BAGUIO CITY (Sept. 28) — In a recent press conference a power generation company clarified that without a clear “interim” agreement between them and the city for the continued operation of the Asin hydroelectric power plants, it would opt to turn over the facilities.
Presently the maintenance of the plants is in consideration to the letters of request last August 23 from the Mayor Braulio D. Yaranon earlier, before the suspension, and then from now acting Mayor Reinaldo Bautista, Jr. on August 31. But Hedcor chief executive officer Rene Ronquillo stressed that they could not continue the maintenance work indefinitely without a clear agreement addressing the financial and equally crucial maintenance issues.
CEO Ronquillo also vehemently denied that the take-over of the management of the Asin plants is a done deal between Hedcor and the city after the 25-year power generation contract with the Baguio Water District (BWD) expired last August 31 as alleged in local media reports (not Nordis).
Ronquillo said that Hedcor was actually on high gear for the turn-over preparations of the facilities to meet the August deadline but Yaranon then deferred the turn-over, initially.
He clarified that what they only have is an invitation from Bautista asking Hedcor to continue operating the plants while the city would have to come-up with a comprehensive plan.
“We will always prefer a bidded contract to a negotiated agreement,” Ronquillo told Baguio-based media. He said, however, that Hedcor is preparing a five-year proposal on maintaining the 80 year-old power plants while the city is preparing for the bidding.
Bautista confirmed this in the weekly media forum, saying an interim contract up to Dec. 31 is cooking while preparations are underway for the bidding process.
Bautista, in defending the interim agreement, aired the same reasons enumerated by Ronquillo such as the possibility that the facilities would be ravaged by thieves, the high revenue loss and heavy cost of rehabilitation for the city and the private generator due to the stoppage of operations.
The city Asin mini-hydro electric plant Task Force said in a briefing paper that the city has no recourse but to consider winding up as a means to have the operation of the plants continued while other options are being studied.
The task force also considered as part of the winding up period an “agreement that would allow the present operator as a party” considering that it owns most of the facilities, according to the inventory report.
What the stakeholders stand to lose
Ronquillo explained that something concrete has to be done immediately for the hydro plants or all stakeholders will stand to lose a monthly average of 3.2 to 3.8 megawatts or some P58 million in revenue that is presently generated by the Asin hydros.
An interim agreement will allow Hedcor to operate the plants up to the end of the year and will spell the same sharing scheme done in the past 25 years, except that the BWD share will accrue to the city coffers. As of today, Hedcor is subsidizing the operations and maintenance and Ronquillo hopes to negotiate payments or returns for this investment.
Since 1985, the city receives the first 400,000 kilowatt-hours per month or roughly P2 million. With the BWD share, which is at least 350,000 kwh, on top of the city share Bautista estimates the monthly revenues now at P4.2 million.
Hedcor will retain its share of at least 270,000 kwh monthly and whatever would be left after another 170,000 kwh is given to the city, City Administrator Peter Fianza cited in his report.
Ronquillo said Hedcor offers a P40 million five-year rehabilitation proposal, which will include an anticipated turnover table. He explains that once the bidding process has started and the city awards the long-term contract to another company, Hedcor will step out of the picture but not without due reimbursement of its investments.
Three Asin hydroelectric plants, two in barangay Tadiangan and one in barangay Nangalisan, all in Tuba, Benguet, produce some 4.2 megawatts of electric power during the rainy season but according to Ronquillo the production may dip down to only 400,000 kilowatts in the dry months.
Tuba town receives a 3% share in resource taxes, 1% of which goes to the host barangays. In 2005, the total share amounted to a little over P2 million in property and business taxes.
Managing the plants
There was a city resolution in 1975 that turned over the hydros to BWD which awarded a contract to Davao Light and Power Company, which used to operate the plants from 1985 to 1992, when these were contracted to the Hedcor. a DLPC sister company.
Before the 25-year BWD contract ended, two other companies offered to operate the plants, aside from the Hedcor. These are BussBarr Corporation and Priva Power.
Since last year, the city council has been deliberating on how the city could take over the operations of the power plants but until now, according to Ronquillo, it has not come up with a concrete plan. In an earlier media forum Bautista admitted that the city cannot manage the plants for lack of technical expertise and the necessary requirements as provided for by law. # Lyn V. Ramo for NORDIS