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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.

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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 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

 

THE Sangguniang Bayan of Sara, Iloilo unanimously approved a resolution calling for a congressional inquiry on the alleged bribery of Iloilo Electric Cooperative (Ileco 3) board of directors in exchange for the approval of a power supply deal with an independent power producer (IPP).

 

The Sara municipal board passed Resolution No. 7-2009 during its regular session May 11, 2009. It urged the House committee on legislative franchises to conduct an inquiry on the contract between Ileco 3 and Applied Research Technologies Phils., Inc. (Artech).

 

The committee on legislative franchises has jurisdiction on matters directly and principally relating to the grant, amendment, extension or revocation of franchises to sectors such as power, telecommunication, media broadcast, among others.

 

The board said member-consumers of Ileco 3, including residents of Sara, were shocked with the admission of Ileco 3 board president Mateo Baldoza over the media that he allegedly received P75,000 from Governor Niel Tupas Sr. and Artech in two separate occasions.

 

Baldoza would later modify his statement saying a female employee of Artech gave the money to him in a meeting with officials of the IPP at Tupas house in Jaro, Iloilo City last April 17.

 

Tupas also denied bribing Baldoza and exerting pressure on the board to approve and sign the 25-year power supply agreement (PSA) with Artech.

 

The second tranche of the purported bribe money was given to Baldoza April 21 after the board approved and signed the PSA at Fine Rock Hotel in Iloilo City.

 

The resolution said Ileco 3 approved and signed the deal “with extraordinary haste and speed” sans prior consultation with the cooperative’s technical personnel or management.

 

The SB also quoted the comparative study and simulation of Ileco 3’s Technical Services Department which “glaringly revealed” that the proposals of Artech in the PSA are “most grossly disadvantageous to Ileco 3 consumers as it offers the highest power rate.”

 

The SB also hit Ileco 3 directors for approving the deal despite the fact that Artech did not participate in the bidding conducted by the Panay-Guimaras power consortium.

 

The action of the Ileco 3 board, the resolution said, violated the provisions of the Electric Power Industry Reform Act of 2001 which directs cooperatives and distribution utilities to look for cheapest sources of power though a competitive process such as bidding.

 

The resolution also questioned the failure of the Ileco 3 board to submit the PSA to the National Electrification Administration (NEA) for review prior to the approval and signing of the contract.

 

Aside from the congressional inquiry, the SB also passed another resolution asking NEA to investigate the deal between Ileco 3 and Artech.

 

Other towns in the 5th congressional district covered by the Ileco 3 franchise are also planning to pass their respective resolutions seeking the revocation of the PSA and investigation on the alleged bribery issue.

 

The resolutions were presented to the fact-finding investigation conducted by the Sangguniang Panlalawigan Tuesday in Sara covered gym.

 

NEA administrator Edita Bueno confirmed with The Daily Guardian that they dispatched a team of investigators to look into the Ileco 3-Artech deal.

 

Sources from Ileco 3 said the investigating team, composed of technical and legal personnel of NEA, will also look into Artech’s deal with Capiz Electric Cooperative.

 

Presidential Assistant for Western Visayas Raul Banias, who also sent a letter complaint to Bueno, said he welcomes the House inquiry which will complement the ongoing NEA investigation.

 

Banias, a former mayor of Concepcion which is under Ileco 3, had confirmed Baldoza’s first statement that the latter received money from Tupas during the April 17 meeting.

 

“Administrator Bueno vowed to go into the bottom of this issue and impose the necessary actions. If the contract is proven onerous, the NEA can dismiss the entire Ileco 3 board,” Banias said.

By Francis Allan L. Angelo and Tara Yap

 

A TEAM of investigators from the National Electrification Administration (NEA) is already in Tuesday to start the probe on the alleged bribery of Iloilo Electric Cooperative (Ileco) 3 directors and the cooperative’s supply agreement with a power producer.

 

The investigators arrived after the Ileco 3 management team wrote sent a letter to NEA administrator Edita Bueno last week seeking an investigation on the 25-year power supply agreement (PSA) with Applied Research Technologies Phils., Inc. (Artech).

 

The management team also asked NEA to preventively suspend the board of directors headed by former judge Mateo Baldoza pending the investigation.

 

The NEA investigators arrived yesterday while the day the Sangguniang Panlalawigan was conducting a fact-finding investigation on the issue.

 

Bueno confirmed in a text message to The Daily Guardian that they sent investigators to look into the complaint of the Ileco 3 management team.

 

Baldoza claimed last May 5 that Governor Niel Tupas Sr. gave him an envelope filled with P75,000 cash during a meeting with Artech officials April 17 at the governor’s house in Jaro, Iloilo City.

 

Another envelope containing P75,000 cash was given to Baldoza by a female Artech worker during the board’s special meeting in Iloilo City April 21, the same day the PSA was approved and signed.

 

But Baldoza later modified his allegation saying it was not Tupas who gave him the first envelope but a female employee of Artech headed by Engr. Reynaldo Uy.

 

Ileco 3 director Rene Arandilla confirmed in his sworn affidavit that Baldoza showed him the cash-filled envelope the latter received April 21.

 

Dr. Raul Banias, Presidential Assistant for Western Visayas, said Baldoza told him about the pressures and bribe he received in exchange for the approval of Artech’s proposal.

 

Tupas’ camp denied the bribery in his house even as they blamed politics and business as the motive behind the exposé.

 

The provincial board probe was headed by Board Member Arthur Defensor Jr., committee on investments and economic enterprise chair.

 

As reported earlier, Gov. Tupas did not attend the hearing due to “prior commitments”. Also absent was Artech president Uy who instead sent Domingo Beltran, vice president for marketing and business development.

 

Beltran defended the PSA with Ileco 3 saying it will eventually drive down prices of electricity and give livelihood to consumers. He also denied that their company bribed Ileco 3 directors.

 

Except for Arandilla, the whole Ileco 3 board did not attend the hearing held at the Sara covered gym.

 

Arandilla reiterated his statements in his affidavit the board was summoned to a meeting with Artech officials in Tupas’ house.

 

After the meeting, Arandilla said Baldoza, a former court judge, told him that Tupas personally gave him P75,000 cash during the meeting.

 

Baldoza, who is in Cagayan de Oro City, said he will attend the next hearing if invited by the SP.

 

A brownout hit the covered gym during the investigation which disrupted the proceedings.

 

Ileco 3 employees were also seen wearing black armband in protest of the PSA which is seen to jack up prices of electricity in Ileco 3.

 

Several towns under Ileco 3 franchise presented their respective resolutions asking for the revocation of the PSA. They also urged for a congressional inquiry on the issue.

Ileco 3 management team urges NEA to suspend ‘bribed’ directors

 

By Francis Allan L. Angelo

 

SAYING they were ashamed with the issues hounding Iloilo Electric Cooperative (Ileco) 3, the management team asked the National Electrification Administration (NEA) to preventively suspend and probe the cooperative’s board of directors (BoD).

 

In a letter to NEA Administrator Edita Bueno dated May 11, 2009, the management team headed by Dory Jane Canones, Finance Services Department manager, asked the agency to investigate the alleged bribery of the BoD for the approval of the 25-year power supply deal with an independent power producer.

 

The alleged bribery happened twice, according to board president and former judge Mateo Baldoza – April 17 at the house of Governor Niel Tupas Sr. and April 21 during their special board meeting in Iloilo City.

 

Baldoza claimed receiving a total of P150,000 although he later retracted his first statement that Tupas gave him P75,000 at the latter’s house in Jaro, Iloilo City when they met with officials of Applied Research Technologies Phils., Inc. (Artech).

 

Presidential Assistant for Western Visayas and Ileco 3 director Rene Arandilla confirmed Baldoza’s first statement that the retired judge received money from Tupas and Artech.

 

Pending the investigation of the Ileco 3 board, the management team requested NEA to send a project supervisor and preventively suspend members of the board who were present in Tupas’ house to accept the alleged bribe.

 

Aside from Baldoza, also present in the meeting at the Tupas mansion in Jaro, Iloilo City were BoD vice president Emmanuel Pacardo, secretary Joy Fuentes, treasurer Asur Salcedo and Achilles Pama.

 

Those who did not show up were Arandilla and Vincent Frances Espinosa.

 

The management team said they were humiliated by the scandal that wracked the cooperative and sparked the ire of the consumers over the deal with Artech.

 

They said they were surprised with the indignation displayed by Ileco 3 consumers during a rally at the cooperative’s office in Sara, Iloilo last May 9.

 

“While our employees staged a black protest by wearing black shirts and black band during the coop’s annual general assembly meeting, we were not prepared for the indignation that the consumers showed during that day. We were never so ashamed in our life,” the letter said.

 

  1. The management team also hit the majority of the Ileco 3 board for their “vindictiveness, encroachment on otherwise purely management prerogatives and high-handed ways in dealing with coop employees who are perceived to be against them.”   

 

They also opposed the board’s designation of Aida Lamigo as permanent OIC because of her questionable competence and involvement in the missing P1million in Ileco 3 funds.

 

“We will do our share in bringing justice to those that betrayed our member-consumers. We will bring to your attention the pronouncements and the calls of alls sectors in our communities. We will try to rebuild the trust and confidence of everyone that took years to earn. Please help us find justice for Ileco 3,” the management team said.

 

Those who signed the letter were Ana Maria Bagsit, OIC assistant general manager; Engr. Antonio Lazarraga, Technical Services Department manager; Apolojandro Sicad, Sara Area Office manager; Lanie Velasco, Natividad Area Office OIC; Consorcia Peñaranda, Institutional Services Department manager; Cirilo Jerry Pacardo, Panian (Balasan) Area office OIC; and Engr. Raim Villarias, Ileco 3 Multipurpose Cooperative president.

 

Information from NEA said the board of administrators is deliberating on the management team’s letter before sending a three-man fact finding team to Iloilo.

By Francis Allan L. Angelo

 

THE management of Global Business Power Corp. (GBPC) told its detractors not to drag the firm in the Iloilo Electric Cooperative (Ileco) 3 bribery mess.

 

Engr. Adrian Moncada, GBPC vice president for commercial operations, said the company has nothing to do with the Artech mess. He was reacting to news items that Engr. Gil Altamira, GBPC commercial business manager, had something to do with the privilege speech of Board Member Rett Rojas calling for an investigation on the Ileco 3 issue.

 

Moncada said Rojas and Altamira are already friends even before the latter worked for GBPC.

 

He said Altamira is familiar with the operations of Ileco 3 and the bidding conducted by the Panay-Guimaras power consortium reason why Rojas asked inputs from him.

 

Moncada also disputed the claims of Iloilo provincial administrator Manuel Mejorada that GBPC and DMCI offered P7.36 per kilowatt hour to the Panay-Guimaras power consortium.

 

Mejorada claimed that GBPC-DMCI’s price was higher than the P6.64 per kilowatt hour proposed by Applied Research Technologies of the Philippines (Artech), Inc.

 

But Moncada said their offer to the consortium was P4.60 per kWh at 75% load factor. In the electricity industry, load factor is a measure of the output of a power plant compared to the maximum output it could produce.

 

Moncada said they did not offer P7.36 per kWh to the consortium.

 

“That figure of P7.36 per kWh is the assumption of the consortium’s technical consultant, not ours. The consultant assumed that we will use Newcastle bituminous coal in producing electricity. But we will use Semirara sub-bituminous coal which is cheaper. Our offer has always been P4.60 per kWh at 75% load factor which is the ideal industry standard,” Moncada added.

 

Moncada said that when the consortium leveled the load factor at 100%, similar to the offers of renewable energy firms, “our price will even go down to P3.98 per kWh.”

 

“Computing the price of electricity is not simple arithmetic. There are factors that must be considered before we can come up with the numbers. I suggest they check their facts,” Moncada said.

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