MARINDUQUE POWER OUTAGES - PART 6

OF MORO-MOROS AND CONSPIRACIES

As recorded by Marelco, power outages in 2008 for which the coop as distributor was responsible was 21.049 hours, and 91.48 hours for outages that emanated from Napocor plants.

For the first half of 2009, Marelco accepted responsibility for 42.94 hours of outages, and 57 hours for Napocor, the latter somehow contesting the figures during a confrontation before the provincial board at the capitol.

One flyer distributed by angry residents from Gasan during such a meeting stated: “Marahil sa ngayon ay nauubusan na sila ng mapaniniwalaang “paliwanag o kabulaanan”. (“Maybe by this time they (Marelco) have ran out of credible ‘explanations or lies.”)

The local churches, expressing dismay over the situation, would also eventually be heard conveying in homilies a quote from Proverbs: 31:9 “Ipahayag mo nang malinaw ang katotohanan at ang katuwiran, at igawad ang katarungan sa api at mahirap”. (Open your mouth, judge righteously, and plead the cause of the poor and needy. (AKJV)

We’ve heard previously of someone in the provincial board accusing the concerned players of “conspiracy” and “economic sabotage”.

Could such conspiracy really be present here? The situation would show that persons, schools, business, churches, hospitals, homes and offices incurred damages in various forms brought about by the outages, and they continue to suffer. Agreements between or among conspirators defraud another of rights and lead to the attainment of evil or illegal objectives and inflict such damages.

Moro-moro (comedia), on the other hand, is a term used in the Philippines to describe farcical acts committed by co-conspirators. Moro-moro on most occasions would need a tacitly mapped out script by a bigger, powerful force or entity.

By listening and studying the Marinduque situation one just might, indeed, distinguish any of these ‘vicious and pernicious’ elements as being evident.


FLASHBACK

By August 2008, the Sangguniang Panlalawigan with Vice-Governor Tomas Pizarro presiding was compelled to call for a ‘clarificatory conference’ in reaction to the public clamor for the provincial council to “intervene in this present critical situation of power supply... and be able to understand the root and causes of this perennial power outages.”

Invited were representatives of 3i Powergen, Marelco, Napocor. There, as would be admitted by the Marelco management itself, we’d be told that the energy consumers (36,000 subscribers), had no apparent knowledge of the involvement of an independent power producer having taken over responsibility to supply electricity in mainland Marinduque: “Sa simula ay walang ginawang konsultasyon at ang usapin ay sa loob lamang ng Marelco sapagkat maaring mahirapan ito sa pagpapaliwanag sa mga ordinaryong consumers”,(Bueno)

Details of the PSA contract, on the other hand, would remain exclusive only to the contracting parties, 3i Powergen and Marelco, including those of subsequent supplemental agreements involving said entities and Napocor. With true information only known to them, the probable extent of the impending power crisis could not have escaped reckoning by the three and, one might add, also by any other parties who may have been involved in said agreements.

By this time IFC had apparently ended its involvement with our IPP, yet we’d learn of said IPP desperately trying to put on a brave face after engaging in minimal ground-breaking activities at their plant, best described by a board member as “just for show”; we’d hear the IPP blaming the global financial crisis, yet convincing some investors somehow to come into the picture; then shortly we’d hear no more from such investors who’d turn away for reasons only known to them; and finally we’d find the IPP representative almost breaking down, pleading before the provincial board for support and understanding.

On the other hand, the electric cooperative would set into motion a series of purported explanations on the cause of power failures. These would range from the seemingly serious to the hopelessly ridiculous. Explanation offered before official bodies such as the provincial board would starkly differ from those intended for public consumption.

ENTER RUMORMONGERS & TEXT BRIGADES

Those for public consumption are not directly related to the persistent outages, but word of mouth as an effective tool to further cause anxiety would be a big break for politically-motivated rumormongers who had their field day over an extended period, reinforced by text brigades.

Under such a situation, in island Marinduque, people who had no inkling of what was going on would tend to believe anything they’d hear from the electric cooperative or purported reliable sources on what was causing the brownouts.



Note the money-focused power outage explanations for public consumption in their raw form:

- Marelco had problems paying debts in the millions that it owed Napocor;

- A large number of consumers could not settle their electricity bills causing Marelco’s failure to settle its NPC bills;

- Collectors would convey to consumers that foremost of those who do not settle bills is a certain provincial official and this has contributed to the problem;

- Shortage of supply for diesel fuel has occurred;

- Marelco has incurred losses due to the cost of rehabilitation and repair of electrical lines and posts;

- An independent power producer has already taken partial responsibility in generating power;

- The brownouts were caused by falling coco fronds, trees hitting and alligators intruding into power lines, etc.

All these explanations would evolve into multiple versions. One would have expected Marelco’s weekly local radio program to come in useful as a medium to inform the public on these issues, yet we find the said program decidedly ineffective focusing on consumer rights related to disconnection and Marelco’s right to disconnect members who are unable to pay: “Iyon po ang focus ng radio - ang karapatan ng consumer at karapatan din ng Marelco para sa pagputol sa ating mga hindi nakakabayad na member consumer” (Marelco’s Espino, July 6, 2009).

For official consumption conveyed during official conferences with the provincial board, Marelco would, however, confirm:

- Payment of outstanding bills to Napocor is not the cause of the power outages;

- Power outages are not caused by IPP’s failure to generate power. Through charts Marelco would prove that these were caused by line faults due to coco palm, power supply trip offs, scheduled maintenance, voltage under-frequencies or over-fluctuations to unknown reasons, with NPC as power source mainly responsible, and Marelco admitting responsibility for some of them;

- Napocor gave Marelco very short notices (“ura-urada”) whenever the former would advise the coop of any impending power curtailment, citing as an example one received on a Holy Thursday, the start of the Holy Week holiday, for a scheduled power curtailment the following Monday); Marelco would cite its perception that such NPC actions were apparently intended to create a bad image for the electric cooperative; (July 6, 2009)

Provincial board member Lety Monte would observe that in these meetings Marelco and Napocor do not look straight into each others eyes like they were hiding something, she had to implore them to be more transparent: “Obserbasyon ni Bokal Monte na ang mga kinatawan ng bawat sektor ay hindi nagtitinginan sa isa’t isa na animo’y may tinatago pa ring problema kaya hiniling niya na maging transparent ang mga ito..” (Aug. 11, 2008).

MORE DRAMATIC DIALOGUES

Also during the August 2008 conference, 3i Powergen’s Atty. Lagundi would rue the wildfire speculations and engage in a futile attempt to create a picture of company efficiency and confidence. Futile as statements are belied.

3i: Because the company recognizes its social responsibility it has already entered into a a MOA with Napocor on May 30, 2008 as a “counter-measure”, a lease agreement involving “a number or all of existing land-based gensets” of Napocor.

Marelco: Marelco is not aware of any such lease agreement document with Napocor.

3i: 3i is currently reimbursing NPC the cost of generating power.

Napocor: No such reimbursement occurs since Napocor bills are paid directly by Marelco.

3i: 3i Powergen has rented 2 units of 1.5 MW Cummings gensets since July 28, 2008and a 5MW gen-set is scheduled to arrive as replacement for the power barge; 3i will assume full responsibility in reimbursing Napocor.

Napocor: (to the provincial board): “...plese help us justify on how we can restore our 2009 budget requirement for Marinduque in order for us to provide continuous power supply in the island.”

3i: “70% of the civil works at the Balogo plant site is already completed”.

Marelco: “They started digging in October 2006, up to now I am not aware of anything they have finished”.

3i: “We are thankful to Marelco for keeping communications with our company always open”

Marelco: Updates should be conveyed by 3i in black and white to avoid such speculations.

MESSIANIC ROLE

Napocor would appear to use the occasion to play Messiah:

Napocor’s Llorente: Since 1995, the commissioning of the power barge, wala pang nagawang maintenance dito so its now overdue for dry-docking. Dry-docking in 2005 & 2007 were cancelled due to the power requirement of Marinduque.

“Once the rented 5MW will be commissioned by August 15 (2008), we will shut down the barge and start dry-docking activities. Last week the contractor committed that tomorrow they will deliver the required transformer, by Thursday the gen-sets will arrive here in Marinduque.

“The 6 MW requirement is good for 4 hours during peak load, as of now we have the capacity of 7.05 MW including rental at nakatakda ang commissioning ng 5MW rented genset sa August 15. We can assure that power barge will stay for as long as necessary.”

That would, of course, be more than enough to assuage the feeling of uncertainty gripping everyone around. Napocor would then follow up with a catch:

Llorente: “Again, for this august body, please help us justify on how we can restore our 2009 budget requirement for Marinduque in order for us to provide continuous power supply in the island.”

Did the Marinduque Provincial Government then respond positively to the Napocor representative’s request?

On the same day, in view of the representations made by the engineers of Napocor who were based in Marinduque and because of the power outages experienced in the province the provincial board adopted a “resolution requesting the National Power Corporation (Napocor) to restore the budget of the NPC-Marinduque to ensure continuity of power supply in the province.”

SAME PLACE, SAME TIME

Yet the problem has persisted. Eleven months later we’d find the provincial board calling for a similar conference where an exasperated board member, Alvarez, would state thus: “...napakiusapan natin ang NAPOCOR noon na ibalik ang pondo nila .... sa pakiusap ng mga nanunungkulan sa pamahalaan ng lalawigan at napahinuhod po natin ang NAPOCOR na ibalik ang pondo nila upang makapagbigay ng mga pagkukulang.” (“...we were able to request Napocor to restore the budget...through representations from the provincial government and Napocor was convinced of the need to restore the budget to address the deficiencies.”)

”...The problem lies on the weakness of the institutions involved in ensuring the stability of power source in the province of Marinduque... sapagkat napakatagal na nitong problema na ito, napakatagal na at paulit-ulit at noong nakaraang taon kung matatandaan ninyo nagharap-harap na rin tayo in the same hall in the very same month because of the very same problem..” (..because this problem has taken so long, so long and repeatedly and last year if you will recall we’ve also met in the same hall in the very same month because of the very same problem).

Heard loud in the same hall:

“Parang chubibo!” (like a ferris-wheel)
“Paikot-ikot!” (going around in circles)
“Deretsahan na!” (go direct to the point)

Nothing’s changed.

(to be continued)

THE FORGOTTEN GRAVEYARD

CEMETERIO DE TAMPUS

Down on the eastern part of barangay Mataas-na-Bayan lies an old cemetery as old as the Boac Church itself. It used to be protected by a wall of adobe stones and an iron gate that have all but disappeared now.

Here lies the remains of some of Boac’s most noble gentry who helped found the great town, celebrate it, shed blood, sweat, tears to build a God-empowered people therein, and defended it in the name of freedom in the days of old. The sacred ancient graveyard and all associated with it have all been sadly forgotten.

Perhaps the quest for the good life for some, the focus on things considered more important than memorials and remembrances of things past, has led to its complete deletion from our collective memory.
Cemeterio de Tampus, as it was called then, has been converted into a cornfield with informal settlers from elsewhere now calling it their home. No candles burn on All Saints Day. One who lived there offered to light a taper we took out.

A few stones and empty chambers built above ground still stand here, eaten up by the elements and balete vines twining around wherever they could, to remind us what happens when mortals forget.

An old film, "Siberiade", tells of a Russian village whose history throughout most of the 1900s mirrors that of the greater country. The first generation focused itself with building a road so they could travel to the rest of the world; the second generation worked on perfecting its own political principles; and the third became obsessed with newfound oil on the land. The quest for oil led to the destruction of an ancient cemetery, symbolizing the loss of old Russian culture and tradition for the sake of financial gain and temporal power.(us.imdb.com; encarta)

Could this type of forgetfulness be symbolic of a town’s continuing loss of culture and tradition creeping through its soul without relent?

PRIEST HIT BY A BULLET

A priest was hit by a bullet on the left of his back as the owner-type vehicle he was riding on with two companions passed through an unpopulated area in barangay Balaring in Boac. The incident happened last Friday, Oct 23 at around 11:00 pm.

Rev. Father Sherwin Apostol, parish priest of Balanacan and a native of Dampulan, Torrijos was immediately rushed to the provincial hospital by other priest companions who shortly found the parked vehicle with the wounded victim. The priests, including Apostol, were also on their way home from a regional basketball tournament, “Soltare Cup”* hosted by the Diocese of Boac.

Police Senior Superintendent Danilo Estapon, Marinduque Provincial Director, today belied initial reports that the incident was a case of “ambush by several armed men” as reported yesterday by a Manila-based newspaper. Estapon said a small bullet, the size of a .22 caliber bullet was still embedded in the priest’s back.

The victim who remained conscious throughout the incident has been transferred to Mt. Carmel Hospital in Lucena City where he is undergoing further treatment. Apostol has been declared out of danger.

Meanwhile, provincial administrator Atty. Allan Velasco requested the National Bureau of Investigation through NBI director Nestor M. Mantaring to immediately conduct a thorough investigation on the incident.


(*a member of the laity clarified that the "Soltare Cup" ended on Oct. 22 and that the basketball tournament participated in by the priests in Cawit on the day of the incident, Oct 23, was related to the Barangay Fiesta of Cawit with parish priests playing against a barangay-based basketball team.) eo/10.27.09)

MARINDUQUE POWER OUTAGES - PART 5

"SHOWING THE MAGIC TRICKS"

Now we know that the name of 3i Powergen. Inc. as contracting party appeared to have manifested from thin air on Sept. 27, 2005, with nobody, nobody raising any audible cry nor whimper about its origin - particularly the Marelco people and the so-called witnesses.

“... ang kontrata ay nakita na lamang niya (Bueno) bilang general manager ay ng aprobado na at hindi lumabas ang kanilang naging rekomendasyon.” (Minutes, Aug. 11, 2008, SP)

We also now know that 3i Powergen failed to meet the effective date of the PSA:
Bueno: “Dapat March 2007, ay 3i na ang naga-generate ng power sa Marinduque subalit mayroon pang intervening factor katulad ng ECC at iba pang government consent. Humingi ang 3i ng extension na natapos noong June 2007”. (Aug. 11, 2008, SP)

So even the ECC (Environmental Clearance Certificate), requirement was also apparently problematic. BM Allan Nepomuceno asks why Marelco allowed extension of the contract.

Bueno. “... walang extension na nangyayari at walang dokumento na nagsasabi na pinalawig ng Marelco ang kontrata nito sa 3i Powergen” (Minutes, Aug. 11, 2008, SP)

Probably missing the glaring double-talk said in the same sitting, nobody in the SP appeared to have winked an eye.

We also know that “nagsimula ang problema sa pera ng iniwan sila ng IFC (International Financial Center)” ng nagsisimula na ang 3i”. (Bueno, Aug. 11, 2008).

Now, that’s IFC, the World Bank's private sector investment arm abandoning 3i Powergen. Was that a surprise? As the transaction advisor engaged by government, particularly Napocor, for the introduction of private participation in power generation in missionary areas by way of divestitures of Power Supply Agreements (PSAs) between SPUG and Electricity Cooperatives (ECs), in favor of new power providers (NPPs), IFC’s departure early in the game from the 3i transaction was also apparently missed.

RESCISSION ISSUE

Nevertheless, we find the issue of rescission of contract being raised, to which Marelco’s position smells of the carotene of a performance bond:

“may mga safeguards naman nakapaloob sa kasunduan, katulad ng performance bond, ito ang patuloy pang pinag-aaralan ng kooperatiba.

“Sa ngayon ay komukunsulta ang Marelco sa abogado upang magbigay ng payo kung ano pang legal na hakbang ang puwede pa nilang gamitin, ayon kay G. Bueno”. (Minutes, Aug. 11, 2008, SP).

Eleven months later the same question on rescission was tossed again by the Sanggunian members but Marelco raises defenses:

Bueno’s defense: “... nagiging maingat ang pamunuan ng Marelco bago gumawa ng severe action tungkol diyan baka po mawala iyong hinahabol na mga damages.

“Iyan ay naka elevate na sa Junta Direktiva (board of directors), pinag-uusapan iyan ngayon dahil napakahirap po naman kung magiging hasty ang kanilang mga action ay baka iyong hinahabol na mga damages na naaayon sa kontrata ay mawala na lamang ng parang walang nangyari.” (Committee Hearing, July 9, 2009)

Director Garcia: “... meron doong provision for performance bond so sa akin pong pagkakaunawa baka kapag outrightly i-terminate natin iyon mawalan tayo ng personality to claim for that performance bond and alternatively seek for actual damages na baka ibalik sa amin ng 3i Powergen, (at sabihin) na since you have already terminated the contract between us ay hindi na puwedeng habulin ang performance bond, mag-claim na lang kayo ng damages (sic)”.

Performance bond definition: surety bond (a bond given to protect the recipient against loss in case the terms of a contract are not filled; a surety company assumes liability for nonperformance); a financial guarantee that a service will be provided or a contract will be satisfactorily completed.

PERFORMANCE BOND AFLOAT ALL AROUND

The performance bond in question purportedly involved the amount of P. 26-Million as surety or guarantee required to be posted by 3i Powergen, copy of which should be furnished Marelco on terms and conditions acceptable to the latter with effect from the ‘effective date’ to the end of term of the SPA.

Director Garcia: “...ayaw din naman namin na kung sakaling mag-desisyon kami (to rescind) ay masisi din kami, kasi baka ma-let go namin ang P26M na performance bond na aming gustong habulin doon sa 3I, sapagkat ang aming priority ngayon kung mahahabol namin sila doon sa performance bond makuha man lang iyon, mapangbayad sa NAPOCOR sa pagkakautang, gagawin namin iyon.”

Not satisfied with that reasoning, Garcia further warns of the difficulty in finding a new IPP: “Madali pong mag-rescind kahit hindi na natin habulin ang performance bond kung iyan po ang kagustuhan ng ating minamahal na Sangguniang Panlalawigan. Ang problema po ang paghahanap na naman po ng panibagong IPP magkakaroon na naman ng panibagong bidding process at kasama diyan ang NAPOCOR, ERC para makahanap ng panibagong IPP.” (July 9, 2008).


3i Powergen’s Lagundi assured that the performance bond was “renewed, intact and in place”, but cautiously added that any other legal questions related thereto would be answered by him in a legal forum. (Lagundi, August 11, 2009)

Mention of the performance bond as a safeguard being studied was first divulged by GM Bueno on Aug. 8, 2008. SP board member Querubin asked him again about a year later, on July 9, 2009 on the validity of the performance bond but Bueno responded cryptically, thus: “Iyon po ang na-determine actually kaya nga kumuha ng abogado ang Marelco para habulin iyon.”

Querubin raised the same question again during the Energy Summit on Oct. 9, 2009, about the possibility of Marelco running after “an empty bag”. No one stood to respond to him with a specific answer.

SMOKING DOCUMENT

We'd have to go back to an earlier mentioned document, “Joint Declaration of Realization of the Effective Date of the Power Supply Agreement between 3i Powergen, Inc. and Marinduque Electric Cooperative (Marelco)” which stated as follows:

“Pursuant to the Power Supply Agreement (PSA) executed on 27 September 2005 between 3i Powergen, Inc. and Marinduque Electric Cooperative (collectively referred to as the “Parties”), the Parties hereby declare:

“1. That the Conditions Precedent as enumerated in Section 3.2 of the PSA have been achieved or the deadline otherwise waived as provided in the 1st Supplemental Agreement to the Power Supply Agreement and Subsidy Agreement executed on 2 March 2006.

“2. That the Effective Date as defined in Section 3.2 of the PSA is hereby attained.

“In witness whereof, each of the Parties has caused this Declaration to be executed in more than one copy each of which shall be deemed to be an original as of the date of this Declaration.

“Marinduque Electric Cooperative
By: (Signed)
Augusto Leo M. Livelo, President

3i Powergen, Inc.
By: (Signed)
Manuel T. Castro, President

“Signed in the presence of:
(Signature of Witnesses)”



Now, “Conditions precedent” referred to above specifies that “Effective Date shall be the first business day immediately following the day on which all of the following shall have occurred”:

Corporate approvals (parties have furnished each other with copies of the resolutions adopted by its respective board of directors authorizing the execution, delivery and performance by it of the PSA, certified by its corporate secretary);

Government Consents (Parties have obtained government consents as applicable and indicated in Schedule D, and furnished each other with certified true copies of each consent, permit, approval or license. Now, “Schedule D” specifies BIR certificate of registration and registration of books and accounts; DOE accreditation of supplier as a private sector generation facility; SEC incorporation documents and SEC certificate approving the articles of incorporation; DENR environmental compliance certificate; Housing and Land Use Regulatory Board locational clearances; National Water Resources Board water use facilities; SSS registration as employer and registration of employees).

Legal Opinions (legal opinions of its general counsel certifying to each Party’s corporate standing as well as the due execution, validity and binding effect of the PSA on such party); Subsidy Agreement (execution of Subsidy Agreement between 3i Powergen, Marelco and NPC-SPUG); Possession and Operational Control of Subtransmission System (if Offtaker has opted to operate the Subtransmission System);

Performance Bond (Supplier shall have furnished Offtaker with a copy of a Performance Bond on terms and conditions acceptable to Offtaker in the amount of Php 26-Million that shall be in effect from Effective Date to the end of this PSA).

Phase In-Phase Out Arrangement (Supplier, Offtaker and NPC-SPUG have agreed on mutually acceptable terms); Project IRR (Supplier has furnished Offtaker with the Project Internal Rate of Return after financial close).

It has been earlier established that Marelco has not seen to-date 3i Powergen’s SEC registration papers. There’s one letter dated July 30, 2007, from NPC-SPUG to 3i Powergen stating that “3i should also be responsible in securing the required ECC from the Department of Environment and Natural Resources (DENR) and other regulatory agencies for its operation”, and as late as Aug 11, 2008, Bueno mentioned ECC issuance as an “intervening factor” (SP Minutes).

With respect to performance bond that is specified as a condition precedent, a copy of which Marelco should have been furnished with as its terms and conditions should be acceptable to Marelco”, why is it that two years have passed since its “elevation” to their Junta Direktiva” and referred to lawyers yet, Marelco still appears uncertain about its details?

SP board member Querubin talks of conspiracy and economic sabotage: “...maaring may sabwatan sa pagitan ng Marelco at 3i Powergen dahil sa kabila ng katotohanan na walang kapasidad ang huli na magsuplay ng kuryente patuloy pa rin ang kontrata... kaya maituturing na economic sabotage ang ginagawa ng Marelco at 3i Powergen dahil apektado ang ekonomiya ng lalawigan”. (Sept. 30,2009)

But what if the requirement for a performance bond, as in the case of one or possibly all of the government consents needed that was remedied through a one page sweep, was never fulfilled? We may seek endlessly but not a crisp performance bond find.

(to be continued)

"TALENTADONG PINOY" AUDITIONS

One television show that has managed to grab the attention of the local viewing public in the Philippines is "TALENTADONG PINOY". It is now the most popular talent show on TV and the number one show on Saturdays.

Hosted by RYAN AGONCILLO, and shown on TV5, (SATURDAYS, 7:30 PM TO 8:30 PM), "TALENTADONG PINOY" pits the talents of the common Filipino as they showcase their skills in the different fields of entertainment. Singers, dancers, magicians, acrobats, (solos or groups), to extreme talents such as fire-eaters and tightrope walkers have tried their luck to grab the show's weekly give-away prize of P 50,000.00.

Current champion for the last two weeks is "OMAR" from Mogpog, Marinduque, doing his "very FIlipino" ladder-balancing act with the help of his father.

"TALENTADONG PINOY" that has held auditions in SM Malls in Metro Manila, Baguio and other branches goes beyond the malls this time, for the first time.

In cooperation with the provincial government of Marinduque and the six municipalities "TALENTADONG PINOY" is coming to search for more Marinduque talents.

Auditions have been set on the following dates and venues:

THURSDAY, NOV. 5, 2009 - MOGPOG COVERED COURT 1:00 pm - 4:00 pm

FRIDAY, NOV. 6, 2009 - TORRIJOS COVERED COURT 1:00 pm - 4:00 pm

No pre-screening. A team from "TALENTADONG PINOY" with executive producer Malou Escio-Gascon will conduct the search.

So chance mo na kaibigan!
Mag-audition na baya!

For further inquiries pls call the Office of the Governor, tel. (042) 332-1002 (Eli or Arlyn)

MARINDUQUE POWER OUTAGES - PART 4

“3i POWER CONUNDRUMS”

So now we have Coastal Power Development Corporation and lts partner, Applied Research Technologies Philippines, referred to as a consortium, to supply power to Marinduque including the islands of Romblon and Tablas. A concession-type contract between the winning bidder and local electric cooperatives would be entered into; the framework of this concession did not require the private supplier to buy existing generation assets of the NPC; a hybrid diesel-wind energy solution for the power needs of these islands would be put into place; and the consortium is also referred to as Coastal Power Consortium or Coastal Consortium.

We note that the said bidders’ first envelopes (technical proposals) were opened on 25 August 2005 and the financial bids on 5 September 2005. Coastal Consortium emerged as the winning bidder having offered a lower electric generation service cost.

How did 3i Powergen, Inc. get into the picture then?

By the time the Power Supply Agreement (PSA) was scheduled for signing three weeks later, on Sept. 27, 2005, a new name has cropped up as “Supplier”: 3i Powergen, Inc.

The signed PSA is therefore now between 3i Powergen, Inc. and Marelco, Inc.

Marelco manager Bueno claimed to have opposed it by questioning the qualification of the new company: “Ilang beses na akong humarap at sinasabi ko na sa mga board members noon na iyan ang aming naging problema bakit na-qualify iyang 3i Powergen na iyan na pumasok dito. Hindi lang Marelco, ang kontrata ay para sa tatlong Isla, Marinduque, Romblon, Tablas. Iyan ay matagal ko ng kinokontra iyan na pag-aralang maigi.

“Ang chairman po ng bids and awards dito alam ko ay NAPOCOR. Two directors coming from each coop, dalawa sa Marinduque, dalawa sa Romblon, dalawa sa Tablas, chaired by NPC president.... Dahil iyong competitive selection process ng kung saan ay ginawa iyan ay hindi dito sa Marinduque, iyon po ay doon sa NAPOCOR na opisina sa main office.”

Marelco director Beethoven Arevalo: “Ang totoo po noon mga panahon na iyon hindi pa general manager si GM (Bueno) siya ay kinuha namin bilang consultant noong mga panahon na ginagawa ang competitive selection process o pagpipili ng mga bidders na sasali dito. At sa proseso po dahil ito ay programa ng DOE at alam natin na ang DOE ay gobyerno walang makakapigil dahil nga doon sa privatization ng NPC talagang walang makakapigil, kahit kami rin po ay ayaw namin noong mga panahon na iyan pero sinabi nila na wala ng choice kasi ang NPC privatized na, so ito po ay programa ng DOE. Kami naman sa first wave na sinasabi iyong 14 Island provinces, napasama ang Marinduque. So no choice po kami sumali sa programa ng gobyerno.”

Whichever way one may look at it, "bakit na-qualify yang 3i Powergen na pumasok dito“; “kinokontra ko yan na pag-aralang maigi”; then a Marelco director adds: “kahit kami rin po ay ayaw namin noong mga panahon na iyan pero sinabi nila na wala ng choice...” there was political pressure, clearly written all over the place, that explains why the PSA was signed. But what else are they not saying?

We then hear, as revealed by board member Jose Alvarez, during the Sept 30 public hearing about the presence during the historic signing, of the three Reyeses (former congressman Edmundo Reyes, former governor now congresswoman Carmencita Reyes and former provincial administrator Luisito Reyes), a milestone in Marinduque’s power solution.

Representing Marelco as signatory in 2005 was then coop president, Augusto Leo Livelo. Was he forced to sign the agreement then? Sources say he was. (A new coop president got elected in 2008, Joel Palatino, as Livelo ended his term of office).

We have previously stated that under the current system embraced by Marelco, it is “subject to the whims and caprices of any government agency” and this episode is merely a re-confirmation of the political pressures that Marelco is subjected to. No less than Cong. Mila Magsaysay had that much to say of electric cooperatives that do not register with the Cooperative Development Authority (CDA), (Solon hits NEA, May 19, 2009; congress.gov.ph)

Back to 3i Powergen:

(Photo: The site in Balogo)

Probably too scared, none from Marelco, before signing the contract even bothered to check the legal personality of the company in question. Not one of the so-called government consents that refer to permits, licenses, agreements, orders, certificates, registrations, clearances, etc. from government authorities were asked for by Marelco as basic pre-requisite.

As late as October 9, 2009, at the Marinduque Energy Summit during the open forum, this blogger asked the Marelco representatives if they ever possessed a copy of 3i Powergen’s Securities and Exchange Commission (SEC) registration papers, inasmuch as it is normal business practice to establish identities of contracting parties.

“Inaamin ko pong wala kaming pinanghahawakang SEC Registration ng 3i Powergen”, replied director B. Arevalo.

This response of course, implies that four years into the confusion, even with all the widespread scepticism, Marelco still does not know until now, anything about the company’s identity, their reasons for existence, their incorporators, authorized capital stock, or if the company has even secured the necessary consents from government agencies concerned.

Contracts such as the Power Supply Agreement (PSA) in question do specify the need to obtain such documents, among others, and to furnish the other party with copies of the same to achieve “effective date” (first business day immediately following the day on which the required documents are submitted). Within a specified period from the date of the agreement, said agreement shall be “deemed terminated” if those requirements do not occur.

In this contract, “within four (4) months from the date of the Agreement” was specified as the deadline (January 27, 2006), for the effective date to occur, otherwise the PSA “shall be deemed terminated”.

Nothing occurred within that period, yet the contract was not deemed terminated. But in view of the above-stated contract provision that had lapsed, this was the singular time when the SPA itself was under threat of outright termination.


The SPA involved investments of P 677-million, or combined investments for the Marinduque-Romblon-Tablas project of P 1.448-billion. What sort of political pressure then, or threat, or persuasion, or consideration, or temptation, or a combination of any of these came into the picture?

A short cut, remedy or one might even call it ‘going around the law’ would be to simply declare, way past the deadline, that those conditions have been met, fulfilled or achieved, contrary to fact. One might suppose that it wouldn’t be hard to see the color and shade of money painted in the background.

BM Alvarez: “Kung merong kotongan (extortion) na nangyari, ay nangyari noong 2006...” (Sept. 30, SP)

On March 2, 2006, the parties concerned did issue such a joint declaration of realization of the effective date of the agreement. In effect, the new date for the commercial operations of 3i would be by July 2007,16 months (not 18), after the “effective date”.

Through the SEC website’s online transaction feature, this blogger’s find is that 3i Powergen, Inc. merely reserved use of its name but has not registered to-date, four years after the Agreement. (Reservation of proposed company name may remain valid up to 90 days, but may be renewed and does not mean registration). To me, the company cannot be considered “a company registered and existing under the laws of the Philippines” as stated in the SPA and the contracting parties cannot waive these requirements.

Five months after what Marelco called an “extension” of the contract, we find almost similar news articles in Malaya, Aug. 6, 2006; Manila Bulletin, Aug. 6, 2006; Manila Standard Today, Aug. 7, 2006:

“...3i Powergen is 100 percent owned by Filipinos...is a joint venture of Applied Research Technologies Philippines Inc., Coastal Power Development Corp., Five Star Bus Co. Inc. and businessman Cesar Hernandez.

“...The Board of Investments granted incentives to the three hybrid wind-diesel plants of 3i Powergen Inc. (in Marinduque and Romblon), with combined investments of P1.448 billion. ...

“...All three plants will start commercial operations by February 2007.”

Came July 2007, there was still no 3i-produced power in Marinduque. By this time a new administration under Gov. Carrion who won the election in May 2007, was running the capitol.

On 3i’s new failure, VP Lagundi reasoned out: “Ang nangyari.... ay ang pagkakaantala ng pagpapalabas ng loan mula sa mga imbestor dahil sa nararanasang global financial crisis. Humihingi na ang mga ito ng PSA na pinagtibay ng ERC na nakabinbin naman sa ERC dahil sa hindi pakikipagtulungan ng tatlong kooperatiba kasama ang Marelco...

GM Bueno rebuked: “...hindi na kailangan pang pagtibayin ng ERC ang PSA para lamang mag-umpisa ang konstruksyon... sa mga pagpupulong ng Marelco kaharap si Atty. Lagundi inamin nito na nagsimula ang problema sa pera ng iniwan sila ng IFC ng nagsisimula na ang 3i. Naging istrikto ito at ginawang kondisyon bago maipalabas ang loan ang approved PSA at approved TCGR subalit ito ay hindi kasama sa pinirmahang PSA”. (Regular Session, SP, August 11, 2008).

IFC abandoning 3i? That’s news!

(Photo: Plant site in Balogo)

By August 11, 2008, in another SP meeting, Lagundi said proudly of the new 3i composition: “Ang 3i Powergen sa kasalukuyan ay binubuo ng tatlong korporasyon: Coastal Power Development, Iljin Electric Company at Korean Western Power Co.”

About a year later, Bueno was saying: “Hindi naging makatotohanan ang 3I Powergen, hindi sila nakapag deliver. Iyang 12.48 na iyan kung saan itatayo ang power plant sa Balogo Sta. Cruz. Kung sino man po ang taga Sta. Cruz kung mapapasyal kayo doon makikita natin ay puro hukay. Hinukay nila noong October 2006. Hanggang ngayon po hindi ko alam ang kanilang natapos doon sa proyekto na iyon.” (Jul 6, 2009, SP)

BM Raza: “...noong pinatawag po natin ang (vice) president ng 3I Powergen si Atty. Domingo Lagundi... he admitted in the session of the Sangguniang Panlalawigan that they are financially incapable to construct the facilities in compliance with the requirements of the obligation. In my view that would send a signal for Marelco’s board to finally decide to rescind or not to rescind the contract...” (July 6, 2009)

BM Alvarez: “...sinasabi na ni Atty. Lagundi na wala po talaga silang kakayahan at halos magmakaawa at umiyak dito. Actually ang nangyari po parang nag-speculate lang sila na may papasok. Iyon naman po ay practice na tinatanggap natin dahil meron naman silang kaugnayan sa ibat-iba pang mga negosyante subalit hindi katanggap-tanggap iyong katagalan ng proseso.” (July 6, 2009)

And this, dear Dave, is just the beginning...

AT LAST, SEAIR FLIES TO MARINDUQUE!

Finally! SEAIR flies to Marinduque!

South East Asian Airlines (SEAIR) has commenced flight on their newest route Manila – Marinduque – Manila last Saturday, October 17, 2009.

Flight frequency and schedules are as follows:

Tuesday, Saturday
Manila – Marinduque DG 385 ETD Manila: 0940H / ETA Marinduque: 1040H
Marinduque – Manila DG 386 ETD Marinduque: 1100H / ETA Manila: 1200H

Thursday
Manila – Marinduque DG 387 ETD Manila: 1100H / ETA Marinduque: 1200H
Marinduque – Manila DG 388 ETD Marinduque: 1220H / ETA Manila: 1320H

Sunday
Manila – Marinduque DG 389 ETD Manila: 1300H / ETA Marinduque: 1400H
Marinduque – Manila DG 340 ETD Marinduque: 1420H / ETA Manila: 1520H

As per SEAIR (www.flyseair.com) website , the LET410 Turbolet is a twin engined short-range transport aircraft manufactured by the Czech aircraft manufacturer LET, mostly used for passenger transport. With more than 1,100 produced, it is the most popular 19-seat plane in history.

It provides first class comfort, while simultaneously servicing and unpaved airstrips. In the 19-seater class, no plane is better suited for short-haul.

Manufacturer: LET A.S.
Powerplant: M601-E
Length: 14.42 m (47 ft 4 in)
Wingspan: 19.98 m (65 ft 5 in)
Height: 5.83 m 19 ft 2 in)
Seat Capacity: 19 + 2 crew
Number of planes: 6
Max. Take-off Weight: 6,600 kgs (15,520 lbs)
Speed: 175 knots

To book your flight to / from BELLAROCCA (Marinduque), contact the following numbers:

SEAIR CALL CENTER : +632 849.0100
Makati/Manila – Commercial; 2nd Floor La'O Centre, Arnaiz Ave. Makati City, Philippines 1200

Commercial FAX: +63 2 849.0219
Reservation FAX: +63 2 849.0239

MARINDUQUE POWER OUTAGES - PART 3

(Photo: Upper tier of Bulusukan Falls, Buenavista)







TRACKING DOWN OUR POWER MISERY & MYSTERY

I have previously posted, that based on a “consultation meeting” with the Department of Energy and Napocor that transpired in 2004, (ref. NPC letter Sept. 4, 2009 to Marelco), the Marinduque Electric Cooperative, Inc (Marelco), OPTED to have its New Power Provider (NPP) in the promulgation of DOE Circular No. 2004-01-001.

The word “opted” was used in said NPC’s letter asking about the status of the privatization of power generation in Marinduque. This appears to suggest that the electric cooperative could have, instead, just opted to allow NPC to continue with its mandate to provide electricity in Marinduque, as provided for in the law.

What does the EPIRA Law (Electric Power Industry Reform Act) state exactly on the matter concerning missionary electrification areas where Marinduque falls under? After seven years of congressional debate and litigation, this Act came into force on June 26, 2001. The act has three main objectives: 1) to develop indigenous resources; 2) to cut the high cost of electric power in the Philippines; and 3) to encourage private and foreign investment. Passage of the Act set into motion the deregulation of the power industry and the breakup and eventual privatization of state-owned enterprises.

Section 70 of said EPIRA Law states the following under its provision for Missionary Electrification:

"SEC. 70. Missionary Electrification. – Notwithstanding the divestment and/or privatization of NPC assets, IPP contracts and spun-off corporations, NPC shall remain as a National Government-owned and -controlled corporation to perform the missionary electrification function through the Small Power Utilities Group (SPUG) and shall be responsible for providing power generation and its associated power delivery systems in areas that are not connected to the transmission system. The missionary electrification function shall be funded from the revenues from sales in missionary areas and from the universal charge to be collected from all electricity end-users as determined by the ERC.

Marelco GM Eduardo Bueno during the July 6, 2009, public hearing held at the provincial capitol expressed, in response to a question about the status of the power supply agreement contract with 3i Powergen, in part: “.. base rin sa Epira Law na 70% ng assets ng National Power Corporation ay ibebenta na sa private sector, 70% except iyong mga areas under ng SPUG na mandated under Section 70 ng Epira Law, Missionary Electrification”

Could we then reconcile this with the DOE Circular No. DC 2004-01-001 (“SPUG Circular”)? Read on.

Said circular set the policy framework for private sector to takeover from NPC-SPUG the role of generating power in off-grid areas.

Under this Circular, gradual opening of all 74 SPUG areas are to be opened up to Private Sector Participation, with 14 as the First Wave Areas. Marinduque was No. 3 on this list. On 12 February 2004, the DOE issued Department Circular No. DC 2004-01-001:

Prescribing the Rules and Procedures for Private Sector Participation (PSP) in Existing NPC-SPUG Areas. The Circular is pursuant to Rule 13 of the Implementing Rules and Regulations of the Electric Power Industry Reform Act of 2001 (EPIRA-IRR) and is premised on the following:

1. Declared policy of the State to ensure and accelerate the total electrification of the country.
2. DOE’s mandate to issue specific guidelines to encourage the inflow of private capital through participation in missionary electrification.
3. NPC-SPUG’s mandate to periodically assess the prospect of bringing power facilities to commercial viability and encourage private sector participation thereat.
4. Reduction of the burden of UC-ME whose missionary electrification component is used to fund such function of NPC-SPUG.

To move forward with the privatization of SPUG areas, the DOE, PSALM, and NPC engaged the International Finance Corporation (IFC) as transaction advisor to assist in the development of appropriate privatization program and selection of new power provider (NPP). The IFC supposedly have conducted pre-engagement surveys to the aforementioned areas. (EPIRA POWER TRACKER, Privatization of NPC-SPUG)

Pursuant to the said Circular, the IFC (International Finance Corporation), as designated Transaction Advisor would advise the Government on the introduction of private participation in power generation in missionary areas by way of divestitures of Power Supply Agreements (PSAs) between SPUG and Electricity Cooperatives (ECs), in favor of new power providers (NPPs).

IFC was to ensure a fair, transparent and competitive selection
process to attract private sector participation, to assist the Philippines to speed up implementation of its missionary electrification program.

Private Sector Participation in NPC-SPUG Areas

The SPUG areas below were opened for the Private Sector Participation (PSP) program of the DOE:

Romblon; Tablas; Marinduque; Catanduanes; Masbate; Mindoro; Palawan; Cebu; Bantayan; Siquijor; Camotes; Basilan; Sulu and Taw-Tawi.
Project Description:

Private Sector Participation (PSP) in Power Generation through Competitive Selection Process as envisioned by DOE would lead to:

Reduction in the total cost of generation; Major improvements in reliability of supply, with a 24/7 supply; Elimination of SPUG's contribution to NPC's deficit; Reduction in the total Missionary Electrification subsidy required.

Concession Structure:

New Private Providers (NPPs) will take over NPC-SPUG generation
functions through a 15-year Power Supply Agreements with Electric Cooperatives (ECs):

For the 1st pilot areas (Hybrid of Bunker and Wind)
- Marinduque – 12MW
- Romblon – 2MW
- Tablas – 6MW

We then track down a report from DOE’s Epira Power Tracker web stating thus: (Status Report No. 7 covering period May-October 2005):

“The provision of electric generation services in three major SPUG areas were recently offered to the private sector through a competitive bidding process. The bidding covered an aggregate rated capacity of 24 MW in the following areas:
• Marinduque
• Tablas
• Romblon

The bidding, which was supervised by the International Finance Corporation, drew two interested parties, namely: Coastal Consortium and MTR Power Corporation. The bidders’ first envelopes (technical proposals) were opened 25 August 2005 and the financial bids on 5 September 2005. Coastal Consortium offered a lower electric generation service cost and emerged as the winning bidder on the opening of the financial proposals.

(Photo: View of Mt. Malindig from Pulang Lupa Historical Site)

The rest of SPUG-served areas for private sector participation/with New Power Provider (NPP) are the following:

• Bantayan Island - Bantayan Island Power Corporation;
• Oriental Mindoro, mainland Palawan and Catanduanes – Power One Corporation;
• Marinduque, Tablas and Romblon Islands – Coastal Consortium;
• Occidental Mindoro, Camotes and Masbate – opted for SPUG to determine the NPP, but IFC will also handle their NPP selection;
• Siquijor – opted to select its own NPP;
• Basilan, Sulu and Tawi-Tawi – IFC will also handle the selection of their sole NPP (similar to Marinduquie, Tablas and Romblon)

Now, it’s COASTAL CONSORTIUM being identified by the DOE website as the “winning bidder on the opening of financial proposals”. Curious, we look again for answers elsewhere and find this report from IFC MEDIA HUB:

“Competitive Bid To Privatize Electricity Supply in Marinduque, Romblon and Tablas” In Manila by Karen Villalobos

“Manila, September 9, 2005 — The Philippine Department of Energy and the International Finance Corporation, the private sector arm of the World Bank Group, today announced that a consortium comprising of Coastal Power Development Corporation and Applied Research Technologies Philippines won a competitive bid to supply power to the Philippine islands of Marinduque, Romblon, and Tablas. The winning bidder proposed a hybrid diesel-wind energy solution that will improve standards and bring the generation into compliance with Philippines environmental standards.

”Private sector participation was structured through a concession-type contract between the winning bidder and local electric cooperatives that take the power on these islands. The framework of this concession does not require the private supplier to buy existing generation assets of the National Power Corporation, allowing those assets to be deployed to unserved areas in the Philippines.

”The winning bidder’s price will lead to a reduction of about 40% from the current cost (13.8 pesos per kilowatt hour) of generating power in the islands. The Coastal Power Consortium agreed to provide power without interruption all year long, compared with the current average interruption of 196 hours, or eight days, per month. The group bid to provide 25 megawatts of combined electric capacity to the three islands not connected to the national power grid.

”IFC was charged with developing the agreements and a regulatory framework to attract private sector capital and expertise to power generation in remote islands. IFC was retained in 2004 by the Philippine government through the Department of Energy, National Power Corporation, and the Power Sector Assets and Liabilities Management Corporation to act as transaction advisor.

”The Coastal Power consortium will take responsibility for power supply from the Small Power Utilities Group, which is part of the National Power Corporation. SPUG has maintained responsibility for supplying power to 74 remote off-grid islands. The annual subsidy requirement for all these islands amounts to 2.1 billion pesos. Only about 60 percent of that cost is covered by a universal service charge assessed to on-grid customers. The remaining 40 percent is passed on to the national deficit through NPC.

”The Private Investor will be able to supply electricity to the 3 islands at a lower cost than the current government-managed operation and thus reduce the annual subsidy for electricity from 458 million pesos to 168 million pesos.

“IFC strategy includes support for power sector reform in the Philippines through increased private sector participation that promotes competition. The interest in this transaction provides tangible results for the ongoing power reform agenda in the Philippines,” said IFC Country Manager Vipul Bhagat.

“This model public-private partnership structure, wherein the investor achieves full cost recovery and profits from the electric cooperatives and partially through government subsidy, can be replicated for other infrastructure transactions in the Philippines and elsewhere,” said IFC Director of Advisory Services Bernie Sheahan."


“POWER HOTLINE” The Official Weekly Publication of the Corporate Communication Division, National Power Corporation. Vol. 13 No. 38, October 3, 2005, then came up with the following headline story:

"COASTAL POWER TO SUPPLY POWER TO THREE OFF-GRID ISLANDS"

"The privatization of the operations of the National Power Corporation’s (NPC) Small Power Utilities Group (SPUG) has scored a breakthrough with the recent award to Coastal Power Development Corporation of the concession to supply electricity to Marinduque, Romblon and Tablas.

"Coastal Power and its partner, Applied Research Technologies, won the competitive selection process conducted last August by the International Finance Corporation (IFC), the investment arm of the World Bank (WB). Last September 27, Coastal Power signed a Power Supply Agreement with the local electric cooperatives from the three island-provinces that are currently distributing power to the said areas.

"With the said development, Tablas, Romblon and Marinduque – which are among the 14 islands identified by NPC as priority or “first-wave” areas for privatization – are now assured of round-the-clock electricity supply. Based on its bid, the Coastal Power consortium will provide a combined 25 megawatts to the three islands at a cost of P. 7.17 per kilowatt-hour. The group had proposed to put up a hybrid diesel-wind energy facility that is scheduled for commissioning by end-2006.

"NPC President Cyril C. Del Callar hailed the entry of the private sector in missionary electrification, saying “This is part of a determined program of the Department of Energy and NPC to turn over to the private sector the generation of power in 14 islands.”

"At the same time, President del Callar noted that the said move will result in operating cost savings of P. 1.5 billion per year for NPC, which may be used for the electrification of an additional 7,500 barangays throughout the country over a five-year period.

"NPC has been producing power at an average of P12 per kWh in the SPUG areas but is selling this electricity aat a heavily-subsidized rate of P4.20 per kWh, resulting in losses of P7.80 per kWh. Under the privatized set up, the new power producers will sell electricity at an average of P7.00 per kWh, to approximate the true cost of power generation based on fuel.

"For her part, Energy Undersecretary Melinda Ocampo said the private-sector participation in missionary electrification would enable the government to deliver on President Gloria Macapagal Arroyo’s commitment to continue bringing power and progress to more remote areas in the country without increasing the burden of the missionary electrification charge on electricity consumers nationwide.

"The entry of Coastal Power in the three first-wave islands is in compliance to DOE Circular No. 2004-01-001, which prescribes the guidelines for private sector participation in the missionary electrification areas being services by SPUG. Among other provisions, the DOE directive mandates the periodic assessment of the requirement and prospects of bringing power generation and associated power delivery systems to commercial viability on an area-by-area basis, including a program to encourage private-sector participation.

"Aside from Marinduque, Tablas and ROmblon, the other first-wave areas for privatization are Occidental and Oriental Mindoro, Palawan, Catanduanes, Masbate, Bantayan Island, Siquijor, Camotes Island, Basilan, Tawi-Tawi, and Jolo."

(to be continued)

CARRION JOINS LAKAS-KAMPI-CMD

Governor Jose Antonio N. Carrion was sworn in yesterday as new member of the political party Lakas-Kampi-CMD. He is the latest provincial executive who has officially joined the party with Defense Secretary Gilbert Teodoro, Jr. as its presidential candidate.

Carrion, considered one of the most influential executives of the League of Provinces of the Philippines, took his oath before Executive Secretary, Eduardo Ermita, party president at the Malacanang Guest House.

The Marinduque governor is the 59th governor under the banner of Lakas-Kampi. Carrion ran as an independent candidate duing the last elections. "We must sustain what the party has built rather than experiment with officials with no achievement record to show," he explained.

Source: Pilipino Star Ngayon, October 16, 2009.