Baguio Mayor presses for termination of Kaltimex contract

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BAGUIO CITY – The city will be pursing the termination of its contract with Kaltimex Energy Philippines for the rehabilitation and upgrading of the city-owned Asin minihydro power plants because of the company’s alleged continuous failure to comply with its obligations to implement the project enshrined in a compromise agreement that was approved by a local court.

Mayor Benjamin B. Magalong directed the members of the city’s local finance committee to prepare the estimated losses that the city incurred over the past several years that the proposed rehabilitation and upgrading of the Asin minihydro power plants had not been implemented despite the commitment of the company to start the programmed works of the multi-million project.

He disclosed that initial estimates show that the local government already lost at least P160 million in potential revenue from the operation of the Asin minihydro power plants since 2012 when the Energy Regulatory Commission (ERC) issued a cease-and-desist order for the city to stop the operation of the power plants until such time that it will be able to secure a certificate of compliance from the regulatory agency.

Earlier, the local chief executive sent a letter to the local legislative body stating among others the city’s intention to terminate its contract with Kaltimex on the proposed rehabilitation and upgrading of the city-owned minihydro power plants for the latter’s failure to comply with its contractual obligations to prosecute the project based on a court-approved compromise agreement.

According to him, a second letter will be sent to the city council reiterating the city’s desire to terminate the contract with Kaltimex to allow the local government to look for a partner that is financially capable to implement the long overdue rehabilitation and upgrading of the century-old power plants to allow the generation of clean energy that will be infused to the Luzon grid and provide additional supply of renewable energy for the same.

Magalong stipulated that the second letter that will be sent to the city council should send a message on the urgency for the body to act on the termination of the city’s contract with Kaltimex because of its failure to start works on the project despite its commitment to do so for the city to move on with the realization of the project with other responsible partners.

In 2015, the city’s Special Bids and Wards Committee (SBAC) declared Kaltimex Energy Philippines as the complying and responsive bidder for the proposed rehabilitation and upgrading of the city-owned Asin minihydro power plants but the memorandum of agreement between the city and the company was confirmed by the city council only in February 2017.

However, the company requested for time to implement the project because of alleged adjustments and the failure of the same to possess the power plants as it is still under the name of the former operator of the said plants as per records from the energy department.

In 2006, the 25-year contract between the city and the Aboitiz-owned Hydroelectric Development Corporation (HEDCOR) expired that allowed the local government to takeover the operation and maintenance of the power plants until it was issued a cease-and-desist order by the ERC in October 2012.

By Dexter A. See

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