posted July 13, 2020 at 08:40 pm by Manila Standard Business
Bantayan Island Power Corp. slammed
what it described as the hasty award by Bantayan Island Electric Cooperative of
a 15-year, 15-megawatt power supply contract to a new supplier in Bantayan
Island.
BIPCOR director Fichte Peñaloza said
in a statement during the bidding process for a new power supply deal that the
company was eased out of the process when Banelco refused to open its second
envelope.
BIPCOR’s power supply agreement with
Banelco will expire in November 2021. Both BIPCOR and Isla Norte Energy
Corp., a joint venture of Vivant Integrated Diesel Corp. and Gigawatt Power
Inc., submitted separate bids during the 2019 competitive selection process for
a new PSA conducted by Banelco.
“We emphasize that we have partnered
with the Bantayan Island community for years, witnessing its growth and
development. BIPCOR has been the stand-alone power generator and new power
provider of Banelco since 2006. However, to our dismay, what transpired during
the bidding process was an apparently systematic and coordinated effort to ease
Bipcor out as Banelco’s sole power provider at all costs,” Peñaloza
He said the opening of bids was
conducted on Sept. 20, 2019 with representatives of both bidders present.
“Our bid documents in the first
envelope were ‘all passed’ except for the certification from the supplier of
the diesel engine generator set which was ‘not notarized’. After our summary
disqualification, BIPCOR’s second envelope was being returned unopened but our
representative, Mr. Reinerio Lastimoso, insisted on leaving the envelope in the
third party bids and awards committee’s hands to safeguard the integrity of
BIPCOR’s financial offer while the notary issue was unresolved,” Peñaloza said.
“The committee declined the custody
but the financial offer remained properly sealed and TPBAC members signed off
on its cover and seal. Under CSP rules and the Supreme Court decision making
public bidding of all power procurement mandatory from June 2015 onwards, the
distribution utility like Banelco constitutes the TPBAC to conduct the CSP. Of
its five members, at least two are consumer representatives,” he said.
The CSP bids came in two envelopes,
including the technical proposal and the financial offer and they were to be
opened sequentially, after qualifying each envelope separately.
“On Banelco’s hasty award to the
other consortium, we maintain that there was gross violation of the rules
governing the grant of PSA, the bidding protocols and the CSP as mandated by
the Department of Energy. Our disqualification from the bidding due to a simple
and minor defect in our document—which was not even listed in the bidding
procedures—was absolutely without basis. Thus, it was highly anomalous and
illegal for Banelco to arbitrarily proceed with the grant of the contract to
Vivant,” Peñaloza said.
He said compounding BIPCOR’s
problems was the CSP rule that any party protesting or contesting a decision of
TPBAC should pay a non-refundable protest fee which should be determined by
TPBAC itself, and in this case was set at P3.6 million.
“Under that rule, resort to court
action to fight for our rights and secure a competitive price for Banelco
members-owners could only be had after BIPCOR paid the substantial,
non-refundable protest fee of P3.6 million. We paid the price, otherwise
consumers in the island could be denied cheaper electricity if the financial
proposal of BIPCOR was not opened,” he said.
“Still, Banelco denied our protest,
refused to open our second envelope and issued last November its notice of
award of the PSA to Vivant, prompting BIPCOR to file before Mandaue RTC Branch
84 a petition for injunction with prayer for the issuance of a TRO and a writ
of preliminary injunction.
BIPCOR, however, failed to secure
the TRO after the judge denied its application a day prior to the deadline for
submission by the parties of their respective memoranda.
Mandaue City Regional Trial Court
Branch 84 Presiding Judge Joe Noel Lawas, in an order dated Feb. 21, 2020 but
received by BIPCOR lawyers on June 3 via electronic mail, denied the company’s
motion for reconsideration to stop Banelco’s award of a 15-year supply contract
to a new supplier—Isla Norte Energy Corp., a consortium of Vivant Integrated
Diesel Corp. and Gigawatt Power Inc.
“The lower court’s denial of our
motion for reconsideration of the order denying BIPCOR’S application for TRO
opens our case to the appellate and higher levels where we may have a better
chance of presenting our case for BIPCOR and for the Banelco coop members. For
all intents and purposes of CSP, there was actually no bidding when TPBAC and
Banelco refused to open Bipcor’s Second Envelope, leaving only one financial
offer on the table,” Peñaloza said.
Vivant recently claimed it sealed
the 15-year PSA with Banelco for the supply of 15-MW power supply and announced
that it would construct a 23-megawatt diesel-fired facility to energize
Bantayan starting next year.
“That is simply not true. The
announcement unduly preempts the outcome of the pending litigation between the
parties and the rigorous evaluation of the PSA by DOE on CSP compliance and the
Energy Regulatory Commission on least cost,” Peñaloza said.
“As things stand, there was only one
financial offer opened and considered and least cost can hardly be determined
under those circumstances. The notice of award issued by TPBAC chairman Ronald
Aloyan and Banelco general manager Lee Rivera said the PSA was awarded to
Vivant consortium ‘as the lowest calculated and responsive bidder having
submitted the bid price offer for TCGR [true cost generation rate] amounting to
P13.3060 (pKWH) exclusive of VAT… ”
The generation charge actually
collected from electric coop members is the SAGR or subsidized approved
generation rate which is net of the subsidy paid out of the missionary
electrification charge all electricity consumers pay under universal charges.
Today, the missionary charge is about P0.15 pkWH. In the case of Vivant’s TCGR
if applied to Banelco’s June 2020 SAGR of P6.2546, the subsidy all
consumers will pay would be about P7.0514 pKWH.
Banelco has a franchise population
of 138,000 with 23,401 captive customer connections, 21,212 of them
residential. Its annual energy sales are projected to reach 52 million kWH at
the onset of the new PSA next year, reaching over 106 million kWH once the new
PSA ends in 2036.
“If a failure of bidding is
declared, BIPCOR will pursue a new bid to make sure the competitive process is
observed. If, on the other hand, our second envelope is opened and
considered, we will concede to whatever the better rate offer is for the
Banelco coop members and the rest of the country’s electricity consumers who
pay the missionary electrification subsidy,” Peñaloza said.
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