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By Francis Allan L. Angelo

THE Office of the Ombudsman in Visayas has begun its probe on the controversial power supply agreement (PSA) between Iloilo Electric Cooperative (Ileco) 3 and an independent power supplier.

Deputy Ombudsman for Visayas Pelagio Apostol said they have formed a fact-finding body that will gather information on the agreement between Ileco 3 and Applied Research Technologies Philippines, Inc. (Artech).

Ileco 3 board president Mateo Baldoza claimed last May that he received P75,000 from Governor Niel Tupas last April 17 when they met Artech officials at the governor’s house in Jaro, Iloilo City.

Artech was offering a 25-year PSA to Ileco using diesel-fired and biomass power plants when the alleged bribery at Tupas’s house happened.

Tupas and Artech officials have denied Baldoza’s allegations.

Apostol refused to give the details and coverage of their investigation saying the proceedings are still confidential.

“When we find in the fact-finding investigation that there is probable cause to investigate any public official involved in this issue, we will start the formal probe. For now, we are gathering more information relative to this issue,” Apostol said.

Apostol urged persons who have knowledge about the transaction to share their information with the office of the Ombudsman.

The National Electrification Administration (NEA) Legal Department has submitted a copy of its own fact-finding investigation on the Ileco 3-Artech deal to the Office of the Ombudsman.

The NEA fact-finding team has recommended the rescission of the power supply deal citing onerous provisions.

NEA also took over the Ileco 3 management and deactivated its board of directors pending the investigation on the alleged bribery.

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


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.


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.

By Francis Allan L. Angelo


DEPARTMENT heads of Iloilo Electric Cooperative (Ileco) 3 will question the power supply agreement signed by an independent power producer (IPP) and the cooperative’s Board of Directors (BoD).


Dory Jane Canones, Finance Services Department head and Crisis Management Team (CMT) leader, said the BoD left out the management team when the board approved and signed the agreement with Applied Research Technologies Phils., Inc. (Artech) April 21 in a hotel in Iloilo City.


Canones said they were surprised to learn that the board gave its nod to the agreement despite the study showing that Artech’s generation cost is expensive than that of other IPPs.


She said the BoD should have considered the study and recommendation Engr. Antonio Lazarraga, Technical Services Department manager, to opt for a cheaper power source.


Canones said they plan to question the Artech deal before the National Electrification Administration (NEA) to protect public interest.


Atty. Edison Belloga, Ileco 3 board counsel, said Canones and Aida Lamigo, also a CMT member, were present during the board meeting at Fine Rock Hotel in Iloilo City April 21.


Belloga said Lazarraga did not show up in the meeting to explain his comparative study before the board.


“The management team only implements the decisions of the BoD which is the policy making body of Ileco 3. All agreements and transactions between the cooperative and other parties pass through the board. The board only delegates the power to carry out such agreements to the management team,” Belloga said.


Belloga said the board already abolished the CMT headed by Canones and appointed Lamigo as OIC-general manager.


The CMT was established after then general manager Gil Altamira retired, leaving a vacuum in the Ileco 3’s management side. Altamira’s resignation was allegedly “forced” by an influential political family in the 5th District.


The CMT, which will function until NEA appoints a full-fledged general manager, is composed of Canones, Lazarraga and Lamigo. Each member assumes as team leader for a 30-day period.


Belloga said the board abolished the CMT because it is ineffective in managing the cooperative.

July 2020

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