MAYOR Reinaldo Bautista said the technical working group (TWG) of Asin Hydros Ad Hoc Management Committee is now in the process of refining the terms of reference (TOR) for the contract to rehabilitate and manage the Asin minihydroelectric plants.
The mayor told a press briefing Thursday that the first set of TOR drafted by the committee appeared too ideal and not viable as per the opinion of the private companies that earlier served intention to bid for the project.
The mayor said these proponents practically rejected the terms, prompting the committee to go back to the drawing board to adjust the terms to a more workable and viable degree.
The mayor, however, assured that the toning down of the terms would not put the welfare and interest of the City Government in jeopardy. He said the TWG will continue to exercise caution in finalizing the TOR to ensure that the interest of the City Government and other stakeholders will be fully protected.
The mayor said the aspects of the draft TOR that need adjustments involve the income sharing scheme and the conflicts with the landowners affected by the operation of the facilities.
He said the committee will soon announce the refined TOR to pursue the contracting out of the facilities to a financially and technically capable private company in line with the privatization policy that was adopted through a city council resolution.
In said resolution, the City Council gave the TWG steered by former city administrator Peter Fianza a deadline to submit the terms of reference for the conduct of an open and competitive public bidding for the management, operation and rehabilitation of the plants subject to confirmation of the city council and subject to the provisions of Republic Act 7188.
The TWG earlier discussed the possibility of the city opting for a Rehabilitate, Operate and Maintain and Manage (ROMM) type of contract as this is deemed as a "time-tested scheme" to meet the city's conditions of having the facilities developed by a private firm that can infuse the much-need capital, expertise and managerial experience without the use of city funds and with the city even earning guaranteed royalties or concession fees while still maintaining ownership of the facilities.
The body also discussed the possible qualification standards for the potential investor.
Initial qualifications broached were; it must have the financial capacity and technical expertise to rehabilitate, repair, refurbish, replace and improve the facilities and equipment required to increase the efficiency and improve performance of Asin plants from the present 3,850 kilowatt to as much as 4,600 KW.
The other proposed terms raised on the responsibilities of the investors include the payment of right-of-way fees due to the landowners of properties where the structures of the Asin Hydro plants are located.
The TWG also discussed the possible terms covering the city's responsibility under the ROMM contract, which include the working out of assignment of the water rights to the private investor as co-user of the water resource and the initiation of the resolution of all claims and disputes with landowners and other claimants of properties and rights-of-way straddled by the facilities.
Other topics discussed were the rehabilitation and ownership of the plants, full use of the facilities, contract period, the share of the City Government in the power generation or operation of the plants and the bidder's qualifications.
The TWG expressed hopes that the TOR will be finalized before the deadline given by the City Council to fast-track the privatization venture.
The city decided to push for the privatization after the TWG recommended the scheme to maximize the production of the facilities which the City Government cannot undertake on its own due to lack of technical expertise and financial resources.
"The comparative income statements for 2005 and 2006 would reveal that the net income of the City Government from the Asin Hydros when it was still being operated by the HEDCOR was P20,627,968.87 and P22,341,117.68 respectively. However, when the City Government started managing the Asin Hydros in 2007, the net income was reduced to P12,390,870.15 and the gross income for 2008 was P18,486,404.72. For 2009 and 2010, a gross income of P16,000,000 was projected. Therefore, the city was earning more when the Asin Hydro Plants were operated by a private company," the city council resolution noted.
The resolution said the TWG also recommended the bidding out of the facilities for private investments where city administrator Fianza was quoted as saying the city needs P168 million to fully rehabilitate the plants and maximize the generating capacity to 4.2 megawatts.
Another disadvantage of direct management by the city was that it had no franchise or certificate of public convenience to sell electricity to consumers nor does it possess the necessary expertise and resources to manage and rehabilitate electric power plants.
"At present, all three plants are grossly derated and could hardly sustain operation of even half of the 3,850 KW installed capacity," the TWG report said.
Based on the result of a study conducted by a foreign group, the facilities if totally rehabilitated can generate a total of 24,680,000 kWh of power annually, which if computed based on the "redemption value of electric energy" will be equivalent to $2,307,580 per year. (A Refuerzo)