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By Francis Allan L. Angelo

AN independent power producer in Iloilo City is reaching out to prospective investors in the metropolis to address their projected energy requirement.

Engr. Henry Alcalde, project manager of the 164-megawatt coal-fired power plant of Global Business Power Corp. (GBPC), said they expect the demand in Panay to increase once their new plant operates next year.

“If you lower the cost of power, you encourage consumption. Lower prices will also attract businesses in our area. And once these investors come in, they will gradually use up the capacities of the new coal-fired power plant and the diesel plant. How fast this demand will be, we don’t know. But once the demand gets higher than our capacity, we will try to address that,” Alcalde said.

The coal-fired power plant will be operated by the Panay Energy Development Corp. (PEDC), a subsidiary of GBPC under the Metrobank Group. It is expected to go online in the last quarter of 2010.

The construction of the coal-fired power plant has resulted in renewed interests by investors to enter Iloilo City, particularly business processes outsourcing (BPO) firms.

A major investor expected to do business in the city is giant land developer Megaworld which bought the old Iloilo airport lot in Mandurriao district for P1.2 billion.

Megaworld is planning to develop the 54.5-hectare lot into a new business district with facilities such as hotels, convention center and BPO offices.

Industry sources said Megaworld would require around 20MW of power for its initial operations which is estimated to cost P1.5 billion.

Recently, the National Grid Corporation of the Philippines (NGCP), which handles the transmission side of the energy sector, made a positive projection on the energy needs in the Visayas grid.

Without factoring in the projected huge power demand from new growth areas such as the 300-hectare South Road Properties in Cebu City and the 54-hectare Megaworld property in Iloilo City, the NGCP said the next round of power supply problems in Cebu, Negros and Panay would be felt in 2018.

Alcalde said NGCP’s projections somehow jives with their own forecast, with Iloilo City suffering a 4-MW shortfall by 2014 on an annual demand growth of 3%. This does not include Megaworld’s demand. 

Engr. Gil Altamira, GBPC commercial manager, said they are reaching out to Megaworld to find out how much power they will need.

“Power plants don’t just pop up like mushrooms. We have to know the needs of the consumers so we can plan ahead of time, whether Engr. Alcalde will put up another unit.” Altamira said.

In Negros and Panay, load growth averaged 6.1% and 5.9%, respectively, this year. Panay’s load grew nearly 50% in 2007 only because the Panay Electric Co., Inc., sole electricity distributor in Iloilo City, was synchronized to the grid that year.

Growing demand has used up power reserves in the grid, leaving Cebu, Negros and Panay vulnerable to outages whenever a plant breaks down. Rotating brownouts have been the norm in these islands since summer.

Cebu’s actual peak demand this year reached 577 MW, while those of Negros and Panay hit 226 MW and 221 MW, respectively. Including Bohol and Leyte-Samar islands, the Visayas’ actual peak demand this year reached about 1,300 MW.

The Cebu-Negros-Panay grid gets 360 MW from the geothermal fields in Leyte, boosting total dependable capacity in the Visayas to 1,466 MW. Of the 360 MW, 200 MW goes to Cebu first and the balance is divided between Negros and Panay.

Cebu, Negros and Panay are expected to continue to experience power shortage until the first quarter of 2010, when the first of three 82-MW coal plants that Cebu Energy is building in Toledo City comes onstream.  (With reports from BusinessWorld)

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By Francis Allan L. Angelo

POWER supply is one of the major reasons why Transcom, a European business processes outsourcing (BPO) firm, decided to open shop in Iloilo City.

Duncan H. Cowie, Transcom vice president and regional manager for North America and Asia Pacific, said electricity was a key factor in their decision to locate their fifth Philippine site in Iloilo City.

“I consider power as a critical element of our business. And with power you have networks and the other elements that supply your infrastructure. I’m very excited that Iloilo has a new power plant coming on soon. Did that (power plant) make a difference in our decision? Absolutely. It’s very important to us. It’s so important to have security of supply because my clients don’t really mind what’s happening where we are. They only want to know we keep working,” Cowie said.

Global Business Power Corp. (GBPC) is putting up a 164-megawatt coal-fired power plant at Brgy. Ingore, LaPaz, Iloilo City to address the power shortage not only in the city but in Western Visayas as well.

The power plant, which is expected to go online next year, will be operated by the Panay Energy Development Corp. under the GBPC umbrella and supply electricity to Region 6.

Cowie said they will initially employ more than 800 Ilonggos when they open next month.

“We plan to increase that capacity by 50% in the next six months. By March 2010, we expect to employ around 1,500 people and will increase to 2,000 by end of next year,” Cowie said.

Transcom will be located at the Amigo Plaza Mall on Iznart Street in downtown Iloilo City. The building has been accredited by the Philippine Economic Zone Authority to host BPO firms.

Cowie said the manpower potentials attracted Transcom to locate its fifth center in Iloilo City after Metro Manila and Bacolod City.

“We are not attracted by facilities or regions. We’re attracted by the people, the individuals,” Cowie said.

Cowie said they began hiring and training employees more than a month ago.

Chris Mason, Transcom vice president for implementation and solutions, said they were did not meet any difficulty in hiring employees, particularly for the management level posts.

Mason said the hiring rate in Metro Manila is 20-25% but in Iloilo it ranges from 40-45%.

“Your hiring rate in Iloilo is double the national rate which speaks a lot of your manpower potentials here. Hiring management level officers is usually the hardest process but here in Iloilo, we did not find it hard to get the people we need. It’s primarily because of the numerous universities in Iloilo,” Mason said.

As regards Transcom expansion, Iloilo City Mayor Jerry Treñas said he has been talking with several businessmen who are interested in putting up buildings for new and expanding BPO firms.

Cowie said North America and Asia Pacific are the fastest growing areas among Transcom’s five regional operation areas at 50% annually.

“Transcom’s global growth is around 20%. In North America and Asia, the fastest growing country is the Philippines. Our growth rate in Asia is more than 100% yearly. Two years ago, we only had 800 employees in the Philippines. This year, we already have more than 6,000 employees,” Cowie said.

Transcom’s main business areas are customer care, sales and support, credit management and additional customer related services. It also provides CRM consulting, translation and interpretation, and legal services. Its expertise is in a wide range of industry sectors including telecommunications, the financial industry, travel & leisure, utilities and retail/consumer goods. It has 75 sites in 29 countries worldwide.

Artech admits contract with Ileco-3 defective

By Francis Allan L. Angelo

NO less than the vice president of Applied Research Technologies Phils. (Artech) admitted that their power supply agreement (PSA) with Iloilo Electric Cooperative (Ileco 3) is flawed.

Atty. Ramil Naciongayo, counsel for complainants Gerardo P. Panes and Evelyn P. Peñaflor, said Artech vice president for administration and business development Domingo Beltran admitted the defects in the 25-year contract before the National Electrification Administration (NEA) investigation committee looking into the alleged bribery and onerous provisions of the Artech-Ileco 3 contract signed last April 21, 2009 in Iloilo City.

The story hugged the headlines after Ileco 3 board president Mateo Baldoza claimed that he received cash-laden envelope from Iloilo Gov. Niel D. Tupas Sr. during a meeting with Artech officials at the governor’s house last April 17.

The cash, Baldoza assumed, was meant to facilitate the negotiations and approval of the power supply agreement offered by Artech.

Naciongayo said Atty. Xerxes Adzuara, NEA probe committee chair, discovered the flaw when they went over Beltran’s affidavit.

Beltran claimed in his affidavit that the contract is beneficial to Ileco 3 because Artech will construct the transmission facility to link the cooperative to the power producer’s proposed diesel and biomass plants.

Beltran said Artech will shoulder the construction so that Ileco 3 will not charge transmission fees on its consumers. The cooperative will only maintain the transmission facility.

But Section 9.2 of the PSA provides that Ileco 3 will construct and maintain the transmission facility.

Beltran told the panel that they are willing to amend the contract in keeping with Artech’s commitment to put up the facility.

He added that Artech prepared the contract which the Ileco 3 board later approved and signed through Baldoza.

Naciongayo said the defect only shows that the Ileco 3 directors did not study the contract which Artech prepared and offered to them.

“The board did not study the contract before approving it because they missed the discrepancy between what was agreed verbally during the negotiation and what is written in the contract. Had they taken time to read the provisions, they could have found it beforehand. And Beltran admitted that there was a flaw in the contract,” Naciongayo said.

IS ARTECH CAPABLE?

Naciongayo also pointed out the conflicting interpretation of Beltran and the contract on when the agreement will take effect.

Section 3.3 of the PSA provides that the contract shall become effective upon its execution and when the plant is ready to deliver electricity.

But Beltran told the NEA panel that commercial operations will only start once the Energy Regulatory Commission (ERC) approves the PSA.

Beltran said they have yet to submit the PSA to the ERC because it is Ileco 3’s job.

Naciongayo said Beltran’s interpretation of the contract’s effectivity is disadvantageous to the cooperative as it will be at the mercy of Artech.

“What if Artech does not do anything? Ileco 3 will be left hanging and that will endanger the power needs of its consumers,” the lawyer said.

Naciongayo also cited Artech’s contract with Capiz Electric Cooperative (Capelco) which took seven years to commence.

He said the Artech-Capelco contract was signed in 2001 but it was only approved in 2008.

Artech later formed another corporation, Enervantage, by partnering with a prominent family in Capiz in order to fulfill its contract with Capelco.

“Right now, Artech has no contract with Capelco, its Enervantage. This is a question of Artech’s capability to deliver its commitment,” Naciongayo said.

NO DISCOUNT

Naciongayo also hit Beltran’s justification before the NEA panel why Artech did not include the prompt payment discount in the 25-year PSA.

“Mr. Beltran said the discount is just a decoration in supply contracts as they have not encountered any cooperative that pays their bill within the 3-day period. In this case, Artech is assuming that Ileco 3 cannot pay its bills on time. Artech actually does not trust the cooperative to fulfill its part of the contract. So why is Artech doing business with Ileco 3 if there is no trust and confidence between them,” he said.

The discount, which is usually pegged at 3%, is an incentive to cooperatives that pay their suppliers within three days upon receipt of the monthly billing. The discount is a feature of power supply contracts to encourage power distributors to pay their suppliers promptly.

BALDOZA CONFESSION

Last Tuesday Ileco 3 board President Baldoza admitted before the NEA panel that Gov. Tupas gave him money in exchange for his approval of Artech’s offer.

Naciongayo said he suggested to the National Bureau of Investigation (NBI) to secure copies of the transcript of Baldoza’s admission.

He said the transcript could be a basis for the filing of criminal cases against personalities involved in the Artech-Ileco 3 bribery scandal.

“The NBI said they will request the NEA administration committee to provide the transcript of Baldoza’s admission. The NBI has been investigating this case as regards the bribery angle,” Naciongayo said.

Naciongayo said there is also a chance that the 25-year PSA might be rescinded or annulled because of the onerous provisions.

By Francis Allan L. Angelo

ILOILO Electric Cooperative (Ileco 3) board president Mateo Baldoza, a former court judge, has no credibility, according to Iloilo Gov. Niel D. Tupas Sr.

This was Tupas’ reaction to Baldoza’s admission that the governor gave him an envelope with cash inside to favor independent power producer, Applied Research Technologies Phils. Inc., (Artech).

The alleged bribery, Baldoza told the National Electrification Administration investigating committee, happened April 17 during a meeting with Artech officials at Tupas’ mansion in Jaro, Iloilo City.

Tupas said in an interview with Bombo Radyo that Baldoza has no credibility because he kept changing his statements.

“At first he claimed that I gave him money then denied it. Now, he is saying that I did it. He always changes his story. He has no more credibility,” Tupas said.

The governor said Baldoza is the only person claiming that there was bribery in the Ileco 3-Artech deal while the other directors have nothing to say.

Tupas said Baldoza is being used by persons who want to besmirch his name and reputation as the 2010 election period nears.

“The election fever is here and these are just efforts by some groups to malign me. I pity Baldoza,” he said.

Tupas had admitted summoning Ileco 3 and Artech officials to a meeting in his house to discuss the looming power crisis in the cooperative’s franchise area.

But the governor denied handing out money to the Ileco 3 directors.

Baldoza: Tupas gave me envelope with cash 

By Francis Allan L. Angelo 

A RETIRED judge and president of the Iloilo Electric Cooperative (Ileco) 3 board finally admitted receiving money from Iloilo Gov. Niel D. Tupas Sr. to favor an independent power producer.

Mateo Baldoza confirmed his first statement over Aksyon Radyo-Iloilo last May 5 that Tupas handed him an envelope filled with cash during a meeting with officials of Applied Research Technologies Phils. (Artech).

Baldoza made the admission during the hearing yesterday conducted by the National Electrification Administration (NEA) investigation committee on the alleged bribery issue involving Artech and Ileco 3 officials.

The hearing was held at the Ileco 1 main office in Tigbauan, Iloilo Tuesday to look into allegations that Artech handed cash to the directors to approve the 25-year power supply agreement the firm offered to the cooperative.

Baldoza spilled the beans on Artech and Tupas during the examination conducted by Atty. Ramil Naciongayo, counsel for the complainants Gerardo P. Panes and Evelyn P. Peñaflor who called for the NEA probe.

According to Baldoza, he and the Ileco 3 directors were called to a meeting with Artech officials led by president Reynaldo Uy at Tupas’ mansion in MV Hechanova, Jaro, Iloilo City last April 17, 2009.

Baldoza said Tupas called him inside a room of the mansion where the latter gave him an envelope while telling him to help Artech.

The retired judge later learned that the envelope contained P75,000 cash when he got home from the meeting.

He also confirmed that he received another envelope with P75,000 cash after their board meeting April 21, the day they approved the power supply deal with Artech.

In sum, Baldoza received P150,000 cash from Artech. Uy and Tupas had denied Baldoza’s allegations.

Aksyon Radyo anchorman Joel Tormon also testified before the AdCom relative to his May 5 interview with Baldoza.

Tormon said he confirmed the authenticity of the transcript of his interview with Baldoza which was admitted as evidence in the NEA probe.

Tormon said Baldoza’s statements during the NEA hearing were the same information and sequence of events the latter told during the May 5 interview with Aksyon Radyo-Iloilo.

A day after his interview with Tormon, Baldoza modified his statement in a local newspaper saying a woman employee of Artech gave the cash-laden envelope during the meeting at Tupas’ mansion.

But he again hinted that the governor gave him the cash-filled envelope when he faced the probe conducted by the National Bureau of Investigation (NBI).

In his affidavit submitted to the NEA AdCom last August, Baldoza said he received the cash-filled envelope from someone during the meeting at Tupas’s mansion.

Baldoza said that after eating at Tupas’s house, he was called inside the living room where that “someone” thrust the envelope in his hand.

By Francis Allan L. Angelo

A CONSORTIUM of electric cooperatives in Panay Island will begin negotiations with an independent power producer to purchase electricity from a 164-megawatt coal-fired power plant based in Iloilo City.

The negotiation kicked off with the signing of a memorandum of agreement between the Panay Power Supply Consortium (PPSC) and Panay Energy Development Corporation (PEDC).

PEDC, a subsidiary of Global Business Power Corp. (GBPC) under the Metrobank group, will operate the coal-fired power plant being constructed at Brgy. Ingore in LaPaz, Iloilo City.

The PPSC is composed of Aklan Electric Cooperative, Antique Electric Cooperative, Capiz Electric Cooperative and Iloilo Electric Cooperatives (Ileco) 1, 2 and 3.

The negotiation is seen to culminate in a 25-year electric power purchase agreement (EPPA) between PEDC and PPSC member cooperatives.

Adrian Moncada, GBPC assistant vice president for commercial operations, said once they have concluded the negotiations, the EPPA will be submitted to the Energy Regulatory Commission for approval.

The PPSC was conceptualized in 2008 to address the worsening electricity shortage in Panay.

The looming expiration of the cooperatives’ power supply contracts with the National Power Corp., which is presently being privatized, in 2010 also prompted PPSC to look for potential suppliers.

The coal-fired power plant is expected to be operational in the last quarter of 2010. It is composed of two units each with a capacity to generate 82MW. The plant has a net production of 144MW

Engr. Wilfred Billena, Ileco 1 general manager and PPSC president, said they bidded out a total of 72MW for their power requirements starting 2011.

A total of 36MW was awarded to two renewable energy companies – Global Green Power and Asea One – while the remaining 36MW was awarded to GBPC.

GBPC has set aside 72MW, or 75% of the coal-fired power plant’s net generation for Iloilo City’s electricity needs.

The remaining 36MW of the coal plant will be allocated to 5 electric cooperatives in Negros Occidental and Oriental.

Engr. Gil Altamira, GBPC commercial operations manager, said their price per kilowatt-hour will be lower than the ERC-approved rate of P4.30/kWh in the EPPA between Central Negros Cooperative (Ceneco) and Korean Electric Power Corp., (Kepco) which will also operate a coal-fired power plant in Cebu.

“We will try to reduce our price from that of the Ceneco-Kepco deal. The advantage of the GBPC-PEDC plant is that it is embedded in Panay Island which could save us from additional transmission cost,” Altamira said.

Billena said their contract with GBPC and other suppliers might not be enough because of their unpredictable consumer growth.

“Our consumption is pegged at 30MW but sometimes we are surprised because we hit 32MW on certain days. The supply instability in the Visayas grid makes it hard for us to predict our growth. When these new capacities operate, we expect our connections to increase. Apparently, the supply that we are about to contract might not be enough,” Billena said.

Billena said an embedded power plant in Panay is advantageous compared to sources outside the island because it is “more stable and cooperatives here will be given priority.”

By Francis Allan L. Angelo

REFORMS are underway to further perk up the mining industry in the Philippines, according to the Department of Environment and Natural Resources (DENR).

Speaking before the 7th Mineral and Energy Visayas Summit in Iloilo City Friday, DENR Assistant Secretary Jeremias L. Dolino said there is a need to refocus on the benefits of mining and attracting more investors in the country.

The DENR Mines and Geosciences Bureau headed by Engr. Leo Van Juguan hosted the summit at Westown Hotel in Mandurriao, Iloilo City.

Juguan said the annual summit is a gathering of key players in minerals and energy that highlighted the experiences of public and private sector affiliated with the mining industry.

Dolino said the mining industry continued its growth despite the global financial crisis since last year.

Dolino said the mining sector contributed 0.95 percent in 2001 to 1.52 percent in 2008 to the country’s gross national product (GNP).

“Mining has plowed in some US$577.25 million in 2008 or a total of US$2.1billion in investments since the start of the revitalization program in 2004,” he added.

The mining sector was also one of the recipients of the US$1.5-billion net foreign direct investments in the country in 2008.

Around 68,310 jobs were generated since the start of the mining revitalization program in 2004, Dolino said.

“As for the energy sector in 2008 the country got close to its 2010 target of 60 percent self-sufficiency, with the achievement of 57.9 percent sufficiency,” he added.

Coal, which is mined in various parts of the country, is one of the largest sources of energy in the country.

According to the Department of Energy, coal-fired thermal power plants remain the number one producer of electricity and account for a total of 3,967 MW or 25% of the country’s total installed powered generating capacity.

Dolino said the DENR will further streamline the processing of mining applications, cleansing of dormant mining claims and stricter compliance and monitoring of permit holders.

“We expect that processing time for new exploration permits(EP)/mineral production sharing agreements (MPSA) will be further reduced from 1 year to 6 weeks, excluding the National Commission in Indigenous People (NCIP) certification and the free, prior and informed consent (FPIC),” Dolino said.

The NCIP certification is needed to ensure that the area to be explored or mined is not an ancestral domain of indigenous peoples.

FPIC consists of giving local people a formal role – and some form of veto power – in the consultations and ultimate decisions about local development projects, particularly mining.

The DENR will also shorten the time for EP renewal/exploration period renewal from 3 months to 1 day.

Cleansing of dormant mining claims aims of weed out speculators aside from coming up with a roster of active, serious, capable and competent mining applicants, Dolino said.

By Francis Allan L. Angelo

MEMBERS of the Iloilo Electric Cooperative (Ileco) 3 board of directors have until next month to answer allegations that they were bribed to approve a 25-year power supply agreement (PSA) with an independent power producer (IPP).

The Administration Committee (AdCom) of the National Electrification Administration (NEA) gave the directors until September 12 to submit their position papers as regards the bribery yarn.

Atty. Xerxes D. Adzuara, NEA AdCom chair, set the deadline after the preliminary hearing conducted at Ileco 3 head office in Sara, Iloilo Thursday morning.

The hearing began around 9am until past 10am and was attended by the Ileco 3 board headed by former Judge Mateo Baldoza, Rene Arandilla, Emmanuel Pacardo, Azur Salcedo, Achilles Pama and Vincent Francis Espinosa.

The directors were aided by their legal counsels Edison Belloga and Joseph Anthony Lutero.

Instead of a full blown hearing, the directors asked the AdCom that they will just submit their position papers.

Adzuara said they will make their recommendation to NEA Administrator Editha Bueno a month after the Ileco 3 directors submitted their position papers.

“If they don’t submit their position papers, this case will be submitted for decision to the NEA board meeting,” he added.

The NEA investigated the Ileco 3 board due to the complaints filed by two consumers following Baldoza’s exposé that he received P150,000 from Iloilo Gov. Niel Tupas Sr. and officials of Applied Research Technologies Philippines, Inc. (Artech).

The money, Baldoza said in his interview with Aksyon Radyo last May 5, was meant to facilitate the approval of the PSA with Artech which NEA recommended to be rescinded due to alleged onerous provisions.

 

SOMEONE?

But in his sworn affidavit which he made available yesterday, Baldoza pulled back his punches.

Baldoza said that he received from “someone” last April 17 an envelope containing P75,000 during a meeting with Artech officials at the house of Gov. Tupas in Jaro, Iloilo City.

Baldoza said that after eating at Tupas’s house, he was called inside the living room where “someone” thrust the envelope in his hand.

In his May 5 interview, the former judge said Tupas handed him the money. But he changed his tune in another interview May 6 saying a female Artech employee gave him the money at Tupas’s house.

He again hinted that the governor gave him the cash-filled envelope when he faced the probe conducted by the National Bureau of Investigation (NBI).

In an interview with Aksyon Radyo yesterday, Baldoza said he revealed the persons behind the alleged bribery to the NBI. He will also detail what happened at the governor’s house in his position paper to the NEA.

Aside from the April 17 meeting in Tupas’s house, Baldoza also claimed that he received another P75,000 from an Artech employee during their special board meeting in Iloilo City last April 21.

By Francis Allan L. Angelo

THE sole distribution utility in Iloilo City is set to introduce the prepaid retail electric service (PRES) to residential consumers.

Randy Pastolero, operations manager of Panay Electric Co. (PECo), said they are waiting for the Energy Regulatory Commission (ERC) to issue the rules and guidelines on the implementation of PRES.

“The ERC has approved the rules already and we are awaiting its issuance so we can study the implementation and draft our own internal system. Once we have studied the rules, we will notify our consumers about the new system,” Pastolero said.

PRES is an electric service that uses a prepaid metering system designed to allow a residential customer to purchase credit or load and then use electricity until such time his load is exhausted.

The ERC approved the rules on PRES July 13 after a series of consultations since last year.

Pastolero said they see several advantages in the implementation of PRES.

“Primarily, it will compel consumers to manage their power consumption which will redound to more efficient generation and distribution of electricity. It will also curb, if not eliminate, power pilferage resulting in lower systems losses. Lower systems losses will mean reduction of additional charges on consumers,” he said.

The ERC allows distribution utilities and electric cooperatives to charge consumers for systems losses or electricity lost in distribution lines due to pilferage and other technical reasons.

Power distributors can only collect a maximum of 9.5% systems losses charges on monthly bills.

Power utilities will also reduce their overhead expenses with the implementation of PRES because “we don’t have to employ meter readers,” Pastolero said.

“Our manpower will shrink because of the prepaid retail system and we will eliminate incidence of wrong meter readings which is common in the traditional metering system,” he added. 

Pastolero said a firm supplying digital prepaid electric meters in the US has presented its product to them recently.

The digital prepaid meter features a magnetic strip which will scan and load electricity prepaid cards.

“The load in the prepaid card will convert the amount to allowable kilowatt per hour based on the prevailing rates. Once loaded, the meter will turn on and supply electricity. We are also studying other prepaid metering technologies,” Mr. Pastolero said.

PECo will require the meter supplier to be accredited and their gadgets calibrated by the ERC.

“Our only concern is that the cost of the digital prepaid meters might affect the operations cost of the distribution utility. From what we learned, the digital meter is triple the price of traditional meters. Maybe the ERC will allow us to gradually recover the costs in procuring the meters,” Pastolero said.

Pastolero said consumers can determine their consumption by calculating the wattage of their appliances and lights.

“PECo will devise a way to help the consumers calculate their consumption and the amount of prepaid card they will buy,” he added.

By Francis Allan L. Angelo

THE National Electrification Administration (NEA) ordered the board of directors of Iloilo Electric Cooperative (Ileco 3) to justify why they should not be preventively suspended.

The NEA Administrative Committee issued the directive to the Ileco 3 board in a show cause order issued Friday.

The Ileco 3 board headed by former Regional Trial Court judge Mateo Baldoza is under investigation for the alleged bribery in the power supply agreement between the cooperative and Applied Research Technologies Philippines Inc. (Artech).

Last week, NEA gave the Ileco 3 board 10 days to explain the alleged bribery unearthed by the fact-finding team led by Atty. Omar Mayo of the NEA Legal Department.

The fact-finding team recommended the preventive suspension of the board of directors pending the formal investigation on the bribery issue.

NEA had deactivated the board and assigned Eddie Adlao as project supervisor to oversee Ileco 3 operations while the probe is ongoing.

Baldoza revealed in an interview with Aksyon Radyo last May 5 that he received P75,000 from Gov. Niel Tupas Sr. during a meeting with Artech officials April 17 at the governor’s house.

Baldoza also claimed receiving another P75,000 from an Artech employee after the approval and signing of the PSA April 21 in a hotel in Iloilo City.

Tupas had denied bribing the Ileco 3 board even as he defended the power supply deal as necessary to ensure ample electricity in the 5th district and portions of the 4th district.

The NEA fact-finding team found out that the PSA was over-contracted and will burden Ileco 3 consumers in the next 25 years.

The NEA investigation was triggered by complaints from two Ileco 3 consumers and the Ileco 3 management team.

Baldoza said he will stand by his claims as regards the alleged bribery when he submits his explanation to NEA.

By Francis Allan L. Angelo

A KOREAN power firm is still keen on putting up a coal-fired power plant in Panay despite stiff opposition it met nine years ago.

Presidential Assistant for Western Visayas Raul Banias said Korean Electric Power Corp. (Kepco) plans to convert the Panay Diesel Power Plant (PDPP) in Dingle, Iloilo into a coal-fired power plant.

In an interview with the weekly cable TV talk show Serbisyo Publiko hosted by Councilor Perla Zulueta Sunday, Banias said Kepco has not lost interest in putting up a power plant in Panay.

Kepco is part owner of SPC Power Corp., the mother unit of SPC Island Power Corp. which bought PDPP and Bohol diesel fired power plant early this year for US$5 million.

“In fact, they told me that their main plan after buying the plant is to convert the PDPP into a coal-fired power plant. They are still interested in investing in the energy sector here in Panay,” Banias said.

Kepco first proposed to put up a 100-megawatt coal-fired power plant in Tibiao, Antique but moved to Iloilo due to poor soil stability in the area.

The Korean power firm then planned to locate the project in the towns of Ajuy and later to Banate but it ultimately transferred to Cebu due to stiff opposition from environmental groups and the Catholic Church.

Kepco is now operating a US$270-million coal-fired power plant in Cebu.

http://www.bworldonline.com/BW070309/content.php?id=043

ILOILO CITY — The National Electrification Administration (NEA) yesterday took over the operations of an electric cooperative in Iloilo province following allegations of bribery over a power supply agreement with an independent power producer.

Edita Bueno, NEA administrator, designated Danny Sedoyo of the NEA Institutional Department and Eddie Adlao of the Management Accounts Group as project supervisors of Iloilo Electric Cooperative (Ileco 3).

Messrs. Sedoyo and Adlao reported to the Ileco 3 office in the town of Sara yesterday morning. They then designated Antonio Lazarraga as OIC-general manager of the cooperative. Mr. Lazarraga also heads Ileco 3’s technical services department.

They were designated to oversee Ileco 3’s operations upon recommendation of NEA legal department chief Omar Mayo.

Mr. Mayo headed the NEA fact-finding team that initially investigated the bribery claims surrounding the new 25-year deal between Ileco 3 and Applied Research Technologies Phils., Inc. or Artech.

NEA Deputy Administrator Edgardo Piamonte said the two supervisors will handle Ileco 3 operations, particularly disbursement of funds and signing of contracts.

“They will act as overseers of the cooperative while we investigate other issues such as the power supply deal. Every transaction of the cooperative must pass scrutiny of NEA through the supervisors,” he said.

The seven-man board of directors of Ileco 3 will only act as advisory board and will have no power to decide on the cooperative’s affairs.

Mr. Lazarraga said it was business as usual at Ileco 3 and there would be no movement of personnel in the meantime.

In a report dated June 5, Mr. Mayo said there was “undue haste, aggravated by bribery, in the signing of the [new power deal], totally disregarding the findings of the very own technical personnel of Ileco 3.”

The fact-finding team based its findings and recommendations on the statements of Mateo Baldoza, Ileco 3 board president, who said he had received P150,000 from a politician and the power supplier.

Mr. Baldoza, a retired trial court judge, said he first received P75,000 from Iloilo Governor Niel Tupas on April 17 and another P75,000 from a female Artech employee on April 21.

Mr. Tupas and Artech President Reynaldo Uy have denied the alleged bribery. Mr. Tupas said he only wanted to assure Ileco 3’s power supply as its contract with the National Power Corp. will expire next year.

Mr. Baldoza later modified his statement, saying a female Artech worker gave him money on April 17 at Mr. Tupas’s house.

Mr. Mayo has recommended the rescission of the Ileco 3-Artechpower supply deal “for being grossly disadvantageous and prejudicial to its interests, as well as that of its consumers-members.” — Francis Allan L. Angelo

By Francis Allan L. Angelo

NEW power plants must be constructed in Panay to address the projected power shortage in Visayas.

This was the stand of Senator Francis Escudero even as he urged for the completion of the coal-fired power plant in Iloilo City.

Citing the Power Development Plan of the government, Escudero said Visayas region will require an additional 2,283 megawatts in the next five years on top of the current power demand of 967MW.

Escudero said the forecast might not be met as only two major power plants are being constructed in Visayas in the next two years.

The proposed plants are in Toledo City, Cebu with a 436MW capacity and the 164MW coal-fired power plant in Brgy. Ingore, LaPaz, Iloilo City.

“These plants can only provide a combined 601MW, leaving a power deficit of 715MW,” Escudero said.

The senator from Sorsogon said Iloilo City and the rest of Panay needs energy to power sunshine sectors such as tourism and information communication technology.

“It is important for the coal plant to be established in Iloilo because you need that,” he added.

As regards the perceived pollution from power plants, Escudero said available clean-coal technologies that conform to national and international emission standards can be used to allay fears of sectors opposing the plant.

“This clean-coal technology must pass the emission standards of the Clean Air Act of 1999 which was based on EU standards. The EU standards are even stricter than the standards used by the US Environmental Projection Agency,” Escudero said.

Environmentalists said coal-fired power plants contribute to greenhouse gas emissions such as carbon dioxide and the so-called global warming.

But Escudero said the Philippines’ contribution to carbon dioxide emission is only 0.29%.

“Our carbon dioxide emission is way lower than that of the US which contributes 29% and China with 28%. And 60% of the 0.29% that we contribute to carbon dioxide emission comes from vehicles, not stationary sources such as power plants,” Escudero said.

The senator said there must be balance between environmental protection and embracing additional power sources.

“We don’t need to choose between the two. What we need is to strike a balance between our need for more energy and protecting the environment,” he added.

Francis Allan L. Angelo

THE National Electrification Administration (NEA) has virtually stripped the board of directors of Ileco 3 of all the powers to run the cooperative.

Effective yesterday, Danny Sedoyo of the NEA Institutional Department and Eddie Adlao of the Management Accounts Group took over the board’s functions in Ileco 3.

Sedoyo and Adlao were designated as project supervisors of Ileco 3 following allegations of bribery in the power supply agreement (PSA) between the cooperative and an independent power producer.

NEA Administrator Edita Bueno, through the two supervisors, also designated Engr. Antonio Lazarraga as OIC-general manager of the cooperative.

Lazarraga also heads Ileco 3’s Technical Services Department.

Sedoyo and Adlao reported to Ileco 3 office in Sara, Iloilo yesterday morning and met the management team.

The supervisors were designated to oversee Ileco 3 operations upon recommendation of NEA Legal Department chief Omar Mayo. 

Mayo headed the NEA fact-finding team which initially probed the alleged bribery in the 25-year PSA between Ileco 3 and Applied Research Technologies Phils., Inc (ARTECH).

NEA Deputy Administrator Edgardo Piamonte said the two supervisors will handle Ileco 3 operations, particularly disbursement of funds and signing of contracts.

“They will act overseers of the cooperative while we investigate other issues such as the power supply deal. Every transaction of the cooperative must pass scrutiny of NEA through the supervisors,” Mr. Piamonte said.

Starting Thursday, only Adlao and Lazarraga can sign checks and disburse Ileco 3 funds. The board of directors will only act advisory board and will have no power to decide on the cooperative’s affairs.

In an interview with Aksyon Radyo, Lazarraga said it will be business as usual at Ileco 3 and there will be no movement of personnel for the meantime.

Mayo said in his report dated June 5, 2009 that there was “undue haste, aggravated by bribery, in the signing of the said PSA, totally disregarding the findings of the very own technical personnel of Ileco 3.”

The fact-finding team based its findings and recommendations on the statements of Mateo Baldoza, Ileco 3 board president, who alleged that he received P150,000 from a politician and ARTECH.

Baldoza, a retired trial court judge, said he first received P75,000 from Iloilo Gov. Niel Tupas on April 17, 2009 and another P75,000 from a female ARTECH employee on April 21, 2009.

Tupas and ARTECH President Reynaldo Uy denied the alleged bribery. Tupas said he only wanted to assure Ileco 3’s power supply as its supply contract with the National Power Corp. will expire next year.

Baldoza later modified his statement saying a female ARTECH worker gave him the money on April 17 at Tupas’ house.

The former judge lately went back to his initial statement after facing the National Bureau of Investigation which is also probing the alleged bribery.

Rene Arandilla, Ileco 3 director, claimed in his sworn affidavit that he saw and counted the money which Baldoza received last April 21, the day the supply deal was approved and signed.

Mayo also recommended the conduct of a formal investigation on the alleged bribery based on the notarized complaint of two Ileco 3 consumers, Gerardo P. Panes and Evelyn P. Peñaflor. 

He also recommended that the board of directors be preventively suspended pending the probe.

Piamonte said the NEA Administration Committee headed by Energy Sec. Angelo Reyes will convene to order the investigation by the NEA Legal Department.  

Mayo recommended the rescission of the Ileco 3-ARTECH power supply deal “for being grossly disadvantageous and prejudicial to its interests, as well as that of its consumers-members.”

Domingo Beltran, ARTECH vice president, said they will sue NEA and Ileco 3 if the power supply deal is rescinded.

Arandilla said they will follow NEA orders and wait for the agency’s action and moves on the alleged bribery.

“The supervisors will only be around for 100 days until the issue has been settled. We will follow whatever NEA wants,” Arandilla said.

By Francis Allan L. Angelo 

TWO managing supervisors from the National Electrification Administration (NEA) arrived at Electric Cooperative (Ileco 3) head office yesterday to start overseeing the cooperative’s operations.

The supervisors, Engr. Danny Sedoyo and Ed Adlao, were tasked to oversee Ileco 3 following the recommendation of a NEA fact finding team that investigated the power supply agreement (PSA) with Applied Research Technologies Philippines Inc. (Artech).

The designation of project supervisors was one of the recommendations of Atty. Omar Mayo, NEA Legal Department chief, who headed the fact-finding team.

Sources from Ileco 3 and NEA said the supervisors will start their tasks today by reviewing transactions and monitoring the cooperative’s operations.

The NEA supervisors will also attend the regular meeting of the Ileco 3 board of directors Saturday to present a letter ordering the “deactivation” of the board, the sources said.

“Once the board is deactivated, it will only act as an advisory body and will have no power to decide on policies and transactions of the cooperative,” an Ileco 3 source said.   

The NEA also ordered the start of a formal investigation on the alleged bribery that attended the approval and signing of the Artech-Ileco 3 power supply deal.

The NEA administration committee (AdCom) will lead the investigation that will make the Ileco 3 board explain its action prior to the approval of the deal.

The AdCom failed to convene and act on Mayo’s recommendation because Energy Sec. Angelo Reyes was out of the country. Reyes is a member of the NEA board of administrators.

Former Judge Mateo Baldoza, Ileco 3 board president, said in an interview with Aksyon Radyo last May 5 that he received P75,000 from Gov. Niel Tupas Sr. during a meeting with Artech officials April 17 at the governor’s house in Jaro, Iloilo City.

He later modified his statements saying a female Artech worker gave the money at Tupas’ house.

Baldoza said he received another P75,000 cash from an Artech employee after the approval and signing of the 25-year PSA with Artech last April 21 in Iloilo City.

The NEA fact-finding team said the PSA must be rescinded due to its “grossly disadvantageous and prejudicial” provisions.

The NEA probers also found out that bribery may have taken place prior to the signing of the contract.

The finding was based on the sworn affidavit of Ileco 3 director Rene Arandilla and Baldoza’s radio interview with Askyon Radyo.

Arandilla claimed in his sworn affidavit that he saw and counted the money that Baldoza received on April 21 at Fine Rock Hotel.

While Baldoza changed his tune on who gave him money at Tupas’s house, his recantation “cannot obliterate the fact of bribery” in the deal.

By Francis Allan L. Angelo

 

THE Office of the Ombudsman has taken interest in the controversial power supply agreement (PSA) between Iloilo Electric Cooperative (Ileco-3) and an independent power producer (IPP).

The anti-graft body has asked the National Electrification Administration (NEA) for a copy of the fact-finding’s team report on the PSA between Ileco-3 and Applied Research Technologies Phils., Inc. (Artech).

The three-man fact-finding team headed by Atty. Omar Mayo, NEA legal department chief, recommended the rescission of the PSA due to its grossly disadvantageous provisions that will burden Ileco-3 consumers.

The fact-finding also recommended that Ileco 3 directors will be preventively suspended and investigated for allegedly receiving bribes in exchange for the approval of the deal.

Edgardo Piamonte, National Electrification Administration (NEA) deputy administrator, confirmed that Ombudsman central office subpoenaed a copy of the fact-finding team’s report.

Mayor also confirmed that the anti-graft body asked for a copy of his report.

But the Ombudsman in Western Visayas said they have no records of any compliant or request for investigation on the Ileco 3-Artech deal.

Atty. Evangeline Nuñal, assistant graft investigation officer, said the complaint or request may have been filed with the Ombudsman Visayas in Cebu or their central office in Metro Manila.

Nuñal said the Ombudsman can also investigate alleged graft and corruption in government reported in the media.

Last May 5, former Judge Mateo Baldoza, Ileco 3 board president, told Joel Tormon of Aksyon Radyo that he received P75,000 cash from Gov. Niel Tupas Sr.

Baldoza said he received the money from Tupas during a meeting with Artech officials led by president Reynaldo Uy at the governor’s mansion in Jaro, Iloilo City last April 17.

The former judge alleged that Tupas asked him to help Artech while handing the money inside a white envelope.

The following day, Baldoza modified his statement saying it was a lady employee of Artech who gave him the money at the governor’s house.

He received another P75,000 cash from an Artech employee after they approved and signed the PSA in a hotel in Iloilo City April 21.

Lately, Baldoza said he stood by his first statement that Tupas gave him the money when the former faced the National Bureau of Investigation (NBI) early this month.

The NBI had also launched an investigation on the issue based on the complaints of two Ileco 3 consumers.

Tupas denied bribing Ileco 3 directors saying he was only concerned with the looming power shortage in the cooperative’s franchise area.

Tupas said he wanted to assure that Ileco 3 will have enough power supply when its contract with National Power Corp. expires next year.

Domingo Beltran, Artech vice president, said they might sue Ileco 3 and NEA should the cooperative decide to rescind their PSA.

Beltran said it is up to Ileco 3 if it will decide to continue with the contract or not.

Tupas also accused Presidential Assistant for Western Visayas Raul Banias of spreading unsigned copies of the fact-finding team’s report to the media.

The governor said the report is not yet official as it remains unsigned and unapproved by NEA.

Banias, who requested the NEA probe, said Mayo and other NEA officials already confirmed the existence of the report which assailed the alleged onerous provisions of the contract.

Banias said the deployment of a NEA project supervisor to Ileco 3 is proof that NEA is seriously looking into deals and operations of the cooperative.

“NEA can always take over the operations of Ileco 3. We hope that NEA will hear the qualms of the consumers who are seeking justice for this alleged anomalous transaction,” Banias said.

By Francis Allan L. Angelo 

A NATIONAL Electrification Administration (NEA) fact-finding team found provisions in the power supply agreement (PSA) between Iloilo Electric Cooperative (Ileco 3) and an independent power producer (IPP) disadvantageous to the coop and its member-consumers.

The findings are included in the report of the fact-finding team headed by Atty. Omar Mayo, NEA legal department head.

The team was tasked to investigate the alleged bribery and disadvantageous provisions of the 25-year PSA between Ileco 3 and Applied Research Technologies Phils., Inc. (Artech).

For one, the team said that the 15-MVA substation that Artech pledged to donate to Ileco 3 after 25 years should not be considered a gift or deal sweetener. Artech made the promise as embodied in Sections 9.2, 15.1, 15.2 and 15.3 of the PSA. 

“Artech has to install and provide the 15 MVA substation, as this is necessary and indispensable in its operation to deliver electric power to Ileco 3 and not for the use of Ileco 3 itself. This will only be turned-over to Ileco 3 after 25 years free of charge but already fully depreciated by then,” the report said.

Artech also did not offer prompt payment discount (PPD) to Ileco 3, unlike the offer of renewable energy producer Asea One which signed a power supply contract with the cooperative.

“It is likewise worthy to note that all the other IPPs included the PPD in their respective offer sheets,” it said.

IMPOSSIBLE

The report also noticed that the projections of the contract on Ileco 3’s power demand “is highly improbable, if not totally impossible.”

In the first three years of the PSA, the minimum energy off-take (MEOT), or quantity of electricity Ileco 3 will buy from Artech, is pegged at 55.750 million kilowatt-hour (kWh).

The quantity will then increase by 51% to 84.480 million kWh in the 4th year and 92.4 million (66%) in the 5th year of the contract.

There is also an over contract of demand, the NEA report said.

The report said the Ileco 3 board of directors failed to evaluate Section 5.8 of the PSA which provides that the cooperative will pay the MEOT as if such quantity has been consumed.  

“The Board Directors failed to evaluate the above provisions since these are very disadvantageous to the Ileco 3 which resulted to over-contract of demand. The Minimum Off-Take provided in the contract is much higher when compared to the forecasted kWh based on the ICPM (Integrated Computerized Planning Model) of Ileco 3,” the report added.

If the PSA takes effect, consumers will pay P55.663 million a year for 8.383 million kWh of electricity.

From 2015 until the contract ends, Ileco 3 consumers will pay P181,349,960 for 29.47 million kWh of excess power.

“Unless there shall be many industrial and commercial consumers who will apply in Ileco 3, the above contracted energy cannot be consumed by the coop. The coop will have to pay the contracted energy whether consumed or not and pass it on to the consumers. In the end, it will be the member-consumers who will suffer,” the NEA report said.

The fact-finding team’s report validated The Daily Guardian’s analysis of the PSA, particularly the over-contracted demand and other onerous provisions.

Mayo recommended that Ileco 3 rescind the PSA because of its disadvantageous provisions.

The fact-finding team also recommended a formal investigation on the complaints of two Ileco 3 consumers and possible preventive suspension of Ileco 3 directors who voted for the contract.

NEA says Artech-Ileco 3 PSA disadvantageous to coop

By Francis Allan L. Angelo 

A FACT-finding team of the National Electrification Administration (NEA) recommended the scrapping of the power supply agreement (PSA) between Iloilo Electric Cooperative (Ileco 3) and an independent power producer.

The report of the probe team headed by Atty. Omar Mayo, NEA legal department chief, said the PSA between Ileco 3 and Applied Research Technologies Phils., Inc. is “grossly disadvantageous and prejudicial to the interests of the cooperative and its members-consumers.”

The team submitted its findings to NEA Administrator Edith Bueno June 5, a month after Ileco 3 board president Mateo Baldoza revealed to Joel Tormon of Aksyon Radyo that he received P75,000 from Gov. Niel Tupas Sr.

Baldoza said in the May 5 interview that Tupas gave him the money during a meeting with Artech officials at the governor’s house in Jaro, Iloilo City.

The NEA probers said there was “undue haste, aggravated by bribery, in the signing of the said PSA, totally disregarding the findings of the very own technical personnel of Ileco 3.”

The team recommended the following actions to NEA board of administrators:

–         assign a NEA project supervisor at Ileco 3 to monitor the operations and transactions in the cooperative;

–         the PSA, upon the initiative of Ileco 3, be rescinded for being grossly disadvantageous and prejudicial to its interests;

–         investigate the notarized letter-complaints of two Ileco 3 consumers for proper action by NEA including, but not limited to, the preventive suspension of the Board Directors who voted for the PSA, either by active participation or tacit consent.

Edgardo Piamonte, NEA deputy administrator, confirmed that the team has submitted its report to the board for its approval.

Piamonte said a project coordinator will arrive in Ileco 3 Wednesday next week to start monitoring the cooperative’s operation.

Bribery

The NEA probers also found that bribery may have took place prior to the signing of the contract.

The finding was based on the sworn affidavit of Ileco 3 director Rene Arandilla and Baldoza’s radio interview with Askyon Radyo.

The investigators said Arandilla’s affidavit is credible because he personally heard from Baldoza about the additional P75,000 from Artech after the signing of the contract April 21 in Iloilo City.

“Baldoza himself showed the envelope to Arandilla, who was asked by the former to count the contents thereof, amounting to P75,000. Stated differently, the portion of the affidavit on the ‘additional’ amount in the envelope was a product of the personal knowledge of Arandilla, and cannot be denominated as hearsay evidence. In point of fact, Arandilla – with the express consent of Baldoza, was even tasked to count the money inside the ‘additional’ envelope,” the report said.

While Baldoza changed his tune on who gave him money at Tupas’s house, his recantation “cannot obliterate the fact of bribery” in the deal.

“The ‘revision’ in the recantation of the Board President touches base only on the person who gave the money, as the latter pronouncements would tend to show that the same official/representative gave the first and second amounts. At bottom, whether it was the Governor or the Artech representative who gave him the first and the second envelopes is of no moment, as it refers only to the giver but does not, in any way, deny the act itself,” the report said.

Baldoza recently said he told the National Bureau of Investigation that Tupas handed him the money last April 17. 

No bidding; railroaded 

The NEA investigators said the Ileco 3 board failed to analyze the PSA that will bind Ileco 3 consumers to Artech in the next 25 years.

It was also noted that Artech was not among those IPPs which submitted bids to the consortium to supply power to seven electric cooperatives in Panay and Guimaras Islands.

“There was undue haste in entering into contract as it took only 16 days for the board to decide to ink the contract with Artech. When compared to the consortium, the period is very short, as it took them about four months to study and evaluate offers of the different IPPs. The duration of the contract is no less than 25 years, which would all the more necessitate the exercise of prudence to afford the members-consumers the best possible deal on the matter of electricity rates. Artech personnel furnished the members of the board copies of their proposed contract for study and evaluation on April 5, 2009 and was signed April 21, 2009,” the report said.

While the Ileco 3 board claimed that Artech presented its proposal during the board meeting March 18, “nothing can be found in the minutes of board meetings that a thorough and extensive deliberation/evaluation was ever conducted on an important issue, so as to warrant the signing of the contract.”

No contract review

The NEA probe team also scored the Ileco 3 board for failure to submit the contract to NEA for requisite review of its provisions.

The NEA report said this lack of NEA approval of the Ileco 3-Artech deal “raises the proverbial quizzical eyebrows, considering that a similar PSA was entered into by and between CAPELCO (Capiz Electric Cooperative) and the same IPP.”

“Why did Artech agree with CAPELCO to subject its PSA to contract review by NEA while totally shutting out NEA from reviewing its PSA with Ileco 3?” the NEA report said.

The investigators said NEA’s omission from the deal was “designed to ‘cut corners’ and expedite the signing of the contract, as referral of the PSA to NEA for review would further delay the signing and set back the timetable.”

By Francis Allan L. Angelo

 

POWER utilities in Panay are preparing for the possible electricity shortage due to scheduled maintenance of power plants in the Visayas grid this September.

Wilfred Billena, Iloilo Electric Cooperative (Ileco) 1 general manager, said they are awaiting word from the National Grid Corporation of the Philippines (NGCP) regarding the preventive maintenance of certain power plants.

“It is up to the systems operator group (of the NGCP) to schedule the load shedding once these plants in the Visayas grid undergo preventive maintenance. Once we have the schedule of maintenance and the load reduction, we can make a manual load shedding scheme in our service areas,” Billena said.

Ileco 1 has a peak load of 30 megawatts which it draws from the Cebu-Negros-Panay grid and independent power producer Global Business Power Corp. (GBPC).

Billena said Capiz and Aklan might suffer the most from the load shedding if they fail to renew their respective supply contracts with the National Power Corp. (NPC).

Billena said they have minimized rotating brownouts in Ileco 1 after entering into an agreement with NGCP.

“NGCP allowed us to use excess power it draws from the Palinpinon geothermal power plant in Negros,” he added.

Gil Altamira, GBPC commercial account manager, said they are rushing the repair of Engine No. 5 of Panay Power Corp. (PPC), the sole power producer in Iloilo City.

Altamira said the engine broke down a month ago due to a damaged rotor winding. It is expected to go online on August 1, 2009.

PPC presently supplies 55MW to Iloilo City through Panay Electric Co. (PECo).

PECo also draws another 15MW from NPC. Iloilo City has a peak load demand of 82MW.

“If we can repair the engine before the scheduled maintenance of plants in the grid, Iloilo City won’t suffer from the load shedding. By then, we can supply 66MW to PECo which is enough to power the city including the 15MW from the grid,” Altamira said.

Altamira said they are hoping that the preventive maintenance of plants will not affect the 15MW the utility draws from the grid.

“If the shutdown will reduce our supply from the grid by more than 50%, we might suffer from brownouts during the scheduled maintenance,” he said.

By Francis Allan L. Angelo

 

THE National Electrification Administration (NEA) might release next week its recommendation on the controversial power supply agreement (PSA) between Iloilo Electric Cooperative (Ileco) 3 and an independent power producer.

 

Atty. Omar Mayo, who headed the NEA fact-finding team, said they have finished their investigation on the deal between Ileco 3 and Applied Research Technologies Phils., Inc (Artech).

 

Mayo said they will soon forward their recommendations to NEA Administrator Edita Bueno.

 

“The recommendations and actions of the NEA board of administrators might be out next week,” he said.

 

Mayo said their investigation focused on the PSA between Ileco 3 and Artech allegedly tainted with bribery as claimed by former Judge Mateo Baldoza, Ileco 3 board president.

 

Mayo said part of their evidence is the May 5 interview of Baldoza with Joel Tormon of Aksyon Radyo.

 

Baldoza claimed in the said interview that Governor Niel Tupas Sr. handed him an envelope containing P75,000 cash during a meeting between Ileco 3 and Artech officials April 17 at the governor’s mansion in Jaro, Iloilo City. 

 

Baldoza said he received another envelope containing P75,000 cash from a female Artech employee during the Ileco 3 board meeting in Iloilo City last April 21.

 

Mayo said they also included the sworn affidavit of Ileco 3 director Rene Arandilla who corroborated Baldoza’s claim.

 

Arandilla said Baldoza showed him the envelope he allegedly received from the Artech employee last July 21.

 

Arandilla said he counted P75,000 cash inside the envelope. Baldoza later told him to get P10,000 because he will give the rest to the church but Arandilla refused.

 

Arandilla said he was not present in the meeting at Tupas’ house although he received information that money changed hands during the gathering.

 

After the May 5 interview, Baldoza modified his statement by denying that Tupas gave him money during the April 17 meeting with Artech officials.

 

Last Monday, Baldoza appeared before the National Bureau of Investigation (NBI) which is investigating the deal due to the complaints of two Ileco 3 consumers.

 

Baldoza said he told NBI investigator Arnold Diaz the actual events surrounding the PSA, particularly the money and pressure they received from Tupas and Artech.

 

Baldoza said his statements to the NBI are similar to his May 5 interview with Aksyon Radyo and revelations to Presidential Assistant Raul Banias.

 

Atty. Norberto Posecion, Baldoza’s legal counsel and former classmate, said the ex-judge made an affidavit relative to the Ileco 3-Artech deal “but he has yet to sign it.”

 

Posecion said the content of the affidavit were similar to Baldoza’s first statement regarding the Ileco 3-Artech deal.

 

“I told him to make sure that everything he wrote in the affidavit is true to avoid any complication,” Posecion said.

Baldoza pinning down Tupas?

 

By Francis Allan L. Angelo

 

WHAT did former Judge Mateo Baldoza tell the National Bureau of Investigation (NBI) relative to the power supply agreement (PSA) between Iloilo Electric (Ileco) 3 and Applied Research Technologies Phils., Inc. (Artech)?

 

“I told the truth,” said Baldoza, Ileco 3 board of directors president, when asked about his meeting with NBI investigator Arnold Diaz.

 

Baldoza said he cannot give the full details of his testimony to the NBI “because it is confidential.”

 

Baldoza said what he told NBI is the same thing he told Presidential Assistant Raul Banias and other persons regarding the April 17 meeting with Artech officials at the house of Governor Niel Tupas Sr. in Jaro, Iloilo City.

 

Banias earlier told The Daily Guardian that Baldoza informed him about the pressure and the P75,000 cash he received from Tupas, obviously to grease the approval of the PSA between Ileco 3 and Artech.

 

Baldoza also told Banias about the second P75,000 he received from an Artech employee during the Ileco 3 board meeting in Iloilo City last April 21.

 

The former judge also told Joel Tormon of Aksyon Radyo last May 5 about the money he received from Tupas and Artech on those two separate occasions. But Baldoza modified his statement a day later saying a female Artech worker gave the money at Tupas’ house.

 

Tupas had denied giving money to Baldoza although he and provincial administrator Manuel Mejorada admitted that Ileco 3 directors met Artech president Reynaldo Uy at the governor’s house April 17.

 

Tupas and Mejorada said Baldoza has “no credibility” because he kept changing his statement regarding the alleged bribery of Ileco 3 directors.

 

The governor said he only intervened to avert a looming power shortage in Ileco 3 franchise area when its transition supply contract with the National Power Corp. expires next year.

 

Ileco 3 legal counsel Edison Belloga also denied the bribery angle even as he defended the PSA to be advantageous and environment friendly.

 

Banias said he met Baldoza after the latter’s visit to the NBI regional office.

 

“He told me that what he narrated to the NBI was the same as his original statement in an interview with Aksyon Radyo and the information he told me before the issue on the Ileco 3-Artech deal came out in the media,” Banias said.

 

Banias said Baldoza was not able to sign his affidavit narrating the April 17 and 21 meetings “because his lawyer was not present during the meeting at the NBI.”

 

Atty. Diaz, who is in-charged of the investigation, said Baldoza’s statement was substantial to their probe but he declined give details.

 

Banias said Baldoza is also willing to narrate to the National Electrification Administration (NEA) the events leading to the signing and approval of the PSA.

 

“NEA is about to finish its investigation as they already gathered all the facts they need. But the investigators are willing to talk to Judge Baldoza and get his side of the story,” he said.

 

DEATH THREATS

 

Meanwhile, Banias claimed receiving death threats relative to the Ileco 3-Artech deal.

 

Banias said a friend passed to him a text message from an unidentified sender saying that the former will die before June 5.

 

When asked if he still has the threatening message, Banias said he cannot locate the text in his cellphone.

 

“It may have something to do with the Ileco 3 issue because June 5 was supposed to be the schedule of the next hearing of the Sangguniang Panlalawigan on the issue. I did not mind it and I did not report it to the police because I also have my own bodyguards,” Banias said.

By Francis Allan L. Angelo

 

(Conclusion)

 

ILOILO Electric Cooperative (Ileco) 3 is bound to pay Applied Research Technologies Phils., Inc. (Artech) for excess energy whether or not the cooperative consumes the annual minimum energy take-off (MEOT), which is way beyond projected demands, based on their bribe-tainted 25-year power supply agreement (PSA).

 

But the 25-year PSA does not penalize Artech for failure to deliver the MEOT nor does it exempt Ileco 3 from paying the independent power producer if it fails to fulfill its committed quantity of energy.

 

Section 7 of the contract is silent on what will be the consequences if Artech does not deliver electricity except to restore supply the soonest.

 

Artech also did not guarantee in Section 8 of the PSA replacement sources of electricity in cases of scheduled maintenance of the plants. This will plunge Ileco 3 in darkness because majority of its supply will be sourced from the IPP.

 

Where will Ileco 3 get electricity during maintenance of Artech’s power plants? Who will pay for the replacement power and how much?

 

Section 9 of the contract burdens Ileco 3 for the system losses and transmission line maintenance.

 

The more contentious provision of the contract is Section 14.6 which allows Artech to transfer its rights in the agreement to another party after 30-day advance written notice.

 

This scenario already happened when Artech assigned its rights and obligations in a power purchase agreement with Capiz Electric Cooperative (Capelco) to Enervantage Suppliers Co. Inc.

 

Enervantage is a special project company jointly owned by TG Property Inc. and Artech.

 

TG Property Inc., which belongs to the Tanco Group, owns 70 percent of Enervantage.

 

Prior to transferring its rights and obligations to Enervantage, Artech entered into a 25-year PSA with Capelco to rehabilitate the 2 x 5.5MW Pielstick power plant in Capiz. The agreement also included the construction of a 5.5MW diesel power plant and a 40MW biomass power plant.

 

FORMULA

 

The PSA also does not assure that Ileco 3 consumers will enjoy lower power rates because Artech pegged its pricing to foreign currency exchange, local consumer price index or inflation, US consumer price index and fluctuations in oil prices in the world market.

 

These factors are present in Artech’s schedule of pricing (which is attached to the contract) even if it starts operating the 20-megawatt biomass power plant using sorghum as feedstock.

 

Engr. Reynaldo Uy, Artech president, and Domingo Beltran, Artech vice president for business development, said they will use 5,000 to 7,000 hectares for the sorghum plantation to sustain the operation of the biomass power plant.

 

So why include foreign exchange rate and US inflation in the pricing of electricity from the biomass plant when the feedstock will be planted within Ileco 3’s franchise area?

 

Artech pegged the base rate for the biomass plant at P5.90 per kilowatt-hour net of taxes and other ancillary charges. But during peak period (from 5pm to 10pm daily), the biomass plant will produce additional 5MW for the peak load at a base rate of P6.50 per kWh.

 

Since Artech will sell electricity more than what Ileco 3 needs, the cooperative will pay P55.6 million for the excess energy in the first three years of the contract. The amount will exceed P200 million during the 4th and 5th year of the contract.

 

The National Electrification Administration (NEA) has concluded its investigation on the Artech’s PSA with Ileco 3.

 

NEA has regulatory function over electric cooperatives because it extends loans to the cooperatives.

 

All resolutions and agreements entered into by cooperatives must also pass NEA scrutiny and approval.

 

But the Ileco 3 board of directors approved and signed the PSA sans NEA imprimatur.

 

NEA is set to release the results of its investigation in the next two weeks.

By Francis Allan L. Angelo

 

PROPONENTS and defenders of the 25-year power supply agreement (PSA) between Iloilo Electric Cooperative (Ileco) 3 and Applied Research Technologies Phils., Inc. (Artech) promised cheaper and stable power to more than 41,000 consumers in northern Iloilo.

 

Based on a copy of the signed and notarized PSA obtained by The Daily Guardian, Artech promised to “build, operate and own” a 6-megawatt diesel-fired power plant within year 2010.

 

Some 36 months after the commissioning of the diesel-fired power plant, Artech will complete and commission a 20MW biomass-fired power plant.

 

Engr. Reynaldo Uy, Artech president, and Domingo Beltran, Artech vice president for business development, said in several media interviews that the diesel plant will provide power to Ileco 3 until the biomass plant goes online.

 

Based on Section 5.1 of the PSA, the diesel-fired power plant will operate in the first three years of the contract to provide 55.75 million kilowatt-hour (kWh) of electricity to Ileco 3 annually.

 

Artech pegged its base rate (net of taxes, ancillary and other charges) for the diesel plant at P6.64 per kWh.

 

Ileco 3 will pay for the minimum energy off-take (MEOT) or total quantity that Ileco 3 will have to buy from Artech whether or not it consumes that quantity.

 

Uy and Beltran said they will sell cheaper electricity to Ileco 3 because their base rate for electricity produced by the biomass plant is only P5.90 kWh. Still, this rate does not include taxes and other charges for the transmission and distribution of power.

 

But Section 5.1 of the PSA states that Artech will continue to operate the diesel plant even if the biomass plant is already in place and operating.

 

On the 4th year of the contract’s affectivity (the estimated period when the biomass plant starts running), the diesel plant will produce and sell 31.68 million kWh of electricity on top of the 39.6 million kWh from the biomass plant.

 

The biomass plant will also produce and sell another 13.2 million kWh of electricity to Ileco 3 for the peak load. In sum, Artech will sell a total of 84.48 million kWh to Ileco 3 for the 4th year of the contract.

 

On the 5th year and onward to the end of the contract, Artech will produce 31.68 million kWh from its diesel plant, 47.52 million kWh from the biomass plant and an additional 13.2 million kWh for the peak load. The total MEOT for this period will be around 92.4 million kWh.

 

The stipulated annual demand growth for 3rd and 4th years of the contract is 51% and 66%, respectively. Industry experts interviewed by this paper say no cooperative has posted such “outrageous growth”.

 

Department of Energy estimates the annual growth of electric cooperatives in rural areas from 2-5% annually. The energy department estimates show electricity demand growing at an annual 4.6 % in Visayas.

 

Based on the Integrated Computerized Planning Model of Ileco 3, the cooperative’s total demand in 2013 (which coincides with the 4th year of the contract) is only 73.958 million kWh. Its demand in 2014, or the 5th year of the contract, is only 77.930 million kWh, or a growth of 5.1%.

 

The aforementioned calculations do not include Ileco 3’s power supply deal with renewable power firm Asea One which joined the bidding conducted by the Panay-Guimaras power consumption.

 

As reported earlier, Ileco 3 will buy a total 70.75 million kWh from Artech and renewable power firm Asea One, which is 8.383 million kWh more than the projected demand of the cooperative of 62.367 million kWh for 2011.

 

Annually, Ileco 3 will pay P458.68 million to the two independent power producers (IPP), including P55.663 million in excess power, whether or not it consumes its MEOT from the two firms.

 

Artech will have to run its 6-MW diesel plant at 117% capacity in order to keep up with the MEOT stipulated in the contract. The standard capacity of plants to produce electricity is around 80%. The regular capacity may exceed 10% but only for one hour.

 

Because of the generation mix of Artech’s diesel and biomass plants from 4th year of the contract, the IPP’s base rate will remain at more than P6 per kWh, net of taxes, wheeling, transmission, distribution and other ancillary charges.

 

‘DOUBLE WHAMMY’

 

Section 5.5 of the PSA said Artech’s biomass plant is considered “available for delivery of electricity during the day if it is capable of continuous operations from 9am to 9pm at a minimum of 65% of its rated capacity.”

 

This section contradicts the intent of baseload operations which pertains to plants running 24 hours a day, 7 days a week. Instead, Artech will only operate its plant for 10 hours at 65% capacity.

 

Sections 5.3 and 5.7 of the contract allow Artech to sell to another buyer its excess electricity if Ileco 3 fails to consume the minimum energy quantity stipulated in the contract.

 

If Ileco 3 pays for 92.4 million kWh of electricity but can only consume 80 million kWh, Artech can sell the excess power to another consumer or cooperative.

 

In cases of emergency caused by force majeure, Artech is willing to reduce Ileco 3’s MEOT to a maximum of 5%. But that deduction will be added to Ileco 3’s minimum off-take quantity in the succeeding contract year based on a schedule agreed by both parties.

 

CHEAPER RATES?

 

Artech’s base rates are pegged at P6.64 per kWh for the diesel plant and P5.90 per kWh for the biomass plant, net of taxes and other charges.

 

But Artech’s price will increase because the IPP pegged its rates to the foreign exchange rate, movement of oil prices in the world market, local consumer price index and US consumer price index, among others. This is indicated in the schedules of electricity rates for the diesel and biomass plants attached to the 25-year PSA.

 

Section 6.10.2 of the contract allows Artech to increase its price of electricity should there be changes in legal requirements of the power plant.

 

Artech can also increase its power rates should the Department of Environment and Natural Resources (DENR) require the IPP to buy equipment or spend for environmental protection requirements.

 

“Any additional capital expenditures in terms of equipment and/or facility required by the DENR to secure the ECC shall be negotiated by the parties in good faith corresponding to such increase,” Section 6.10.3 of the PSA said.  

 

Earlier, Engr. Edgar Mana-ay, a retired PNOC official, said a sorghum biomass plant (which Artech proposed to construct) churns out 80 tons of ash daily.

 

If the DENR requires Artech to install equipment and implement mitigating measures relative to ash disposal, the IPP will charge Ileco 3 for its additional investments.

 

Artech’s contract with Ileco 3 will also tie the cooperative’s assets to the IPP aside from shouldering financial burdens.

 

Section 6.9.1 of the contract require Ileco 3 to put up an escrow account in an unspecified commercial bank where the cooperative will deposit “an amount equal to or exceeds the monthly due” to Artech based on 8.3% of the annual minimum off-take quantity.

 

 

The escrow account adds financial burden to Ileco 3 since Artech’s billing payment is seven days after receipt of invoice. In this case, Ileco 3 shall advance the payment of uncollected billing for the month plus interest charges of the escrow.

 

Section 6.9.2 of the contract required Ileco 3 to maintain a P17-million revolving credit facility (RCF) with an unspecified commercial bank. Artech can avail the credit facility “in full or in part” to pay any due or outstanding obligation of Ileco 3 to the IPP.

 

In the banking and credit world, revolving credit facilities require collaterals. In this case, Ileco 3 will have to put up its assets as guarantee for the P17-million RCF. (To be concluded tomorrow)

Ileco 3 supply contracts exceed demand in 2011

 

By Francis Allan L. Angelo

 

CONSUMERS of Iloilo Electric Cooperative (Ileco) 3 will be made to pay electricity more than what they need if the cooperative pushes through with the 25-year power supply agreement (PSA) with an independent power producer (IPP).

 

This was the analysis of Ileco 3’s Technical Services Department (TSD) after going over the contract offered by Applied Research Technologies Phils., Inc. (Artech) and approved by the Ileco 3 board.

 

Based on the study conducted by Engr. Antonio Lazarraga, TSD manager, Ileco 3 will buy 15 million kilowatt-hours of electricity from Asea One, a renewable energy producer, and another 55.75 million kWh from Artech’s 6-megawatt diesel-fired power plant. This is because Ileco 3 recently signed a supply contract with Asea One, one of the IPPs that joined the bidding conducted by the Panay-Guimaras power consortium.

 

The minimum energy off take (MEOT) or total quantity that Ileco 3 will have to buy from the two IPPs will total 70.75 million kWh which is 8.383 million kWh more than the projected demand of the cooperative of 62.367 million kWh for 2011.

 

Ileco 3 will have to pay P458.68 million annually to Asea One and Artech for the power they contracted. And the cooperative will pay P55.663 million annually for the excess power whether or not it consumes its MEOT from the two IPPs.

 

The projected demand of Ileco 3 is embodied in its Integrated Computerized Planning Model which is regularly submitted to the National Electrification Administration (NEA).

 

In a simulation of Ileco 3’s electricity bill, residential consumers will pay P9.1229 per kWh for Artech’s generation charge alone. This does not include distribution charges and taxes mandated in the Electric Power Industry Reform Act (Epira).

 

In its contract, Artech offered a base rate of P6.64 for its diesel-fired power plant sans taxes and other charges.

 

Based on the same simulation, if a residential consumer pays P971.75 for consuming 103 kWh for the month of April 2009, the monthly bill will increase by 40.73% or P1,367.54 if Artech’s contract takes effect.

 

Commercial consumers will incur an average increase of 48.29% in their monthly bill while industrial users will incur 51.84% increase in their monthly bills, still based on Ileco 3’s simulation.

 

In Artech’s contract with Ileco 3, the cooperative will be compelled to buy 55.75 million kWh from Artech for the first three years using a 6MW diesel powered plant. This includes the peak load, or electricity that will be produced during the period of the day when electricity consumption rises.

 

But based on the calculation of Ileco 3, Artech will operate the diesel plant at 117 percent of its capacity just to produce 55.75 million kWh of electricity in one day.

 

The standard capacity of plants to produce electricity is around 80%. The regular capacity may exceed 10% but only for one hour.

 

Artech said in the contract its plant will have a heat rate of 10,000 British Thermal Unit (BTU), unit of energy used in the power, steam generation, heating and air conditioning industries.

 

But Artech’s plant is not “very sophisticated compared to existing plants” such as the 30-year-old Panay Diesel Power Plant in Dingle, Iloilo which has a heat rate of 9,600 BTU.

 

But the bigger question is this: Can Artech supply power to Ileco 3 using its biomass power plant? Will Artech’s offer result in cheaper power rates to consumers? (To be continued)

By Lydia C. Pendon 

 

THE National Bureau of Investigation is set to conduct its separate investigation on the alleged bribery case involving directors of the Iloilo Electric Cooperative (Ileco) 3, Applied Research Technologies Phils. Inc. (Artech) and Iloilo governor Niel D. Tupas Sr.

 

This developed after the National Electrification Administration (NEA) began its own investigation on the 25-year power supply agreement (PSA) between Ileco 3 and independent power producer (IPP) Artech.

Presidential Assistant Raul Banias said he was informed of the NBI entry into the bribery investigation to hasten and determine the culpability of the persons involved in the bribery case. 

 

 

 

It was reported that Artech gave P150,000 as bribe money to members of Ileco 3 board. This was confirmed by board president Mateo Baldoza and director Rene Arandilla. Baldoza said the bribery took place at the house of the Iloilo governor last April 17 and on April 21 at Finerock Hotel. In his first interview over Aksyon Radyo, Baldoza said it was Governor Tupas who gave him the first envelope containing half of the P150,000 but later modified his revelation saying it was actually a female employee of Artech.

 

Tupas denied he helped Artech bribe the board to have the 25-year power supply contract approved.

By Francis Allan L. Angelo

 

ILOILO Governor Niel Tupas Sr. questioned the credibility of the whistle blower of the alleged bribery that attended the power supply deal between Iloilo Electric Cooperative (Ileco) 3 and an independent power producer (IPP).

 

In his letter to Edita Bueno, National Electrification Administration chief, Tupas said the statements of former Regional Trial Court judge Mateo Baldoza, who is also the president of the Ileco 3 board of directors, is nothing but idle talk.

 

Baldoza claimed in an interview with Joel Tormon of Aksyon Radyo last May 5 that Tupas gave him an envelope containing P75,000 during a meeting with executives of Applied Research Technologies Phils., Inc. (Artech) at the governor’s house in Jaro, Iloilo City last April 17.

 

Baldoza later modified his statement saying it was a female employee of Artech, not Tupas, who gave him the envelope.

 

“The credibility of Atty. Baldoza is questionable. His supposed revelation is hearsay,” Tupas said in the letter dated May 22, 2009.

 

In an earlier media interview, Tupas said it was only Baldoza who claimed that money changed hands during the meeting with Artech.

 

“Of all the board members, he is the only one saying that he was bribed. Who will you believe then?” the governor said.

 

In his bloctime radio program over Aksyon Radyo Saturday, Iloilo provincial administrator Manuel Mejorada also lambasted Baldoza for changing his tune regarding the alleged bribery of the Ileco 3 board.

 

Mejorada said Baldoza has no credibility after the latter modified his statement in a latter interview with Inquirer correspondent Nestor Burgos Jr.

 

Mejorada earlier confirmed that Tupas summoned the Ileco 3 board and Artech officials led by Engr. Reynaldo Uy to a meeting at his house April 17.

 

In the same letter to Bueno, Tupas also assailed Presidential Assistant for Western Visayas Raul Banias for “twisting the truth.”

 

Banias, former mayor of Concepcion which is under Ileco 3 franchise, earlier wrote NEA asking for an investigation on the Ileco 3-Artech deal and the alleged bribe of the board of directors.

 

Tupas said it is not true that Baldoza “repeatedly admitted publicly over the media” that the governor gave the latter an envelope with P75,000 inside.

 

“Atty. Baldoza was interviewed only once when he made that statement,” he said.

 

Tupas added: “He (Banias) also embellished the false story by saying that the directors were ‘called one by one’ into a room. That wasn’t part of Atty. Baldoza’s statement in the radio interview. Asec. Banias is making up his own story.”

 

Tupas also defended Artech’s deal to Ileco 3 saying the IPP offered the lowest generation charge compared to other IPPs that joined the bidding conducted by the Panay-Guimaras power consortium.

 

REVELATION

 

Banias said that before the May 5 interview, Baldoza already revealed the alleged bribery to him, Ileco 3 director Rene Arandilla and other personalities in the 5th district.

 

Banias said that as early as Holy Week, Baldoza told him about the pressures the board received from Tupas to accept Artech’s offer.

 

Banias said Baldoza revealed the bribery in a text message and phone calls in the first week of May.

 

“It was Judge Baldoza who revealed the information to a lot of people even before his radio interview. If he changed his statement, only he knows why. But I believe in the integrity and probity of Judge Baldoza and I believe that he will eventually tell the truth,” Banias said.

 

Meanwhile, in his sworn affidavit dated May 13, 2009, Arandilla said Baldoza showed him an envelope filled with P75,000 cash given by a female Artech employee during their April 21 special board meeting, the same day they approved and signed the power supply deal at Finerock Hotel.

 

“I counted the money inside the envelope and determined to be containing P75,000 allegedly coming from Artech. President Baldoza told me to get P10,000 from the said amount because he will give the rest to the church but I refused,” Arandilla said.

RESIGN   Consumers hold placards calling for the resignation of Ileco 3 board of directors during the hearing conducted by the Sangguniang Panlalawigan Tuesday on the alleged anomalous deal between the cooperative and Artech. (Photo by Tara Yap)

RESIGN Consumers hold placards calling for the resignation of Ileco 3 board of directors during the hearing conducted by the Sangguniang Panlalawigan Tuesday on the alleged anomalous deal between the cooperative and Artech. (Photo by Tara Yap)

By Francis Allan L. Angelo

 

THE National Electrification Administration (NEA) has begun its investigation on the power supply agreement (PSA) between Iloilo Electric Cooperative (Ileco) 3 and an independent power producer (IPP).

 

Atty. Omar Mayo of the NEA legal office leads the investigation on the deal between Ileco 3 and Applied Research Technologies Phils., Inc. (Artech).

 

Assisting Mayo in the probe is Nixon Bautista, Electric Cooperative Operations Systems Audit Division OIC.

 

The investigating panel first looked for a copy of the 25-year PSA between Ileco 3 and Artech.

 

The panel also summoned Engr. Antonio Lazarraga, chief of Ileco 3 Technical Services Division, who made the comparative study and simulation of Artech’s proposal to the cooperative.

 

Lazarraga’s study showed that Artech’s generation charge will reach more than P8 per kilowatt-hour using diesel fired and biomass power plants.

 

The investigators also summoned Ileco 3 board secretary Joy Fuentes and the minutes of their special board meeting last April 21, the day the board approved and signed agreement.

 

Mayo said all resolutions passed by the Ileco 3 board must first be examined and approved by NEA before implementation.

 

In an earlier interview, Ileco 3 board legal counsel Edison Belloga said NEA approval of their resolutions is only ministerial in nature.

 

Ileco 3 board president Mateo Baldoza will also be summoned to shed light on the alleged bribery of the cooperative directors in exchange for the approval of Artech’s proposal.

 

Baldoza claimed in an interview with Joel Tormon of Aksyon Radyo last May 5 that he received an envelope containing P75,000 from Governor Niel Tupas Sr. during a meeting with Artech officials April 17 at the governor’s house in Jaro, Iloilo City.

 

Baldoza later modified his statement saying it was a female employee of Artech, not Tupas, who gave him the money.

 

The former judge received another envelope with P75,000 cash from a female Artech worker April 21 after they approved and signed the PSA.

 

Ileco 3 director Rene Arandilla said in his sworn affidavit that he counted the money Baldoza allegedly received from Artech on April 21.

 

Presidential Assistant for Western Visayas Raul Banias said Baldoza also told him about the alleged pressures and bribe they receive from Artech and Tupas.

 

TUPAS IS MAD

 

Tupas continues to fend off the alleged bribery of Ileco 3 directors that happened in his house.

 

In his letter to NEA Administrator Edita Bueno, Tupas countered the “wild, malicious and patently false accusations made by Presidential Assistant Raul Banias.”

 

Banias wrote and met Bueno last week to ask for an investigation on the Ileco 3-Artech deal.

 

Tupas told Bueno that the alleged “bribery” is not true.

 

“I did not hand over to Atty. Baldoza anything, much more an envelope containing P75,000 in cash. The story was concocted to implicate me in this controversy and put the transaction in bad light. It is not true, as alleged by Asec. Banias in his letter, that Atty. Baldoza ‘repeatedly admitted publicly over the media’ that I gave him an envelope with P75,000 inside. Atty. Baldoza was interviewed only once when he made that statement. The next day, perhaps bothered by his conscience, he retracted his statement in another interview with Philippine Daily Inquirer correspondent Nestor Burgos, Jr.,” the governor said.

 

The governor also questioned Baldoza’s credibility saying his supposed revelation is hearsay.

 

Tupas also defended the Ileco 3-Artech contract saying the IPP’s generation charge is P6.64 per kwh for the first three years for power generated by a diesel-fueled plant it will put up, and then P5.90 per kwh from a biomass power plant that is expected to be operational by 2013. 

 

Artech’s rates are cheaper compared to other IPPs that are putting up power plants in Iloilo, Tupas said.

 

“Clearly, there is no such thing as overpriced power rates. Besides, the PSA will still have to pass through the scrutiny of the Energy Regulatory Commission (ERC). The issue is without basis,” he added.

 

Tupas cautioned NEA against making any “hasty and precipitate actions that would be prejudicial to the public interest.”

By Francis Allan L. Angelo

 

SOME of the major protagonists in the alleged bribery of Iloilo Electric Cooperative (Ileco) 3 board of directors will not attend the public hearing initiated by the Sangguniang Panlalawigan in Sara, Iloilo today (May 19, 2009).

 

The probe, which was triggered by a privilege speech of 5th district Board Member Jett Rojas, is spearheaded by the committee on economic affairs and investments chaired by 3rd district BM Arthur Defensor Jr.

 

The investigation will focus on the alleged bribery of the Ileco board in exchange for the approval of a 25-year power supply agreement (PSA) with Applied Research Technologies Phils., Inc. (Artech).

 

Last May 5, former judge Mateo Baldoza claimed in an interview with Joel Tormon of Aksyon Radyo that Governor Niel Tupas gave him an envelope containing P75,000 during a meeting with Artech officials April 17 at Tupas’ house in MV Henchanova, Jaro, Iloilo City.

 

Another envelope containing P75,000 was also given to Baldoza by a female Artech employee April 21, the same day the board approved and signed the PSA.

 

Baldoza, however, later modified his statement saying it was not Tupas who gave him money during the April 17 meeting but a female Artech worker.

 

Baldoza and Tupas will not attend the SP hearing today “because of prior commitments”.

 

Tupas said he will send a letter to Defensor explaining why he cannot show up at the hearing.

 

Baldoza is said to be attending the wedding of his son in Cagayan de Oro City.

 

The committee also invited 5th district Rep. Niel “Jun-Jun” Tupas Jr. but the latter declined.

 

Mayor Raul Tupas of Barotac Viejo, which is under Ileco 3 franchise, will send a representative to the hearing.

 

Those who confirmed to attend the hearing are Presidential Adviser Raul Banias, Ileco 3 management team headed by Dory Joy Canones, Ileco 3 directors and 5th district mayors.

 

Engr. Reynaldo Uy, Artech president, will also attend.

 

Representatives of Global Business Power Corp. and Panay-Guimaras power consortium were also invited to the SP hearing.

 

Tupas had denied bribing the Ileco directors although he confirmed the meeting between the board and Artech at his house.

 

Iloilo provincial administrator Manuel Mejorada said Tupas had indeed arranged the meeting to expedite the deal between Ileco 3 and Artech to avert a looming power crisis.

 

Tupas said he favored the PSA because Ileco 3’s transition supply agreement with the National Power Corp. will expire in December 2010. The governor said he wants to address the looming power shortage in Ileco which covers the 5th district.

 

Uy also denied the alleged bribe saying he did not bring with him any female employee to the April 17 meeting at Tupas’ house.

 

Uy said their proposal to put up a 5-megawatt diesel-fired power plant and a 5-MW biomass power plant will solve the power crisis in Ileco 3 and provide livelihood to consumers.

 

The Artech official said his company will also construct a P30-million power substation to connect Ileco 3 to his plants.

 

Uy said his company does not engage in bribery even as he suspects that business and politics could be behind the issue.

By Francis Allan L. Angelo

 

THERE is no assurance that the biomass plant being proposed by Applied Research Technologies Phils., Inc. (Artech) can supply cheap and stable electricity to the consumers of Iloilo Electric Cooperative (Ileco) 3.

 

This is the assessment of Engr. Edgar Mana-ay, who has 30 years of experience in oil, power generation and mining industries, in an interview with The Daily Guardian on Air over Aksyon Radyo.

 

Citing previous media interviews of Artech president Reynaldo Uy, Mana-ay said the primary purpose of the power firm is to plant sweet sorghum which will be processed into alcohol and ethanol.

 

The Biofuels Law mandates that diesel and gasoline should be mixed with ethanol to reduce dependence on fossil fuels and help arrest climate change.

 

Mana-ay said the waste product from ethanol processing called silage, which is equivalent to the bagasse in sugar mills, will be used as feedstock for Artech’s 5-megawatt power plant.

 

“The biomass plant is actually a steam power plant. In the Artech system, sweet sorghum will be processed into ethanol. The silage from the sorghum will be burned to boil water in the caldera to produce steam. The steam will run the turbine which in turn produces electricity,” Mana-ay said.

 

But Mana-ay fears that Artech will use Ileco 3 as “guinea pig” because the sorghum-based biomass plant technology is not reliable and feasible.

 

“Nowhere in the world can we see of a plant similar to what Artech is proposing is used as baseload power plant. The technology of converting sorghum into alcohol and electricity is still in the research and pilot stage,” Mana-ay said.

 

Mana-ay said 1.5 kilograms of sorghum silage must be burned to produce one kilowatt of electricity.

 

“A 4MW power plant will need about 216 tons of silage everyday to operate. Considering that sorghum matures in 100 days, it is estimated that 5,000 hectares of land is required to support a 4MW power plant. Is that plantation achievable and possible and how sure are we that such an area can provide a year round steady supply of fuel to the power plant?” he added.

 

Mana-ay is also concerned with the environmental effects of the biomass plant because sorghum silages has 40 percent ash content.

 

“This means that 80 tons of ash from the plant must be disposed daily. Unlike in coal ash which is a very good material for hollow blocks, agricultural ash has no use expect to sour up the soil,” Mana-ay said.

 

Mana-ay said Artech should explain to the public the actual technology of its biomass plant so that Ileco 3 officials and consumers can study the advantages and disadvantages of the power supply agreement.

 

In an interview with Serbisyo Publiko hosted by Councilor Perla Zulueta yesterday, Uy said the sorghum plantation is a livelihood component of Artech’s 25-year power supply agreement (PSA) with Ileco 3.

 

Uy said the Ileco 3 board headed by former judge Mateo Baldoza had no objections to the PSA when he presented his proposal starting February 2009.

 

The Ileco 3-Artech deal is tainted with bribery after Baldoza claimed in an interview with Joel Tormon of Aksyon Radyo that Governor Niel Tupas Sr. gave him an envelope containing P75,000 cash while saying “Buligan ta lang sila (Let’s help them).”

 

The money was given during a meeting between the board and Artech officials at Tupas’ house in Jaro, Iloilo City April 17. Baldoza said the money might have something to do with Artech’s proposal.

 

Another P75,000 cash was given to Baldoza April 21, the day the board approved and signed the PSA, by a lady believed to be working for Artech.

 

Baldoza later modified his first statement saying a woman from Artech gave the money to him at Tupas’ house, not the governor himself.

 

Uy denied that his company gave money to Baldoza and other Ileco 3 board officials. He said his company does not practice bribery to corner deals.

 

Uy also said that other companies might be behind the issue against Artech’s deal with Ileco 3.

 

“I feel bad because my company was dragged in the fray,” he added.

By Francis Allan L. Angelo

 

ILOILO Governor Niel Tupas Sr. indeed arranged the meeting between the Iloilo Electric Cooperative (Ileco) 3 board of directors and officials of an independent power producer (IPP) at his house in Jaro, Iloilo City last April 17.

 

In an interview in the weekly cable TV program Serbisyo Publiko hosted by Councilor Perla Zulueta Sunday, provincial administrator Manuel Mejorada said Tupas initiated the meeting between the Ileco 3 board and Applied Research Technologies Phils., Inc. (Artech) to address the looming power crisis in Iloilo.

 

“It is the habit of Governor Tupas to expedite matters when things go slow. He was worried that by 2010, Ileco 3 will have no more power supply because its transition power contract with the National Power Corp. will expire December 2010,” Mejorada said.

 

Engr. Reynaldo Uy, Artech president, said Ileco 3 director Asur Salcedo invited him to meet the board headed by former judge Mateo Baldoza at Tupas’ house in MV Hechanova, Jaro last April 17.

 

Uy said the meeting was set after Tupas learned that the board has yet to act on Artech’s 25-year power supply agreement after three months.

 

“Governor Tupas asked the board about our deal and president Baldoza said the offer was good. The governor then said that we must settle the matter because he will be leaving for his office,” Uy said.

 

Uy said the board told him that they will meet April 21 to decide which IPP to choose.

 

The Artech official denied that money changed hands during the meeting at Tupas’ house and the April 21 meeting at Fine Rock Hotel in Iloilo City.

 

Uy’s denial contradicts the claims of Baldoza that he received money from Artech during the two meetings.

 

Baldoza initially implicated Tupas as the one who handed him the money. But he later modified that statement saying it was a female Artech employee who gave him an envelope containing P75,000 cash.

 

Baldoza said he wanted more time to study Artech’s offer because the comparative study of their Technical Support Department showed that the IPP’s generation rate of P8.per kilowatt-hour 56 is expensive compared to other power producers.

 

But Uy said their rates are lower compared to other IPPs that made offers to the Panay-Guimaras power consortium – P6.64 per kWh for the diesel plant and P5.90 per kWh for the biomass plant.

 

Artech will supply power to Ileco 3 from a diesel-fired power plant starting December 2010. Between 2010 and 2013, the firm will construct a 5-megawatt biomass plant which will operate as baseload power plant.

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