Thermal Plant Buyer's Bond Held

Manila Bulletin
By MYRNA M. VELASCO
November 30, 2011, 12:00am


MANILA, Philippines — The release of the balance of the performance bond of Malaysian firm Gagasan Steel Inc., buyer of the Manila thermal power facility; is being hobbled by the uncompleted clean-up process of toxic wastes at the decommissioned facility’s site.


Gagasan Steel, which is an affiliate of Gagasan Steel Sdn Berhad, acquired the idled Manila thermal facility for $2.5 million in 2008. Of the $1.2-million performance bond posted by the buyer, it was gathered that more than US$500,000 has already been released.


The Malaysian firm reportedly elevated its concern to Malacañang following the refusal of the Power Sector Assets and Liabilities Management Corporation (PSALM) to release its bond deposit because of the pending completion of the polychlorinated biphenyls (PCB) wastes clean up. PCBs are widely used as dielectric and coolant fluids in transformers, capacitors and electric motors and are considered to be environmentally damaging if not properly disposed.


“Gagasan still has pending obligation to dispose PCB transformers pursuant to its contract with PSALM,” company president Emmanuel R. Ledesma Jr. has noted.


He added that “environmental clean up is among the obligations of buyers of decommissioned plants, including Gagasan (for the Manila thermal facility).”


The task on the PCB clean up has been bestowed to the Philippine National Oil Company-Alternative Fuels Corporation (PNOC-AFC) based on a deal entered into by the buyer with relevant government entities.


Ledesma explained that PSALM “is holding on to a portion of Gagasan’s bond corresponding to the cost to government of (its) remaining contractual obligations.”


He further qualified that “as to technology for the disposal of the PCB equipment, the DENR (Department of Environment and Natural Resources) allows only PNOC-AFC to handle the disposal, so any other technology is irrelevant.”


He thus emphasized that PSALM then required Gagasan “to enter into an agreement with PNOC-AFC for the disposal of transformers with PCB oil.”


Based on latest developments, Ledesma bared that the PNOC affiliate firm “is revising its contract price for the destruction of the PCB equipment.”


He validated reports though that “the PNOC-AFC machinery to destroy the PCB equipment is not yet operational.”


PSALM, Ledesma reiterated, is obligated to ensure compliance with laws, such as mandated clean-up processes, even after getting the payment from the sale of its power assets.