Mayor asks council anew to act on Asin hydro contract, waive damage claims

BAGUIO CITY – Mayor Mauricio Domogan on Monday urged the city council anew to confirm 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 also asked the body to issue the waiver of claims for damages to the affected landowners in Tuba to facilitate the settlement of the rental through the implementation of the court-issued compromise settlement amounting to roughly P2.7 million.

The mayor reiterated his appeal to the city council after Atty. III Isagani Liporada of the city legal office expressed concern on the absence of development on the hydro front almost a year after the signing of the agreement with Kaltimex.

“We hope that the executive and legislative departments can get their acts together because if we do not resolve the issues the soonest possible time, either we lose so much time to so many cases or we lose the facilities to Mother Nature,” Liporada lamented.

Liporada believes that the key in solving the issues would be the formalization of the Kaltimex deal and the settlement of the damage claims.

He said with the confirmation of the contract, Kaltimex “can fulfill its contractual obligation and can help the city government negotiate directly with the affected parties both in the settlement of the damage claims and the pending cases outside the limitations of the law insofar as the local government unit is concerned.”

The city is now embroiled in a number of cases before the National Water Resources Board and the Dept. of Energy over its application for the transfer of water rights over the mini-plants with the affected Tuba communities, the Tuba municipal government, indigenous people’s groups and the private firm Goldlink Global Energy Philippines which is partnering with the Tuba town in the development of hydro power plants along Asin River.

In a dialogue held last June, Tuba officials made clear with Domogan that they will only allow the reoperation of the Asin facilities on two conditions — that there will be no diversion of water from the river system and that the concerned barangays should issue resolutions interposing no objection to the operation. The second condition would mean that all issues on compensation have been resolved and the new terms on sharing scheme have been reached between the parties.

As per the compromise agreement, the city will compensate the landowners by way of rentals amounting to three percent of the net surplus from the operation of the mini-hydro plants subject to conditions that the rentals will be retroactive to year 2007 when the city assumed management of the plant; that the rentals will be subject to increase after three years; and that the rentals shall be payable to Tadiangan-Nangalisan Hydro Ancestral Landowners Association (TNHLA) which will assume the task of distributing the amount to the affected landowners.

As computed, the amount totaled P2,733,897.75 from 2007 to October 2012 when the city operations ceased.

The contract with Kaltimex was signed in January 2015 by the mayor and Kaltimex chairman Krishan Kumar Ralhan and up for confirmation 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.

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.

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.

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.

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 pecrent share of the province of Benguet) to the affected surface owners whose properties are affected by the pipelines and plant facilities. /Aileen P. Refuerzo


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