Manila Times.net
An official of the Palawan Electric Cooperative (Paleco) in Puerto Princesa City questioned the legality of an award of 25-megawatt power supply to DMCI Power that involves a government subsidy of P560 million a year for 15 years.
Director Gospel Doromal of Paleco District 4 disclosed that the proposed award to DMCI Power faces two legal problems—one, DMCI’s bid price was only P9.38 a kwh but the bidder is now changing the price to P12.80 a kwh or an increase of P250-million in annual government subsidy.
For another, Doromal cited that the bidding called for the supply of a minimum of 25MW of net guaranteed dependable capacity (GDC). DMCI offer of only 27MW of gross capacity gives a net of 22MW only in GDC. This is a major non-compliance and DMCI should be been disqualified.
The 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, he explained.
Government subsidy for these off-grid areas have increased to P12 billion a year despite the privatization of many major islands. In Masbate province, 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 a kwh from only P7 in 2005, he cited.
Doromal said that the team leader of the Paleco bid technical working group certified that their understanding is the P9.38 a kwh bid is already the blend of coal and regular diesel for the 15 year term of the contract and that a P12.80 a 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.
Doromal, a pastor of the Independent Baptist Church in Aborlan town south of Puerto Princesa has been advocating reforms in the electric cooperative that serves the whole of mainland Palawan province. He recently succeeded in canceling the coop order for wood poles after exposing the 30 percent overpricing.
Paleco’s bid committee also should have disqualified DMCI Power for its failure to meet the 25MW net dependable capacity. They offered only 27MW of 1MW regular diesel generators and 15MW of coal power starting in 2014.
Doromal pointed out that the terms of the bidding clearly defined the 25MW GDC to be determined by deducting the station use of the power plant, the capacity of the largest unit, and the allowed downtime for maintenance from the installed capacity. DMCI asked for 1300 hours a year maintenance downtime for each of the engine generators or 15 percent of the time a year.
To assure dependability, Paleco wanted to assure they have 25MW net even if the largest unit is down for maintenance.
Paleco’s award to DMCI is still subject to the approval of the Department of Energy and the Energy Regulatory Commission. DMCI Power is also meeting strong opposition from local environment organizations in its application for environmental permit to build its coal plant in Palawan. Gov. Baham Mitra of Palawan openly expressed his opposition to DMCI’s coal application, Doromal cited.
Doromal said that there is a high likelihood that Palawan will be stuck with a very expensive price for diesel based power at P12.80 a kwh when Paleco is only paying P11 a kwh from its current private suppliers of power using heavy fuel oil. source
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