THE CITY Council confirmed the memorandum of agreement entered into between by the local government and the Kaltimex Energy Philippines for the privatization of the city-owned Asin hydropower plants amidst the request of the company for a detailed presentation of the actual condition of the power plants two years from the signing of the agreement.
Members of the local legislative body granted the request of Kaltimex to make the detailed presentation within one month from the confirmation of the contract and for the company to signify its intention and capacity to pursue the implementation of the 20-year agreement.
Oscar Turalba, Kaltimex Energy Philippines president and chief executive officer, informed the local legislators the management contemplated on withdrawing from the project because of the delayed confirmation of the contract for more than two years, the emergence of a third party application with the energy department, the worsening condition of the units of equipment of the power plants and the presence of unsettled claims for rentals by the affected landowners that happens to be the obligation of the city.
Turalba assured it is definitely financially capable to implement the project with or without its partners as it is looking into the loans from the banks interested in bankrolling the proposed rehabilitation of the city-owned power plants.
The Kaltimex official also requested the presence of the city’s technical working group to present its own findings on the actual condition of the city-owned power plants compared to its condition two years ago.
Under the agreement, Kaltimex is required to post a performance bond amounting to more or less P18 million to the city’s coffers within six months after the confirmation of the contract to guarantee the implementation of the desired rehabilitation after the approval of the final plans for the power plants.
On the other hand, the local government is obliged to turnover to Kaltimex the city-owned power plants without encumbrances for the smooth implementation of the desired rehabilitation to increase its power output from 4.2 megawatts up to 8 megawatts within a 4-year period and its turnover must be done in a peaceful manner.
Baguio City is the only local government unit in the country that owns a renewable power plant which was turned over to the city by the American colonial government over a century ago.
In 1981, the local government decided to privatize the operation of the power plants and awarded the management and operation of the facilities to the Baguio Water District (BWD) which in turn allegedly sub-contracted the operation to the Aboitiz owned Davao Lights. Eventually, the operation of the power plants ended up with the company’s sister company, the Hydroelectric Development Corporation (HEDCOR) until the expiration of the contract in 2006.
The city government took over the operation of the power plants and operated the same from October 2006 to October 2012 when the city ceased from operating the plants. (Dexter See/PIO)