Agreda)

Published in the Sun.Star Baguio newspaper on October 13, 2012.

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