Council Asked to Confirm Asin Hydro Contract

BAGUIO CITY – Mayor Mauricio Domogan last Monday urged the city council to fast-track the confirmation of the memorandum of agreement between the city government and Kaltimex Energy Philippines for the privatization, development and operation of the city-owned Asin mini-hydroelectric plants in Tadiangan and Nangalisan, Tuba, Benguet.

The mayor said the city needs to speed up its act to get the project off the ground. He said the city has waited long enough for the opportunity to get the mini-hydros, once an income-generating venture for the city, running again.

The contract which was signed last January by the mayor and Kaltimex chairman Krishan Kumar Ralhan needs to be confirmed by the august body before the city can issue the notice to proceed.

Upon issuance of the notice, Kaltimex will also submit within six months the detailed working plans with work schedules and the environmental compliance and disposal plan of the project based on a detailed engineering Feasibility Study of the Asin Mini Hydro Power Plants as basis for the construction, rehabilitation, operation, and also for the evaluation and monitoring of the project.

By virtue of the MOA, the city government will turn over the mini-hydropower plants to Kaltimex “unencumbered and without any accounts payable to any authorities whatsoever” for rehabilitation, upgrading, expansion, operation and management for a period of 20 years.

Kaltimex, for its part, will undertake the full rehabilitation, upgrading, expansion of the three power plants within four years commencing upon the issuance of the notice to proceed, with a minimum capitalization amounting to P500,000,000 spread over four years as based on the typical plans showing the initial Project Implementation Rehabilitation Schedule it submitted.

The firm will pay the city monthly rental fees which for the first two years will amount to P18 million or the peso equivalent of 32 percent of gross power plant production valued at the prevailing selling price, whichever is higher. The amount shall be paid on twelve monthly equal installments every third week of each month without any extension.

The firm will also be given a maximum of six months from the confirmation of the agreement by the city council to secure all the necessary permits to operate but it will be required to pay the full rental fee for the first year from the time it commences payment.

On the third year, the rental will increase to P40 million; to P50 million on the fourth year and to P60 million on the fifth and succeeding years until the end of the contract.

Any underpayment of the accruing month based on actual meter reading shall be reflected in the succeeding billing month. Payment of the fees will be made whether or not the plant is operating for the duration of the agreement.

On top of the rental fees, the firm will remit one percent to the province of Benguet, municipality of Tuba and barangays Tadiangan and Nangalisan the gross receipts based on the distribution scheme provided for in RA 7160 in Sec. 291 and Sec. 292 of the Local Government Code and three percent of the net surplus (net profit after tax and 1 perent share of the province of Benguet) to the affected surface owners whose properties are affected by the pipelines and plant facilities.

The company will also absorb existing personnel who meet its staffing and qualification and skills requirements but will have the right to hire, retain and terminate its personnel in the entire duration of this agreement./A Refuerzo


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