City pursues legal action versus Kaltimex

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BAGUIO CITY  – Mayor Mauricio G. Domogan said the city government is pursuing the appropriate legal action against Kaltimex Energy Philippines pending other actions that the city may take under existing circumstances following the company’s sudden withdrawal from the rehabilitation of the city-owned Asin mini-hydropower plants.

In his letter to Kaltimex president and chief executive officer Oscar Torralba, the city mayor  said the company’s withdrawal from the rehabilitation of these mini-hydropower plants is considered a violation of the contract it signed with the local government, thus, the need for the city to exercise legal rights it has to compel the firm to pursue its commitment.

On the other hand, the city is also proceeding taking action against the company’s performance bond in the amount of P150 million which is still effective until next year.

In his separate letter to BF General Insurance Company, Inc. chief marketing underwriter George F. Mercene, Domogan cited in view of Kaltimex Energy Philippines, the company’s principal, unjustified withdrawal from its project rehabilitation, development and operation of the city-owned Asin mini-hydropower plants, the local government is calling the performance bond and demanding the full payment of the amount of the bond to the city coffers pursuant to item 14 of the memorandum of agreement between the company and the city.

He advised the insurance company to make the check, preferably a certified check, to the City Treasurer of Baguio City for the said funds to form part of the city’s general fund.

In his letter to Mayor Domogan dated May 10, 2017, Toralbal informed the local government of its withdrawal from the implementation of the proposed rehabilitation, development and operation of the Asin mini-hydropower plants because of the various issues that cropped up ranging from the problem of the water rights issued to another company that will affect the operation of the power plants, the conflict between the affected land owners and the local government over unpaid claims, among others that will affect the delivery of the plants to the company in peaceful and orderly condition.

It will be recalled that in 2015, the Special Bids and Awards Committee (SBAC) declared Kaltimex the winning bidder for the proposed development, rehabilitation and operation of the three city-owned mini-hydropower plants after four failed bidding processes but the memorandum of agreement signed between the local government and the company was only confirmed early this year.

In 2006, the local government took over the operation of the Asin mini-hydropower plants after the expiration of the 25-year agreement with the Aboitiz-owned Davao Lights and continued operating the power plants until the city was ordered to cease and desist from continuing to operate the power plants in October 2012 because of the absence of the mandatory certificate of performance from the Energy Regulatory Commission (ERC).

The city is the only local government in the country that owns several renewable energy plants left by the Americans after World War II.

By Dexter A. See

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