House probe of Palawan electric co-op deal sought

Business Mirror

Published on Thursday, 06 December 2012 19:42

Written by Fernan Marasigan

THE former chairman of the board of directors of Palawan Electric Cooperative (Paleco) wants Congress to investigate the legality of an award of 25-megawatt (MW) power supply to DMCI Power that involves a government subsidy of P560 million a year for 15 years.

In seeking a congressional inquiry, Director Gospel L. Doromal of Paleco District IV said there are two main legal problems in the proposed award to DMCI Power—DMCI’s bid price was only P9.38/kiloWatt hour but the bidder is now changing the price to P12.80 per kWh or an increase of P250 million in annual government subsidy and the bidding called for the supply of a minimum of 25 MW of net guaranteed dependable capacity (GDC).

“DMCI offer of only 27 MW of gross capacity gives a net of 22 MW only in GDC.  This is a major non-compliance and DMCI should be been disqualified,” said Doromal.

In particular, Doromal wants the House of Representatives Committee on Energy to look into the matter saying that government bidding rules do not allow major modifications in the bid that are intended to make a non-complying bidder qualify.

“This one involves the use of P560 million in government missionary area subsidy. The government’s subsidy for these off-grid areas have increased to P12 billion a year despite the privatization of many major islands. On the island of Masbate the government subsidy is reported to have gone from P300 million in 2005 to P600 million now despite privatization when DMCI’s rate in the island mysteriously went up to P16 per kWh from only P7.00 in 2005,” he said.

Doromal has earlier wrote the Department of Energy, asking its officials to investigate the issue.

Listed DMCI Holdings Inc. earlier announced that DMCI Power Corp., its power business arm, has been enlisted by Paleco to provide the cooperative’s power requirements.

Doromal said the leader of the Paleco Bid Technical Working Group certified that their understanding is the P9.38 per kWh bid is already the blend of coal and regular diesel for the 15-year term of the contract and that a P12.80 per kWh rate for secondary technology is nowhere to be found in DMCI’s financial bid envelope.  The P12.80 was not read in the bidding and was not requested by DMCI until after the award had been made.

(Fernan Marasigan)   source